The Oregon Court of Appeals filed an opinion in Stokes and Stokes on March 31, 2010. The entire opinion can be found here: http://www.publications.ojd.state.or.us/A136795.htm The case addressed the treatment of the following issues: 1. Whether military benefits that are non-taxable can be included in gross income for child support calculation purposes; 2. What the proper valuation date for a pension is; 3. The proper method to divide a pension interest; 4. Whether payment for other debts can be credited against support obligations.
Husband is in the military and receives BAH and BAS payments which are included in his monthly paychecks. He argued that the court should not consider those benefits as income for child support purposes since they are non-taxable. The court of appeals did not agree and held that pursuant to OAR 137-050-0340 which defines gross income as “income from any source including, but not limited to, salaries, wages, commissions, advances, bonuses, dividends, severance pay, pensions, interest, honoraria, trust income, annuities, return on capital, Social Security benefits, workers’ compensation benefits, unemployment insurance benefits, disability insurance benefits, gifts, prizes, including lottery winnings, and alimony or separate maintenance received,” that the BAH and BAS payments were gross income. It did not matter that those payments were non-taxable.
Husband, as a member of the military, is entitled to a military pensiion after 20 years of service. At the time of the divorce he had not completed 20 years of service, but testified that he would complete said service. Under Oregon law, the marital portion of husband’s pension must be calculated as a fraction of the entire actual pension, rather than as a fraction of a hypothetical pension amount. The trial court had awarded wife a potion of the pension based upon a hypothetical retirement date prior to his full srevice. The “time” rule is typically used to calculate the marital portion of benefits under a defined benefit retirement plan. Under that rule, the marital portion is determined by multiplying the total actual pension benefit by a fraction, the numerator of which is the number of years (or months) of service during the marriage and the denominator of which is the total years (or months) of employment. Wife’s interest in the pension should be based on the total pension benefit as of the date of retirement, determined either by way of an actuarial present value or through a division of benefits as they are distributed.
The court used the date of the parties’ separation to determine the marital portion of the pension. The court of appeals held that the proper date is the date of dissolution, not the date of separation.
The court of appeals also held that in view of the fact that wife is entitled to a share of the marital portion of husband’s retirement benefits, and because those benefits would terminate if husband were to predecease her, it is appropriate that wife’s interest be protected by the provision of survivor benefits in an amount sufficient to cover wife’s share of the marital portion of the pension, with the parties to share equally in the cost of the annuity.
The trial court ruled that husband satisfied his pretrial child and spousal support obligation via payment of the parties’ credit card debt. Under Oregon law, a court cannot forgive a past-due support obligation. Wife was awarded temporary spousal and child support in order to provide her with assistance in meeting her monthly expenses during the pendency of the proceeding as sset forth in ORS 107.095. The trial court should not have credited husband’s obligation by his payment of credit card debt.
This case shows that a trial court can make myriad errors in its decisions. In this case, the divorce was finalized by the trial court years prior to the court of appeals rendering its decision. The issues in this case were complex. In complex cases, the parties are frequently unable to reach a settlement due to their lawyers not being sure of a proper result. Obviously, the alternative of throwing the issue into the hands of a trial court was not helpful in this case. It is important to make sure that your lawyer has a firm grasp of the law and is able to property understand its application to the facts of your case and to the trial court.