Ex-Wife Entitled to Ongoing Interest in Ex-Husband’s Defined Benefit Retirement Plan

iStock-1187184203-300x200Retirement benefits are often subject to property division in a Texas divorce.  In some cases, calculating the community interest is straight forward; however, in other cases, it can be somewhat more complex.  In a recent case, a former wife challenged a trial court’s handling of the former husband’s retirement benefits after it concluded she had already received all of the benefits to which she was entitled.

The parties had been married 22 years when they divorced.  The wife was awarded 50% of the husband’s Civil Service Retirement Benefits accrued as of the date of the decree’s entry.  The trial court signed a Qualified Domestic Relations Order (“QDRO”) authorizing payment of an interest in the husband’s monthly annuity payments to the wife and stating that she was entitled to a survivor annuity.

Trial Court Enters Original QDRO

The parties began receiving the monthly annuity payments pursuant to the QDRO after the husband retired at the end of 2011.  In March 2016, the husband moved to vacate the QDRO, arguing the wife was not entitled to a survivor’s benefit under the decree but a premium was being deducted from his monthly benefit.  He asked the court to amend the QDRO to match the property division in the divorce decree.

The trial court found there was no survivor’s annuity award in the decree so the QDRO substantially changed the property division by including one.  The court signed an order vacating the QDRO in January 2017.  In July 2018, the wife petitioned for a QDRO, asking the court to enter an order to accomplish the property division in the divorce decree.

The husband argued the wife was only allowed a fixed sum pursuant to the divorce decree and that she had already received more than that amount.  The wife argued she was entitled to an interest in the monthly annuity benefits during the husband’s lifetime.

The trial court agreed with the husband and denied the petition, finding the wife had received the retirement benefits awarded to her in the decree.  The wife appealed.

Wife Appeals Trial Court’s Denial

The wife argued the trial court abused its discretion by not entering an amended QDRO. She argued the trial court improperly modified the decree by denying her an ongoing interest in the retirement benefits.  The husband argued the decree awarded her a fixed sum and not an ongoing interest.

The appeals court found the husband’s retirement was a defined benefit plan because it gave the husband a monthly benefit with annuity payments based on his salary history and years of service.  In Gainous v. Gainous, the Texas Supreme Court developed a formula to determine the community interest in a defined benefit plan when the spouse participated in the plan during the marriage but did not retire until after the divorce. The community interest is calculated by dividing the months both married and in the plan by the months in the plan at the time of retirement and multiplying by the monthly benefit the employee would have received at the date of the divorce, whether eligible for retirement or not.  The appeals court stated that the community interest in the payments cannot be valued as a fixed some because the payments continue for the retiree’s life.

The appeals court found the language of the decree limited the community interest to the benefits that had accrued when the parties divorced.  It concluded the decree awarded the wife an ongoing interest 50% interest in the community share of the husband’s monthly benefits during his lifetime.  The appeals court further found that the trial court’s conclusion the wife had already received the retirement funds due to her was contrary to both the divorce decree and case law establishing the formula for valuing the community interest. The court’s order therefore improperly modified the decree’s property division by denying her an ongoing interest in the monthly benefits. The appeals court reversed and remanded the case to the trial court with instructions to enter a QDRO granting the wife’s interest in the community share of the monthly retirement payments in accordance with the formula and to enter any orders needed for the past-due benefits.

Retirement Assets are Complex – Call the Knowledgeable Attorneys at McClure Law Group Today

Courts do not always understand the rules for calculating an interest in the other spouse’s retirement benefits.  If you are facing a divorce involving substantial retirement benefits or other complex assets, a knowledgeable Texas divorce attorney can fight to protect your rights.  Schedule a consultation with McClure Law Group by calling 214.692.8200.

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