Opinion ID: 1057654
Heading Depth: 3
Heading Rank: 2

Heading: Precedents Construing Section 36-4-121(b)(1)

Text: In Cohen v. Cohen, 937 S.W.2d 823 (Tenn.1996), we used language suggesting that the date of acquisition controlled on the question of whether property qualified as marital or separate property. The Cohens were married in 1982, and the husband's employer began contributing to his retirement plan in 1987, so there were no premarital contributions. We granted permission to appeal in order to determine whether an interest in an unvested retirement plan is marital property pursuant to section 36-4-121(b)(1). Id. at 825. While determining that the benefits were marital property, this Court, in multiple instances, used language stressing that the statutory reference to the time of accrual referred to the accrual of the benefit right  as opposed to accrual of additional value through appreciation: (1) Though not necessary to our conclusion, we note that courts of other states and our own Court of Appeals are in accord with our conclusion that unvested retirement benefits accruing during the marriage constitute marital property; (2) A spouse who is primarily a homemaker would be seriously disadvantaged by the inability to claim a portion of the retirement benefits that accrued during the course of the marriage; (3) Only the portion of retirement benefits accrued during the marriage [is] marital property subject to equitable division; (4) We, therefore, conclude that marital property includes retirement benefits, both vested and unvested[,] which accrue during the marriage ; (5) An interest in a retirement benefit, vested or unvested, accruing during the marriage, is marital property subject to division under Tennessee Code Annotated Section 36-4-121(a)(1). Id. at 829-30 (emphasis added). Each reference serves as an indication that accrued during the period of the marriage meant acquired during that time. Furthermore, the Cohen opinion expressed concurrence with the Rhode Island Supreme Court's rationale for treating retirement benefits accrued during a marriage as marital property: To the extent earned during the marriage, the benefits represent compensation for marital effort and are substitutes for current earnings which would have increased the marital standard of living or would have been converted into other assets divisible at dissolution. Subjecting the benefits to division is just, because in most cases the retirement benefits constitute the most valuable asset the couple has acquired and they both have relied upon their pension payments for security in their older years. Id. at 828-29 (quoting Moran v. Moran, 612 A.2d 26, 33 (R.I.1992)) (emphasis added). In other words, the benefits are part of the consideration earned by an employee, and . . . a form of deferred compensation provided by the employer for work already performed. Id. at 829 (citation omitted). By defining marital property as those retirement benefits earned during the marriage, the Cohen court by negative implication excluded those earned prior to the marriage. In Langschmidt v. Langschmidt, 81 S.W.3d 741 (Tenn.2002), this Court considered section 36-4-121(b)(1)(B) in the context of individual retirement accounts (IRAs) funded with premarital earnings, concluding that the accounts were not marital property. While the majority purports not to specifically overrule Langschmidt, it has ruled that the analysis lacked clarity and failed to articulate clearly the correct analytical approach. I must disagree. In Langschmidt, this Court concluded that the time of the husband's acquisition of the assets that funded the account controlled as to the classification of the property as marital: Unlike the accrual of vested or unvested pension during the marriage, Husband's IRAs in this case do not represent deferred compensation during the marriage, but were funded with premarital assets. . . . [A]ssets owned by a spouse before marriage are not marital property. See Tenn.Code Ann. § 36-4-121(b)(2)(a). Since Husband's IRAs do not represent deferred marital compensation, but were funded with premarital earnings (except for the value of the 401(k) rollover), we conclude that Husband's premarital IRAs are not retirement benefits under Tenn.Code Ann. § 36-4-121(b)(1)(B). 81 S.W.3d at 749-50. By adopting that reasoning, this Court explicitly considered and rejected a line of cases that treated the question of whether accounts are retirement benefits by definition as determinative. Id. at 749 (citing McKee v. McKee, No. M1997-00204-COA-R3-CV, 2000 WL 666363, at  (Tenn.Ct.App. May 23, 2000); Mahler v. Mahler, No. 01A01-9507-CH-00303, 1997 WL 187130, at  (Tenn.Ct.App. April 18, 1997); Mayfield v. Mayfield, No. 10A01-9611-CV-00501, 1997 WL 210826, at -5 (Tenn.Ct.App. April 30, 1997)). The majority has chosen instead to revive the reasoning of this line of cases. Because I see no reason to either overrule or clarify Langschmidt, I must disagree. The principle espoused by Langschmidt and Cohen is that contributions to a retirement account qualify as marital property if made as a form of deferred compensation during the marriage, but they do not qualify as marital property if made prior to the time of marriage. Because the premarital contributionsas benefits accruing before the marriageshould be separate property, any increase in value attributable to those contributions should also be treated as separate property.