Opinion ID: 2385501
Heading Depth: 1
Heading Rank: 2

Heading: The Valuation of the Disability Allowance

Text: It appeared to the trial court that a monetary award was in order as an adjustment of the equities and rights of the parties concerning marital property.... FL § 8-205(a). In determining the amount of the award the court had to consider certain factors, including the value of all property interests of each party. FL § 8-205(a)(2). Since Husband's pension was a property interest, the court was obliged, as directed by FL § 8-204, to determine the value of the pension as marital property. The court accepted the valuation reached by an actuary who testified as an expert. The actuary's valuation, however, was with respect to the service plan, for at the time the expert testified, Husband had not retired and was not receiving an allowance under the disability plan. At a subsequent hearing pursuant to Maryland Rule S74 c., Stale Testimony, it became known that, in fact, Husband had retired and was receiving payments under the disability plan so that the service plan was not available to him. This substantial change since the conclusion of the prior testimony was noticed by the Chancellor but, in effect, brushed aside. He valued the allowance then being received by Husband under the disability plan at the same valuation which had been placed by the actuary on the unmatured service plan. The Chancellor said: Although [Husband] asserts that he no longer has his retirement pension available to him because he is now receiving a disability pension, the Court finds this argument to be without merit. A pension is nothing more than an expected future stream of income, whether that stream of income bears the label retirement or disability. At age 53, [Husband] will have the benefit of a pension at least as good as the retirement pension which was evaluated by [the actuary]. Thus [Husband] does have a pension which [Wife] is entitled to have included in the computation of a monetary award. The Chancellor made an adjustment with respect to the disability plan by allocating to Wife an amount equal to one-half the value the actuary had placed on the service plan. As we have seen, the Chancellor was correct in determining that Husband had a pension which constituted marital property. He was wrong, however, in his valuation of it. The allowance under the service plan, BCC § 20-19, differs from the allowance under the disability plan, BCC § 20-23. Furthermore, Husband, as the beneficiary of a disability plan allowance, may be faced with periodic physical examinations and must submit a statement of earnings each year. The continuance of his allowance depends upon what the physical examination and statement of earnings from time to time disclose. BCC § 20-24. It is obvious that the value as marital property of the allowance Husband is receiving under the disability plan is not necessarily the same as the allowance he may have received under the service plan. We hold that the Circuit Court for Carroll County erred in its valuation of Husband's pension. We vacate that part of its decree which granted the monetary award and entered a judgment thereon. We remand the case with direction to the court to revalue the allowance received by Husband under the disability plan and to use that revaluation as a factor in computing the amount of the monetary award. In Deering we recognized that in valuing pension plans as marital property, an elastic approach ... is required. 292 Md. at 129, 437 A.2d 883. We said that when determining the proper allocation of retirement benefits between the parties, the trial court should evaluate various alternatives.... Id. at 130, 437 A.2d 883. For the guidance of the trial court here, we repeat those alternatives as set out in Deering. First, the trial court could consider the amount of [the husband's] contributions to the fund, plus interest, and award [the wife] an appropriate share.... Second, the trial court could attempt to calculate the present value of [the husband's] retirement benefits when they vest under the plan. Under this approach, the benefits payable in the future would have to be discounted for interest in the future, for mortality ... and for vesting.... The benefits would then have to be calculated with respect to [the husband's] life expectancy as a retiree. This calculation involves considerable uncertainty, and the amount yielded changes as different assumptions are used with respect to mortality, job turn-over, etc.... It has been recognized that this kind of calculation can be very difficult and that, where it becomes too speculative, the trial court should use a different method of valuation.... Under either of the above two methods, the trial court would have the discretion to order the payment to [the wife] of her share in either a lump sum or in installments, depending primarily on the other assets and relative financial positions of the parties. The third method, which has been used widely ... is to determine a fixed percentage for [the wife] of any future payments [the husband] receives under the plan, payable to her as, if, and when paid to [the husband].... Under this approach, of course, it is unnecessary to determine the value of the pension fund at all. The court need do no more than determine the appropriate percentage to which the non-employee spouse is entitled. Deering, 292 Md. at 130-131, 437 A.2d 883, quoting Bloomer v. Bloomer, 84 Wis.2d 124, 267 N.W.2d 235, 241 (1978) (citations omitted). It was our view that any of these approaches may represent the proper one for the trial courts of this State to take. But we cautioned that whether any particular option represents an appropriate exercise of discretion depends, of necessity, upon the circumstances of the individual case. Deering, 292 Md. at 131, 437 A.2d 883. We pointed out, in this regard that FL § 8-205 does not require an equal division of marital property, nor does it contemplate a decretal award which is so harsh as to force a wage earner spouse to liquidate his or her pension interest in order to satisfy it. Moreover, we reiterate that the provision does not authorize a property award without the chancellor first giving due consideration to any alimony decreed. 292 Md. at 131, 437 A.2d 883. Of course, in selecting an appropriate method of allocating retirement benefits between estranged spouses, it is important that the chancellor consider all relevant factors beginning with those expressly set out in FL § 8-205. Id. DECREE AFFIRMED EXCEPT AS TO THAT PART THEREOF GRANTING A MONETARY AWARD WHICH IS VACATED; CASE REMANDED TO THE CIRCUIT COURT FOR CARROLL COUNTY FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION; COSTS TO BE PAID ONE-HALF BY APPELLANT AND ONE-HALF BY APPELLEE.