Opinion ID: 1430158
Heading Depth: 2
Heading Rank: 5

Heading: Whether Husband's future Federal Civil Service disability benefits are community property.

Text: Husband argues that the Federal Civil Service disability benefits which he receives are his separate property. He claims that these disability benefits are different from strictly retirement benefits in that they are analogous to a personal injury recovery or a workmen's compensation recovery. He points out that in New Mexico personal injury recoveries and recoveries under workmen's compensation are treated as separate property because they are in lieu of wages and the divorced spouse can have no interest in the future wages of the other spouse. Husband also argues that his disability benefits are separate property because his right to receive those benefits vested five years after he began making contributions to the retirement fund, and before his marriage to Wife. Wife argues that the disability benefits received by Husband should be considered community property, at least to the extent community funds were contributed to the Retirement and Disability Fund. While the issue of whether disability benefits are community property has never been before an appellate court in New Mexico, the issue has been addressed in other jurisdictions. Various rationales have been employed depending on the type of disability benefits involved. Military disability benefits have been held to be separate property because they are compensation for personal injury rather than an earned property right. Ramsey v. Ramsey, 474 S.W.2d 939 (Tex.Civ.App. 1971). Where the disability benefits have been earned either through community labor or through monetary contributions of the community, the benefits have been held to be community property. Guy v. Guy, 98 Idaho 205, 560 P.2d 876 (1977). The case of LeClert v. LeClert, 80 N.M. 235, 453 P.2d 755 (1969), is cited by Wife. It should be noted that following McCarty v. McCarty, ___ U.S. ___, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981), cases such as LeClert are overruled to the extent they hold that United States military retirement pay is community property. Espinda v. Espinda, 96 N.M. 712, 634 P.2d 1264 (1981). The implications of McCarty for the case at bar are limited in that McCarty appears to be a narrow holding. The effect of McCarty is restricted to Congressional intent as expressed in federal statutes. Although the Court in McCarty did hold that Congress intended to preempt the field as to the treatment of United States military retirement pay as either separate or community property, it is clear that where no such Congressional intent is found, there is no federal preemption. See, e.g., Hines v. Davidowitz, 312 U.S. 52, 61 S.Ct. 399, 85 L.Ed. 581 (1944). Indeed, dicta in McCarty shows that other federal benefits are to be treated as community property to the extent Congress has indicated they should be. Specifically mentioned in McCarty are Federal Civil Service retirement benefits and Foreign Service retirement benefits, with regard to which Justice Blackmun stated: Indeed, Congress recently enacted legislation that requires that Civil Service retirement benefits be paid to an ex-spouse to the extent provided for in the terms of any court order or court-approved property settlement agreement incident to any court decree of divorce, annulment, or legal separation. Pub.L. 95-366, § 1(a), 92 Stat. 600, 5 U.S.C. § 8345(j)(1) (1976 ed., Supp.III). In an even more extreme recent step, Congress amended the Foreign Service retirement legislation to provide that, as a matter of federal law, an ex-spouse is entitled to a pro rata share of Foreign Service retirement benefits. Thus, the Civil Service amendments require the United States to recognize the community property division of Civil Service retirement benefits by a state court, while the Foreign Service amendments establish a limited federal community property concept. Id. ___ U.S. at ___, 101 S.Ct. at 2740. The case at bar involves Federal Civil Service disability benefits. There is no indication that Congress intended that the federal benefits involved in this case be treated as separate property. If there is to be any change in philosophy and result in military retirement benefits as compared to Federal Civil Service disability benefits, the change must be made by the United States Congress. In the absence of such Congressional Act or intent, an analysis of applicable case law becomes necessary. Guy v. Guy, supra , is of particular interest. Although Guy did not involve Federal Civil Service disability benefits, it is analogous to the case at bar to the extent it holds that the portion of an ex-spouse's disability benefits earned during coverture are community property. Here, the record shows that a portion of Husband's disability benefits were earned during coverture. Husband became entitled to disability benefits because he contributed to the retirement and disability fund. This case involves an asset acquired during coverture where the presumption is that the asset is community property. Section 40-3-12(A), N.M.S.A. 1978. The presumption is overcome only if the method of acquisition shows, by a preponderance of the evidence, that the asset is separate property. Thaxton v. Thaxton, 75 N.M. 450, 405 P.2d 932 (1965). In this case, we see that the right to Federal Civil Service disability benefits was acquired through community financial contribution as well as by Husband's labor, which represented community labor when exercised during coverture. We hold that the trial court was correct in its determination that to the extent the community contributed, Husband's Federal Civil Service disability benefits are community property. Husband claims that his right to receive disability benefits vested before his marriage to Wife, and therefore, his disability benefits are his separate property. This claim is without merit. In New Mexico, time of vesting has not been considered significant in the analysis of whether retirement benefits are separate or community property. In the analogous case of Copeland v. Copeland, 91 N.M. 409, 575 P.2d 99 (1978), the court differentiated between the terms vested and matured, holding that retirement benefits earned by a state employee were divisible as community property upon dissolution of marriage. The Court in Copeland reasoned that the right to receive the retirement benefits had vested at the time of the divorce even though the right to receive the benefits had not yet matured. The significance of Copeland for this case is that the Court was willing to divide the husband's future retirement benefits at the time of the divorce even though the right to receive them had not yet actually vested completely. The possibility existed in Copeland that the husband would never actually receive his full retirement benefits, yet the Court included those benefits among the community assets divisible upon dissolution of marriage. The conclusion in Copeland is consistent with the rule stated above that the community share in the future retirement and disability benefits of a spouse depends upon contributions made by the community during coverture. Husband's claim that he had a vested right to receive disability benefits at the time he married Wife does not deprive Wife of her community interest acquired during the marriage. We hold that Wife's interest in Husband's future Federal Civil Service disability benefits is based on contributions made by the community during coverture which is in no way related to when Husband's right to the disability benefits vested.