Opinion ID: 1773735
Heading Depth: 1
Heading Rank: 2

Heading: Dividing Retirement Benefits

Text: We begin with an overview of the law that was in effect in this area at the time the decree was entered to demonstrate the complexities involved in dividing retirement benefits upon divorce. Our decisions focused first on the recognition of pension interests as community property rights and then on the separate issues of apportionment and valuation of benefits. In Cearley v. Cearley, we considered whether future pension benefits constitute community property rights subject to equitable division upon divorce. 544 S.W.2d 661, 663-64 (Tex.1976). We approved of the proposition that even nonvested [2] pension rights are ... a contingent interest in property, and to the extent that such rights derive from employment during coverture, they comprise a community asset subject to division in a dissolution proceeding. Id. (quoting Brown v. Brown, 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561, 562 (1976)). We also discussed the difficulty of computing the present value of such a contingent interest and approved the method of making the award of the non-employee spouse's community interest effective if, as, and when the benefits are received by the [employee] spouse. Id. at 666. The 1983 case Berry v. Berry, 647 S.W.2d 945 (Tex.1983), currently governs the division of retirement benefits. However, when the decree in question was entered in 1981, Cearley and Taggart v. Taggart, 552 S.W.2d 422 (Tex.1977), provided trial courts the formula to use in determining the community interest in retirement benefits and the non-employee spouse's share of that interest. The Court used a fraction to apportion the community interest: the number of months married under the plan divided by the total number of months employed under the plan at the time of retirement. Taggart, 552 S.W.2d at 424. That fraction was multiplied by the non-employee spouse's just and right share in the community interest as determined by the trial court (often fifty percent) and then multiplied by the value of the benefits received by the employee spouse at retirement. Id. [3] When the trial court entered George and Kenda's divorce decree, it should have employed the Taggart formula to divide the retirement benefits, though of course the court would not have been able to insert numbers for the denominator of the community interest fraction or the value of the benefits, which could not be determined until retirement.