Opinion ID: 2521155
Heading Depth: 3
Heading Rank: 2

Heading: William's Pension Was Erroneously Valued on Remand.

Text: Camille argues that it was error to value William's pension by considering information that was not available on August 12, 1992, the date we instructed the superior court to use in valuing William's pension. Camille notes that on that date, it would have been impossible to determine the amount of pension benefits William would collect before his eventual death. Thus, Camille argues that the superior court should have valued the pension by multiplying William's life expectancy as of August 1992 by the expected annual pension benefit, adjusting that figure for cost of living allowances, and discounting it to present value. The estate responds that our remand instructions in Williams required the superior court to award Camille the amount she would have received if the court had divided William's pension in August 1992. Citing McDougall v. Lumpkin, [17] the estate argues that trial courts have discretion to distribute retirement benefits to a non-employee spouse through either a qualified domestic relations order (QDRO) or through a lump sum payout. [18] The estate further argues that because there were insufficient marital assets in 1992 to satisfy Camille's claim for a lump sum payoutthe marital estate excluding William's pension was valued at approximately $85,000it would not have been an abuse of discretion to distribute William's pension in August 1992 by entering a QDRO. [19] And although it concedes that `an agreement for equitable division of retirement benefits earned during marriage presumptively encompasses survivor benefits,' [20] the estate notes that a QDRO could not have conferred survivor benefits on Camille, because the federal regulations made her ineligible for survivor benefits. The estate therefore concludes that if the superior court had entered a QDRO in August 1992, Camille would have received one-half of the marital share of any pension benefits that William received before his eventual death in June 1995. Thus, the estate argues that it was not error to award Camille one-half of the marital share of the pension benefits William (and his estate) actually received. Camille's interpretation of our remand instructions is correct. We instructed the superior court to award Camille one-half of the marital share of William's pension valued as of August 12, 1992, when the parties entered into their agreement. We have previously referred to the value of a defined benefit pension [21] as its actuarial value, determined by multiplying the employee's life expectancy by the expected annual benefit, and discounting it to present value. [22] It is appropriate to apply this same valuation method here. We specified August 12, 1992 as the date of valuation, because we intended to give effect to the parties' agreement to divide the pension benefit as of that date. We did not intend that the value of William's pension would be calculated based on the actual date of his death, a date that was, of course, unknown to the parties on August 12, 1992 when they entered into their agreement. We therefore conclude that it was error to rely on remand on the actual date of William's death in valuing the pension. Accordingly, we reverse and remand for further proceedings. On remand, the superior court should determine the actuarial value of William's pension on August 12, 1992 by multiplying William's life expectancy on that date by the expected annual pension benefit, and by discounting to present value. In calculating that value and determining William's life expectancy as of August 12, 1992, however, the superior court may consider evidence relevant to the state of William's health to the extent it bears on his life expectancy and to the extent it was known on August 12, 1992. [23] The superior court concluded on remand that it would be inequitable to ignore the amount actually paid on William's pension, an amount dependent on the actual date of his death. We disagree with that conclusion, for a number of reasons. First, looking to William's actual state of health as of August 12, 1992 will minimize the chance of overvaluing the prospective pension benefit. And to the extent William's health status reduces the value of his pension benefit, this approach reduces any apprehension that Camille's ultimate share of the benefit will be disproportionately large compared to the value of the estate apart from the pension benefit. Likewise, to the extent the superior court based its conclusion of inequity on the parties' expectations as of August 12, 1992, William's health status is particularly relevant. Second, basing the award on the actual date of death leads to inequity not recognized by the superior court. Its conclusion of inequity turns in part on its finding that Camille knowingly bargained ... with the assistance of counsel for a nearly equal division of the pension benefit. But to be consistent, if the actual date of death can be taken into account for one purpose, it must also be taken into account for equivalent purposes. Per the superior court's analysis, the values of what the parties respectively bargained for would have to be based on the actual date of death. Knowledge in August 1992 that William would die in 1995 would have made the survivor benefit bargained for by Camille more valuable and would have diminished the value of the benefit bargained for by William. Inconsistent use of the prospective date of death contributed to the inequity perceived by the superior court. Finally, the superior court does not mention another post-agreement circumstance that bears on the equity resulting from our prior remand instruction. After the parties learned of Camille's ineligibility for survivorship benefits, Superior Court Judge Larry D. Card granted Camille post-judgment relief and ordered William to make Camille the beneficiary of his life insurance policies. William died before complying.