Opinion ID: 1145441
Heading Depth: 3
Heading Rank: 2

Heading: Case Law in Other Community Property Jurisdictions

Text: Schweitzer firmly committed New Mexico to the reserved jurisdiction method of distributing the community interest in retirement benefits. The other principal method of distributing these benefits is the lump sum or cash value method. Under the lump sum method, retirement plan benefits are awarded to the employee spouse at the time of dissolution and assets of equivalent value are awarded to the nonemployee spouse. See L. Glenn Hardie, Pay Now or Later: Alternatives in the Disposition of Retirement Benefits on Divorce, 53 Cal.St.B.J. 106, 107 (1978). Under the reserved jurisdiction method, the court does not distribute the community interests at the time of dissolution, but reserves jurisdiction to distribute the benefits when the employee spouse actually receives them. Id.; see also Barbara A. DiFranza & Donald W. Parkyn, Dividing Pensions on Marital Dissolution, 55 Cal. St.B.J. 464, 466-68 (1980) (describing both methods and referring to lump sum method as present cash value method). With respect to the specific issue involved in this case  whether a nonemployee spouse should receive her [9] community interest in a retirement plan, or begin to receive it, upon dissolution when the employee spouse's interest is vested and matured, or should be required to wait until retirement benefits are actually paid before receiving, or beginning to receive, her share  only three of the eight community property states appear to have expressly considered the issue. All three of those states have ruled that, when the employee spouse's interest is vested and matured, the nonemployee spouse is entitled upon dissolution to immediate distribution of her share of retirement benefits: Arizona  Koelsch v. Koelsch, 148 Ariz. 176, 713 P.2d 1234 (1986) (en banc); California  Gillmore v. Gillmore (In re Marriage of Gillmore), 29 Cal.3d 418, 174 Cal. Rptr. 493, 629 P.2d 1 (1981); and Nevada  Gemma v. Gemma, 105 Nev. 458, 778 P.2d 429 (1989). Rulings in the other community property jurisdictions are somewhat ambivalent on whether courts should follow one method or the other, and in any event none appears to have addressed the precise issue considered in this case. [10] In re Marriage of Gillmore is a leading case. There, the California Supreme Court held that the nonemployee spouse can immediately receive her community interest in the benefits from the employee spouse. The court stated, A unilateral choice to postpone retirement cannot be manipulated so as to impair a spouse's interest in ... retirement benefits. Gillmore, 629 P.2d at 4. The court reasoned that the nonemployee spouse's interest would be impaired because she would be deprived of immediate enjoyment and management of her community property. Id. at 4 n. 4 (recognizing that the timing of receipt and the control of an asset are important aspects of its value). The court also said that the employee spouse cannot force the nonemployee spouse to share in the risk that the benefits could be forfeited if the employee spouse dies before retirement. Id. at 4. The Arizona Supreme Court followed Gillmore, to a considerable extent, in Koelsch. In an extensive discussion covering various aspects of the subject considered in this opinion, the Arizona court held that a nonemployee spouse's community interest in an employee spouse's matured retirement plan, when the employee wants to continue working, is to be valued and paid, or commenced to be paid, upon dissolution. The court recognized, however, that the trial court retains considerable discretion in selecting the appropriate method of payment. The court expressed a preference for the lump sum distribution method as providing a clean break between the parties and an unencumbered pension plan to the employee, as well as relieving the court of any further supervision over the parties' relationship. Koelsch, 148 Ariz. at 183, 713 P.2d at 1241. The court continued that the nonemployee spouse's lump sum interest in the plan can be satisfied in several ways: by an award of cash or property equal to the value of the interest or by an installment obligation, which may or may not correspond with the amount the nonemployee spouse would receive if the employee spouse were to retire, and which may be secured by a lien on some or all of the employee spouse's separate property and may bear interest. Id. at 183, 713 P.2d at 1241. Further, [i]f the lump sum method would be impossible or inequitable, the court can order that the non-employee spouse be paid a monthly amount equal to his or her share of the benefit which would be received if the employee spouse were to retire. Id. at 185, 713 P.2d at 1243. For the reasons that appear below, we agree with Koelsch that the lump sum method is the preferable one for satisfying the nonemployee spouse's claim to her community interest in her spouse's retirement plan, and that the trial court should have discretion in implementing that method, alone or in combination with other methods, including in an appropriate case the reserved jurisdiction method, in distributing the nonemployee spouse's interest upon dissolution.