Opinion ID: 1143506
Heading Depth: 5
Heading Rank: 1

Heading: Characterization as Marital Property.

Text: This court has considered pensions in the equitable division of marital assets. See, e.g., Morlan v. Morlan, 720 P.2d 497, 498 (Alaska 1986) (pension rights should generally be awarded to the employee spouse if there is other marital property of appropriate worth which can be awarded to the non-employee spouse); Chase v. Chase, 662 P.2d 944, 946 (Alaska 1983) (trial court has discretion to consider military retirement in effecting an equitable and just property division); Monsma v. Monsma, 618 P.2d 559, 561 (Alaska 1980) (federal employee retirement benefits statute did not preempt state marital property law so that trial court correctly considered federal benefits to be a marital asset); Cose v. Cose, 592 P.2d 1230, 1233 (Alaska 1979) (Matthews, J., concurring) (stating that while existing federal law excluded Railroad Retirement benefits from characterization as marital property subject to division, [a]s a matter of state law it is clear that retirement pay must be considered in dividing marital property.). Alaska thus follows the majority rule that vested pension and retirement benefits are subject to division by a divorce court. Annotation, Pension or Retirement Benefits as Subject to Award or Division by Court in Settlement of Property Rights Between Spouses, 94 A.L.R.3d 176, 182 [hereafter Annot., Pension Rights ]. Whether the majority rule can also be applied with regard to Kenneth's nonvested [8] pension rights is a question of first impression in Alaska. Jurisdictions are split on this issue. Those in which nonvested pensions are held not to be divisible marital property rely primarily on the notion that such interests are too speculative and cannot be said to constitute a property right. See, e.g., Wilson v. Wilson, 409 N.E.2d 1169, 1178 (Ind. App. 1980); Ratcliff v. Ratcliff, 586 S.W.2d 292, 293 (Ky.App. 1979); cf. Copeland v. Copeland, 91 N.M. 409, 575 P.2d 99, 101-02 (1978) (although pension there at issue was vested, court stated in dicta that an unvested pension cannot be said to constitute a property right because the benefits rest upon the whim of the employer.). The trend, however, is to consider pensions as marital property regardless of whether they have vested. See generally 1 J. McCahey, Valuation and Distribution of Marital Property § 18.03[3], at 18-29 (1985). See, e.g., Van Loan v. Van Loan, 569 P.2d 214, 215-16 (Ariz. 1977); In re Marriage of Gillmore, 29 Cal.3d 418, 174 Cal. Rptr. 493, 495, 629 P.2d 1, 3 (Cal. 1981); In re Marriage of Hunt, 78 Ill. App.3d 653, 34 Ill.Dec. 55, 62, 397 N.E.2d 511, 518 (1979); Ohm v. Ohm, 49 Md. App. 392, 431 A.2d 1371, 1375 (1981); Janssen v. Janssen, 331 N.W.2d 752, 754 (Minn. 1983); Weir v. Weir, 173 N.J. Super. 130, 413 A.2d 638, 640 (1980); Damiano v. Damiano, 94 A.D.2d 132, 463 N.Y.S.2d 477, 481 (1983); Cearley v. Cearley, 544 S.W.2d 661, 666 (Tex. 1976); Wilder v. Wilder, 85 Wash.2d 364, 534 P.2d 1355, 1357 (1975); Leighton v. Leighton, 81 Wis.2d 620, 261 N.W.2d 457, 464 (1978); see contra, e.g., Wilson v. Wilson, 409 N.E.2d 1169, 1178 (Ind. App. 1980); Ratcliff v. Ratcliff, 586 S.W.2d 292, 293 (Ky.App. 1979); Boyd v. Boyd, 116 Mich. App. 774, 323 N.W.2d 553, 556-57 (1982). Supporting this trend is the reasoning that the contingent nature of a nonvested pension presents simply a valuation problem, not bearing on the non-employee spouse's entitlement to a just share of the marital assets. See, e.g., In re Marriage of Brown, 15 Cal.3d 838, 126 Cal. Rptr. 633, 639, 544 P.2d 561, 567 (1976); Wilder v. Wilder, 534 P.2d at 1358; 1 McCahey, supra p. 16, § 18.03[3] at 18-28. Pension benefits are generally viewed as deferred compensation for services rendered and the employee spouse's right thereto is a contractual right. Johnson v. Johnson, 131 Ariz. 38, 638 P.2d 705, 708 (1981); Brown, 126 Cal. Rptr. at 637, 544 P.2d at 565. The fact that a contractual right is contingent upon future events does not degrade that right to an expectancy. Brown, 126 Cal. Rptr. at n. 8, 544 P.2d at 566 n. 8. One commentator provides another persuasive reason for characterizing even nonvested pensions as divisible marital assets: The non-employee spouse's contribution to the pension asset is exactly the same whether the pension be labeled a mere expectancy, or a contingent future interest. L. Golden, Equitable Distribution of Property 172 (1983) (emphasis in original). We are persuaded that the contingencies that may prevent the employee spouse from ever collecting his or her nonvested pension should not bar the non-employee spouse from recovering a share if the pension is in fact paid out. Indeed, a contrary rule would frustrate the statutory command that Alaska courts effect a just division of the marital assets. AS 25.24.160(a)(4). This obviously requires that the trial court consider the financial circumstances of each party. Cose, 592 P.2d at 1233 (Matthews, J., concurring), cited with approval in Monsma, 618 P.2d at 561 n. 3; see generally Merrill, 368 P.2d at 547-48 n. 4; Malone v. Malone, 587 P.2d 1167 (Alaska 1978). It would be wholly inconsistent with this policy to ignore the existence of so substantial an asset as a party's pension rights. In this regard, we adopt the rule representing the current trend and recognize nonvested pension rights as a marital asset.