Court Opinion

ID: 9583390
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:38:09.006387+00
Date Added: 2024-06-11T13:38:59.597337
License: Public Domain

Justice ERICKSON
dissenting:
I respectfully dissent. I do not agree with the majority’s analysis of the Uniform Dissolution of Marriage Act, §§ 14-10-101 to -133, 6B C.R.S. (1987 & 1995 Supp.). In resolving division of property issues in a dissolution of marriage action, the inclusion of an asset within the marital estate is a legal determination; the manner of distribution of that asset once characterized as marital property is appropriately a matter within the trial court’s discretion.
Pension rights are important economic assets within a marriage unit. In re Marriage of Gallo, 752 P.2d 47, 51 (Colo.1988). “[Sjince military retirement pay is awarded in return for past services, it constitutes an asset which should be divisible as marital property to the extent the entitlement was based upon military service rendered during all or part of the marriage.” Id. at 52 (emphasis added) (involving retirement benefits which had vested, matured, and were being collected); In re Marriage of Grubb, 745 P.2d 661, 665 (Colo.1987) (involving vested retirement benefits which had not matured).1 Narrowly framed, the question pre*549sented by this consolidated review is whether increased military pension benefits due to post-dissolution rank increases are marital property.
As the majority recognizes, we have approved three methods of distribution of pensions upon dissolution: (1) net present value; (2) deferred distribution; and (3) reserve jurisdiction. Maj. op. at 530-531. See Gallo, 752 P.2d at 55; Grubb, 745 P.2d at 666. See also Brett R. Turner, Equitable Distribution of Property § 6.11 (2d ed. 1994 & 1995 Supp.). If a court reserves jurisdiction, it determines division when and if the pension vests. If the court utilizes the net present value method, the court awards the nonem-ployee spouse a liquidated share at dissolution. Finally, if the court elects the method of deferred distribution, it establishes a formula for division at the time of dissolution, but defers distribution until the employee spouse actually receives the benefits.
Although the trial court has broad discretion in dividing marital property, see, e.g., In re Marriage of Nelson, 746 P.2d 1346, 1349 (Colo.1987), the classification of property as marital or separate is a legal determination, not a matter of discretion. See § 14-10-113(2); In re Marriage of Franz, 831 P.2d 917, 918 (Colo.App.1992). By definition, marital property does not include property acquired prior to marriage or subsequent to a decree of legal separation. See § 14-10-113(2).
Three basic rules govern the classification of post-dissolution increases in military pension benefits:
First, retirement benefits earned as consideration for marital efforts are marital property. Second, retirement benefits earned as consideration for postmarital efforts are separate property. Third, when market or other nonmarital forces cause passive appreciation between the date of classification and the date of distribution, the appreciation is given the same classification as the underlying property. Thus, the marital share of postdivoree passive appreciation is the same as the marital share in the unappreciated asset.
Turner, supra § 6.10 (citations omitted).
Under these basic rules, a nonemployee spouse should not share in increased benefits due to promotions and similar individual efforts occurring after dissolution of the marriage. See, e.g., Bishop v. Bishop, 113 N.C.App. 725, 440 S.E.2d 591, 595-96 (1994); Berrington v. Berrington, 534 Pa. 393, 633 A.2d 589, 592 (1993). Although spousal support may influence an employee’s final rank and position, such support presumably ceases in the event of divorce. See In re Marriage of Olar, 747 P.2d 676, 679-80 (Colo.1987) (distinguishing between educational degrees and vested but unmatured pensions and holding that the contribution of one spouse to the increased earning potential of the other is appropriately considered when the dissolution court divides marital property and awards maintenance). Generally, pension benefits which accrued during marriage are appropriately classified as marital property. However, increased pension benefits resulting from post-dissolution promotions are analogous to advanced educational degrees obtained during the marriage. That is, post-dissolution rank increases, although perhaps influenced by the support of the spouse during the marriage and based upon experience obtained during the marriage, depend on the post-dissolution efforts of the employee spouse. Both the employee spouse with an unvested, unmatured pension and the spouse holding an advanced degree leave the marriage with an asset which has no cash value at the time of dissolution, but may prove of value dependent upon the spouses’ individual, post-dissolution efforts. As such, increases in pension benefits attributable to post-dissolution rank increases are appropriately classified as the separate property of the employee spouse and should not be susceptible to division by the dissolution court.
The majority concludes that “[i]f the non-employee spouse must bear the risks attendant to waiting [under either the deferred distribution or reserve jurisdiction method], then the nonemployee should share in increased benefits that accrue during the delay.” Maj. op. at 536. The majority also notes that we have held that “contingencies should be taken into account when the court disposes of marital property between the parties, not when determining which assets *550belong in the marital estate.” Gallo, 752 P.2d at 52; Grubb, 745 P.2d at 665. See maj. op. at 536. However, the majority then considers two interrelated contingencies: first, that an unvested, unmatured pension, such as those at issue here, might never vest; and, second, that, as a result, the nonemployee spouse might never get paid. Maj. op. at 536. The majority then rewards the nonem-ployee spouse who “risks” these contingencies by deeming increased military pension rights in such cases to be marital property. Under the holding of the majority, an increase in pension benefits attributable to post-dissolution rank increases is marital property when the nonemployee spouse bears a portion of the risk that the pension will not vest, as with the deferred distribution and reserve jurisdiction methods, see In re Marriage of McGinnis, 778 P.2d 281, 283 (Colo.App.1989), but is not marital property when the risk is borne entirely by the employee spouse under the net present value method.2 Maj. op. at 539.
The trial court should consider such contingencies in selecting the methodology and distribution of the marital property, see Nelson, 746 P.2d at 1349; In re Marriage of Beckman, 800 P.2d 1376, 1379 (Colo.App.1990), not in determining whether the benefit is marital property. Indeed, the trial court is statutorily required to consider the “contribution of each spouse to the acquisition of the marital property, including the contribution of a spouse as homemaker ” when dividing the marital property. § 14—10—113(1)(a) (emphasis added).3 Thus, the nonemployee spouse who contributes to the career of the employee spouse is not without a remedy. The trial court can and should consider the nonemployee spouse’s contribution when dividing marital property and awarding maintenance. See §§ 14-10-113(1)(a), 14-10-114. However, consideration of spousal contribution is inappropriate when determining the inclusion of the asset within the marital estate.
The majority states that separating the “marital” increase from the “separate” increase “would lead to widely divergent and inconsistent results, inject an element of fault into the property division, and enmesh the courts in the parties’ lives for many years.” Maj. op. at 535. On the contrary, the result espoused by the majority leads to inconsistency by placing the determination of the marital estate within the trial court’s “discretion.” Under the majority’s approach, whether the post-dissolution pension increase constitutes marital property depends entirely upon the distribution method the trial court deems appropriate. Further, the courts are enmeshed in the parties’ lives for many years under the reserve jurisdiction method, which the majority today expressly allows. Finally, even if the “time rule” set forth by the majority is the appropriate method to determine the nonemployee’s participatory share in the pension increase,4 the trial court’s consideration of the nonemployee spouse’s contribution or lack thereof does not inject *551fault into the property division. Contra maj. op. at 535, 542-543. Rather, the trial court’s consideration of the nonemployee spouse’s relative contribution to the marital asset is statutorily required. See § 14-10-113. The majority disallows this consideration, stating: “If the ‘time rule’ formula is used, the formula cannot be altered.” See maj. op. at 543. In so stating, the majority today effectively overrides the provisions of section 14-10-113 whenever the trial court uses either the deferred distribution or reserve jurisdiction methods of property division.
Accordingly, I dissent.

. This court has not determined whether unvest-ed, unmatured pension benefits are “property" subject to division, nor does the majority address that issue. "Nonvested military retirement benefits lack the following characteristics of property: cash surrender value, loan value, redemption value, lump sum value, and a value realizable after death.” Burns v. Burns, 312 Ark. 61, 847 S.W.2d 23, 26 (1993) (holding that such benefits are not property). Contra Jackson v. Jackson, 656 So.2d 875, 877 (Ala.Civ.App.1995) (cataloguing cases on both sides of the issue, but holding that an unvested military pension right "is a contractual right, subject to a contingency, and is a form of property”). See also 3 William M. Troyan et al., Valuation & Distribution of Marital Property § 46.32 (1995). Our statute requires the trial court to divide "all property acquired by either spouse subsequent to the marriage" with certain enumerated exceptions not applicable here. See § 14-10-113 (emphasis added). Although I believe the court as a whole should consider whether an unvested military pension is property, this dissent assumes, as did the majority, that unvest-ed, unmatured military pension rights are "property” under the statute. See Grubb, 745 P.2d at 667-68 (Erickson, J., dissenting) (discussing vested, but unmatured military pension benefits).

. Courts have adopted three positions on the extent to which post-dissolution pension benefit increases are divisible as marital property: (1) the marital estate includes only those benefits which exist as of the date of classification; (2) the marital estate includes all benefits, regardless of when they are earned; or (3) the marital estate includes only passive increases in benefits. See Turner, supra § 6.10. The majority here appears to combine the second and third positions, concluding that the benefit increase may be either marital or separate property dependent upon the trial court’s discretion.

. The statute’s recognition of homemaking as a “contribution” indicates that the contributions to be considered in dividing marital property are not limited to monetary contributions, but can include domestic and other types of noneconomic support.

.If the time rule is the appropriate method, the coverture fraction should be determined by "points” rather than years. See Beckman, 800 P.2d at 1379.
The military benefit is based on points which are converted into years of service. Since the basis of years of credited service is points, the coverture fraction for military benefits must be determined in terms of points rather than years, as is normally the case. Use of a simple years of service computation rather than recognition of the point system will, in some situations lead to inequitable conclusions. The greatest potential for distortion of the marital share of the benefit occurs in situations where the member of the military retirement system switches from regular component to reserve component service.
Troyan, supra § 46.34.