Court Opinion

ID: 8892983
Source: CourtListenerOpinion
Date Created: 2022-11-26 23:29:30.454264+00
Date Added: 2024-06-11T17:07:18.888144
License: Public Domain

Judge Greene
concurring
The issue, generally stated, is whether the formula utilized by the trial court to fix the marital property share of the employee spouse’s (defendant) pension is consistent with N.C. Gen. Stat. § 50-20(b). The defendant argues that the formula utilized by the trial court, which classifies as marital a fixed percentage of his retirement benefits which in this case is to be based on his total years of service (a substantial number of which will occur after the date of separation) and his highest salary (which will likely occur after the date of separation and is determined on merit), violates N.C. Gen. Stat. § 50-20(b). I agree.
*262It is a basic teaching that only that portion of a vested pension “ ‘acquired by either spouse .during the course of the marriage and before the date of the separation’ is marital property.” Bishop v. Bishop, 113 N.C. App. 725, 729, 440 S.E.2d 591, 595 (1994). Thus, any retirement benefits acquired or earned after the date of separation are not properly classified as marital property. See Lawrence J. Golden, Equitable Distribution of Property § 6.16, at 212 (Brett R. Turner ed., Supp. 1993) [hereinafter Golden]-, N.C.G.S. § 50-20(b)(1) (marital property includes only property acquired during marriage and before date of separation); N.C.G.S. § 50-20(b)(3) (award of retirement benefits must not include “contributions, years of service or compensation” accruing after the date of separation). Post-separation increases in retirement benefits that are passive in nature, that is, attributable to “market or other non-marital forces,” see Golden at 212, are properly classified as marital property. N.C.G.S. § 50-20(b)(3) (“gains” are to be included in award).
The question is whether a method can be devised to distribute passive gains in a pension occurring after the date of separation and which does not distribute gains in the pension which are earned after the date of separation, when the employee spouse retires after the date of separation and a deferred distribution is selected by the trial court. Our courts have answered this question in the affirmative, Seifert v. Seifert, 319 N.C. 367, 370-71, 354 S.E.2d 506, 509, reh’g denied, 319 N.C. 678, 356 S.E.2d 790 (1987); Workman v. Workman, 106 N.C. App. 562, 570-71, 418 S.E.2d 269, 274 (1992), holding that application of the coverture fraction adopted by the legislature, N.C.G.S. § 50-20(b)(3), resolves the issue. This fraction consists of a numerator representing the time of employment during the marriage and a denominator representing the time between initial employment and retirement. Using the formula, the marital estate is awarded, as was done in this case, the resulting percentage of the employee spouse’s retirement benefit received at the time of retirement.
Although I am bound by the previous decisions of our Court and the Supreme Court, I do not agree that application of the coverture fraction necessarily results in compliance with the legislative mandate that precludes the marital classification of post-separation earned increases in the retirement benefits and includes post-separation passive increases in the marital estate. In many instances, as in this case, the formula can result in the marital classification of a portion of the retirement benefits earned by the employee spouse after the date of separation. Some states, in an effort to prevent this *263problem, have devised formulas utilizing a denominator representing the time of employment through the date of separation and then multiplying the fraction “by the value of the employee’s retirement benefits if he stopped working on the date of Glassification.’’ Golden at 315. This method solves the problem created by the North Carolina formula but creates a new problem in that the marital estate receives nothing for the passive increases in the benefits occurring after the date of separation. As recently noted by one author, in “pre-retirement cases,” all of the various formulas devised to implement the deferred distribution of retirement benefits are “flawed” in that they fail to fairly allocate retirement benefits into marital and non-marital portions. Golden at 317. In any event, North Carolina has adopted a formula which has been approved by our courts as fairly allocating the marital and nonmarital retirement benefits, and I am bound by these decisions.
Thus, although I agree with the defendant that the formula utilized by the trial court classifies as marital a portion of the retirement benefits earned after the date of separation and consequently violates the mandate of Section 50-20(b)(3), I am nonetheless compelled to join with the majority in affirming the judgment of the trial court. Furthermore, it may be that the complexity involved in fairly distributing a defined benefit pension requires the use of some formula, though it may be flawed. If so, it appears that we should acknowledge the deficiencies in the formula and make some effort to make appropriate adjustments. That could be done by treating the problem as a distributional factor under Section 50-20(c)(12), thus granting the trial court broad discretion to equitably adjust the parties’ share of the marital estate. This argument has not been made in this case and therefore is not a basis for reversal.