Court Opinion

ID: 2761280
Source: CourtListenerOpinion
Date Created: 2014-12-16 19:04:27.196943+00
Date Added: 2024-06-11T08:29:52.778511
License: Public Domain

Dec 16 2014, 9:34 am
FOR PUBLICATION

ATTORNEY FOR APPELLANT:                      ATTORNEY FOR APPELLEE:

APRIL L. BOARD                               JOHN W. PETERS
Crown Point, Indiana                         Portage, Indiana

                            IN THE
                  COURT OF APPEALS OF INDIANA

IN RE: THE MARRIAGE OF                       )
HELEN FISHER                                 )
                                             )
      Appellant-Petitioner,                  )
                                             )
            and                              )   No. 64A05-1403-DR-150
                                             )
RONALD FISHER,                               )
                                             )
      Appellee-Respondent.                   )

                  APPEAL FROM THE PORTER SUPERIOR COURT
                  The Honorable John Shanahan, Judge Pro Temporare
                           Cause No. 64D02-0601-DR-808

                                 December 16, 2014

                         OPINION - FOR PUBLICATION

ROBB, Judge
                                Case Summary and Issues

       Following dissolution of the marriage of Helen Fisher and Ronald Fisher, Helen

appeals the trial court’s division of property. Helen raises the following issues for our

review: (1) whether the trial court abused its discretion in valuing and distributing an

IRA account; and (2) whether the trial court abused its discretion by declining to deviate

from the presumptive fifty-fifty split of marital assets. Concluding the trial court erred in

its valuation and distribution of the IRA, but that the trial court did not abuse its

discretion by dividing the marital assets evenly, we affirm in part, reverse in part, and

remand for further proceedings consistent with this opinion.

                               Facts and Procedural History

       Helen and Ronald were married on May 9, 1969.              Ronald was a longtime

employee for EJ&E Railway. He began working there in June 1962. In May 1993,

Ronald was involved in a car accident resulting in disability. He retired from EJ&E two

years later and received a lump sum pension payout that was rolled over into an IRA.

Ronald’s employment with EJ&E also entitles him pension benefits that are comprised of

“Tier I” and “Tier II” benefits, which are disbursed monthly. For the purposes of these

dissolution proceedings, Tier I benefits are non-divisible, but Tier II benefits are

divisible.

       Helen and Ronald filed for a dissolution of marriage on January 27, 2006. In

March 2006, the parties entered into an agreement that allowed them to remain in the

marital home together, during which time Ronald paid all expenses, including Helen’s

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medical expenses, and provided Helen with $500 per month for spending money. In

2009, the marital home was sold, the parties were living separately, and Ronald was

relieved of all financial responsibility for Helen. Ronald was receiving Tier I and Tier II

benefits of approximately $2,229 per month ($1526 for Tier I and $703 for Tier II), while

Helen was receiving a spousal annuity of approximately $1,079 per month. The parties

agreed to allow the dissolution proceedings to remain pending until September 21, 2011,

in order to maximize the estate and allow Helen to reach an age at which she could

receive a divorced spouse annuity from the railway. Helen’s divorced spouse annuity

pays $600 per month, and that amount will increase to $853 per month on September 1,

2015.

        In the two years prior to final dissolution, Ronald took two distributions from the

IRA in 2012 and 2013 in the amounts of $19,046.68 and $17,695.13, respectively. A

final hearing was held on November 18, 2013, at which time the value of the IRA was

$160,925.37. On February 27, 2014, the trial court entered its final dissolution order and

distributed the marital assets as follows:

        5. The sum of $191,409.40 has been distributed to the parties from the sale
           proceeds of the marital residence. The Wife has received $121,409.00
           and the Husband has received $70,000.
        6. The Wife received her 2000 Pontiac automobile with an agreed value of
           $4,700.00; and the Husband received his 2004 Chevrolet automobile
           with an agreed value of $8,500.00.
        7. The Court finds that the parties previously divided their personal
           property and that same was done fairly and equitably.
        8. The parties have an IRA account with Western Southern with total value
           of $174,031.30. The coverture value thereof is 77.42%, or $134,735.03;
           from which the Husband received distributions in 2012 and 2013 in the
           total amount of $38,093.36. The Court finds that the after tax value of
           said distributions to be $29,383.36.

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      9. The remaining coverture value of the IRA account is $105,351.67.
      10. The Husband received a life insurance policy containing a cash value of
          $3630.02.
      11. There is $5,029.00 in [an attorney] trust account . . .
      12. The Net total of the Marital Estate is $348,003.45 . . .
      13. The Court orders final distribution as follows:

WIFE $174,001.72 (50%)                     HUSBAND $174,001.72 (50%)

Proceeds received from $121,409.40 Proceeds received from sale of               $70,000.00
sale of Marital Residence          Marital Residence
Pontiac Grand Am          4,700.00 Chevrolet Malibu                               8,500.00

IRA                            42,863.32 IRA Dist (After tax)                    29,383.36

SWJ Trust Account               5,029.00 Life Insurance                           3,630.02

                                           IRA                                   62,488.34

      14. The Court orders that the Wife receive 100% of Husband’s Tier 2
          Pension benefits.
      15. The Court orders that Husband pay . . . the sum of $5,000.00 for Wife’s
          attorney fees.

Appellant’s Appendix at 4-5. Helen now appeals that order.

                                Discussion and Decision

                                 I. Standard of Review

      Helen contends that the trial court incorrectly divided marital property—

specifically, the IRA—and abused its discretion by failing to deviate from a fifty-fifty

split of assets in favor of Helen. When reviewing a claim that the trial court improperly

divided marital property, we consider whether the trial court abused its discretion. Chase

v. Chase, 690 N.E.2d 753, 755 (Ind. Ct. App. 1998). An abuse of discretion occurs

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where the trial court’s decision is clearly against the logic and effect of the facts and

circumstances before the court. Id.

                                      II. IRA Account

       Helen takes issue with the trial court’s handling of the IRA, and she raises

numerous concerns in that vein.        She maintains that the trial court (1) incorrectly

determined the total value of the IRA account; (2) abused its discretion by using a

coverture fraction to determine what portion of the IRA’s value was marital property; and

(3) abused its discretion by utilizing the after-tax value of monies withdrawn from the

IRA by Ronald while the dissolution was pending. As we will explain below, although

we do not believe that use of a coverture fraction was an abuse of discretion, we agree

that the trial court used an incorrect value of the IRA and improperly considered only the

after-tax value of money distributed to Ronald from the IRA prior to the final dissolution.

                                      A. Value of the IRA

       First, Helen argues that the trial court’s valuation of the IRA at $174,031.30 was

improper. It is undisputed that at the time of the final hearing, the IRA had a value of

$160,925.37. Ronald’s brief is sparse on this issue, pointing out that the $174,031.30

assessment was the value of the IRA as of August 15, 2012 but admitting “[i]t is a fair

argument” that the $160,925.37 value should have been used by the trial court. Brief of

Appellee at 9. Ronald speculates, however, that the trial court used a different value in

order to use after-tax values when considering the IRA distributions taken by Ronald

prior to the final dissolution. We find this to be a rather thin justification, and as we will

explain below in further detail, the trial court’s consideration of the after-tax value of

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Ronald’s IRA distributions was error in itself.                     Moreover, use of the $174,031.30

valuation appears illogical because it ignores Ronald’s 2013 distribution, which the trial

court later recognizes when divvying up the IRA. We conclude the trial court abused its

discretion in determining the value of the IRA. Considering Ronald’s IRA distributions

as marital property, as is appropriate, the IRA’s supposed value for the purposes of

property division is thus $197,667.18 ($160,925.37 + $19,046.68 + $17,695.13 =

$197,667.18).1

                                             B. Coverture Fraction

        Second, Helen challenges the trial court’s use of a coverture fraction to determine

what portion of the IRA, which was a direct result of Ronald’s pension, is attributable to

the marriage.

        The “coverture fraction” formula is one method a trial court may use to
        distribute pension or retirement plan benefits to the earning and non-
        earning spouses. Under this methodology, the value of the retirement plan
        is multiplied by a fraction, the numerator of which is the period of time
        during which the marriage existed (while pension rights were accruing) and
        the denominator is the total period of time during which pension rights
        accrued.

Hardin v. Hardin, 964 N.E.2d 247, 250 (Ind. Ct. App. 2012) (citation omitted) (emphasis

omitted). In this case, the trial court used a coverture value of 77.42%, which took into

account thirty-one years of work and twenty-four years of marriage (24 / 31 = 77.42%).2

        1
             In reaching this figure, we take note of a conflict: the actual value of Ronald’s IRA distributions
($36,741.81 = $19,046.68 + $17,695.13) and an incorrect value stated in a mediation agreement signed by the
parties ($38,093.36). Exhibits reflecting the correct distribution total of $36,741.81 were admitted into evidence,
and Helen’s own brief concedes their accuracy despite her assertion that the value stated in the mediation agreement
should be used. See Brief of Appellant at 3 n.1. We see no reason to apply incorrect values for the IRA
distributions.
          2
            Although Ronald was employed at EJ&E for thirty-three years, he did not accrue pension rights for the
two years during which he was disabled and not working.

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        Helen contends that the trial court’s consideration of the first seven years Ronald

worked at EJ&E prior to marriage is improper because he was not entitled to a pension

until he had given ten years of service to the company.3 It may be true that Ronald’s

pension did not exist until he logged ten years of service, but this does not discount the

fact that his first seven years of employment were integral to earning his pension. Helen

has not provided us with case law supporting her argument that a coverture fraction is

inapplicable to years of employment prior to, but necessary for, a vested pension. We are

not inclined to create such a rule. With the deference we give the trial court in these

matters, we do not conclude the use of a coverture fraction in these circumstances was an

abuse of discretion.

                                 C. Value of IRA Distributions to Ronald

        Third, Helen argues that the trial court erred by considering only the after-tax

value of monies withdrawn from the IRA by Ronald while simultaneously treating the

remainder of the IRA at its pre-tax value. Ronald claims that the trial court’s use of an

after-tax value is permissible because Helen was awarded a greater share of the proceeds

from the marital home, which was after-tax dollars, and the trial court’s use of an after-

tax value of the IRA disbursements was an attempt to offset any benefit Helen gained by

receiving a larger share of the sales proceeds from the marital home.

          3
            A majority of Helen’s initial brief addressing the coverture fraction is spent attempting to demonstrate
that 78.78%, rather than 77.42%, would be the correct coverture value, and that she is unsure how the trial court
reached the percentage it did. Ronald’s brief explains the matter quite succinctly, and Helen’s reply brief does not
pick up the point a second time. Because we believe 77.42% to be the correct figure, we address only Helen’s
alternate argument, which is that no coverture fraction should have been applied at all.

                                                         7
       As Ronald correctly points out, Indiana law states that “[t]he court, in determining

what is just and reasonable in dividing property under this chapter, shall consider the tax

consequences of the property disposition with respect to the present and future economic

circumstances of each party.” Ind. Code § 31-15-7-7. But that statutory provision is an

acknowledgement that there are varying tax consequences depending upon the assets at

issue and how they are divided; it is not a license to distort the value of individual assets

by assigning a pre-tax value to one person and after-tax value to the other. Moreover,

Ronald’s rationalization for the trial court’s treatment of the IRA distributions is

speculative, and any alleged disproportionality could have been easily remedied by

dividing the marital home proceeds more evenly amongst the parties.             In sum, we

conclude that the court abused its discretion by taking a single asset, the IRA, and

assigning pre-tax and post-tax values to portions of the asset in a discriminatory fashion.

                             D. Value and Distribution of the IRA

       To summarize, the appropriate start value of the IRA is $197,667.18, and the trial

court is within its discretion to utilize a coverture fraction equal to 77.42%, which results

in a coverture value of $153,033.93. Ronald’s two IRA distributions, totaling $36,741.81

pre-tax, should be counted against Ronald, resulting in $116,292.12 to be divided

amongst the parties in accordance with the trial court’s decision to carry out an equal

division of the marital assets.

                           III. Equal Division of Marital Property

       Last, Helen claims the trial court abused its discretion by failing to deviate from a

fifty-fifty split of the marital assets. Indiana Code section 31-15-7-5 provides that “[t]he

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court shall presume that an equal division of the marital property between the parties is

just and reasonable.” However, the trial court may deviate from the presumptive equal

division when a party presents relevant evidence rebutting the presumption. Id. Such

relevant evidence includes the following:

      (1) The contribution of each spouse to the acquisition of the property,
      regardless of whether the contribution was income producing.
      (2) The extent to which the property was acquired by each spouse:
             (A) before the marriage; or
             (B) through inheritance or gift.
      (3) The economic circumstances of each spouse at the time the disposition
      of the property is to become effective, including the desirability of
      awarding the family residence or the right to dwell in the family residence
      for such periods as the court considers just to the spouse having custody of
      any children.
      (4) The conduct of the parties during the marriage as related to the
      disposition or dissipation of their property.
      (5) The earnings or earning ability of the parties as related to:
             (A) a final division of property; and
             (B) a final determination of the property rights of the parties.

Id.

      Helen argues that a deviation from the presumptive fifty-fifty split is warranted

due to the amount of money Ronald collected from his Tier I and Tier II pension benefits

during the dissolution proceedings. She also asserts that Ronald will receive $200 per

month more in pension benefits than Helen, after her entitlement to the Tier II benefits.

Helen, however, does not acknowledge that although Ronald received more in pension

benefits during the proceedings, there were also three years during which he paid for all

of Helen’s expenses and provided her with $500 per month in spending money. Further,

although Helen’s argument regarding a $200 difference is accurate at this time, her

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divorced spouse benefits will substantially increase on September 1, 2015 and nullify that

income disparity. On the facts before us, we cannot say the circumstances are such that

the court’s refusal to deviate from an equal division of assets was an abuse of discretion.

                                        Conclusion

       We conclude the trial court erred in its valuation and distribution of the IRA, but

that the trial court did not abuse its discretion by declining to deviate from the

presumptive equal division of marital property. Accordingly, we affirm in part, reverse

in part, and remand for further proceedings consistent with this opinion.

       Affirmed in part, reversed in part, and remanded.

BAKER, J., and KIRSCH, J., concur.

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