Court Opinion

ID: 9884819
Source: CourtListenerOpinion
Date Created: 2023-10-06 03:15:51.049338+00
Date Added: 2024-06-11T07:48:41.022894
License: Public Domain

WOZNIAK, Chief Judge
(dissenting).
I agree pension benefits originally awarded in a property distribution may not subsequently be treated as income in modifying a maintenance award. I disagree with the majority’s ruling, which allows a future maintenance award from monthly pension benefits once William has received payments in the amount of the $61,312 present value assigned at the time of the property division. This decision not only lacks support in the law, but unnecessarily decides an issue not presently before this court, and invites the parties to continue their struggle over William’s original property award.
The majority’s conclusion, while acknowledging the finality of property distributions, concludes William’s property settlement, his pension, may be used to determine if he can be forced to pay all of his other income in maintenance. This ruling is at odds with the underlying notion of the finality of property settlements. I therefore dissent.
I.
Additional Facts
In 1982, William Kruschel was ordered to pay $1,000 a month maintenance (in addition to premiums on two life insurance policies) to Dorothy Kruschel. Maintenance was awarded until remarriage, death, or “any material change in circumstances.” (Emphasis added.)
In its determination of the property division, the trial court carefully outlined the value of the parties’ marital property, reflecting “its intention to divide the assets equally between the parties.” Taylor v. Taylor, 329 N.W.2d 795, 798 (Minn.1983). Dorothy was awarded personal and real property in excess of $81,000, including the parties’ homestead (equity of $61,175). William was awarded property in excess of $83,000, $61,312 of which was the present value of the future payments under his pension plan. His net monthly income at the time of the divorce was $1,981.22, plus his partial veteran’s disability pension.
The trial court further found Dorothy had the ability to work on a part-time basis. She has not worked since the dissolution.
William recently retired. He receives $1,900 a month pension benefits (100% taxable) and $671 social security (50% of which is taxable). His net income is $2,045 per month. At issue is what portion of his net monthly income may properly be considered when determining maintenance.
Dorothy’s monthly social security benefit is $117. The trial court found her monthly living expenses have decreased over 17% since 1982, from $1,701 to $1,405, while William’s increased over 10%, from $1,523 to $1,680.
It appears that Dorothy has received $95,000 in cash from the sale of the home and some marital stock awarded to her as part of the property settlement. The present disposition of these funds is not apparent from the record. The trial court made no findings regarding the amount of income she receives from these assets.
*124II.
A. Minnesota law clearly holds that property divisions are final. Under Minn. Stat. § 518.64, subd. 2 (1986), all divisions of real and personal property provided by Minn.Stat. § 518.58 are final, and may not be modified after the time for appeal of the original decree has expired. Arzt v. Arzt, 361 N.W.2d 135, 136-37 (Minn.Ct.App.1985).
The majority impermissibly has ruled this property division is not final, or is final for only a short period of time. The amount to be paid in. maintenance will be based on income William receives from his property settlement, whether it is labeled a property interest or income. The practical result of the majority’s decision is that Dorothy now will receive a larger portion of the property settlement than originally was intended by the trial court.
There simply is no way William could have known at the time of the dissolution that he would one day be forced to pay maintenance based on his interest in the property settlement. Unlike the spouse in Faus v. Faus, 319 N.W.2d 408 (Minn.1982), William was not on notice that a portion of the property settlement would be used in determining the support obligation. Presumably, had he known of this result, William would have insisted upon a different property settlement or appealed the original division.
B. Income and property awarded in the original distribution are two distinct entities for maintenance purposes. In Taylor v. Taylor, 329 N.W.2d 795, 798 (Minn.1983), the supreme court stated that “pension benefits are property to be considered by the trial court in exercising its discretion in a property division or award of maintenance.” (Emphasis added.) The trial court in the original action could have treated the pension as future income and awarded Dorothy a future share of that income as maintenance, or it could have treated the pension as property (valued as the present value of the stream of future income) and awarded it to William with an offset of other property to Dorothy. Taylor clearly implies pension benefits originally awarded in a property disposition may not be considered in awarding maintenance.1 The trial court chose to include the pension in the property portion of the original dissolution, and now is without jurisdiction to modify that decision.
If the trial court intended to give her an interest in the pension benefits, it should have done so explicitly. See Faus, 319 N.W.2d at 413. The majority, while agreeing with this proposition, leaves open for future consideration the income from William’s pension in any future maintenance modification. This creates a de facto amendment of the earlier property division. It does indirectly what cannot be done directly.
Dorothy has had the continued and exclusive enjoyment of the property received in the earlier settlement. After partial sale and receipt of cash, she now enjoys the income derived therefrom.
William, on the other hand, has just begun receiving the fruits of the pension, but only will be entitled to exclusive enjoyment of that property until early 1990. William *125has no right to the increased value of Dorothy’s property, yet she may return to claim a portion of the benefits he receives beyond the original valuation assigned by the trial court. This is fundamentally unfair and arbitrary.
C. Maintenance is defined under our statutes as an award of payments “from the future income or earnings” of one spouse to support another spouse. Minn. Stat. § 518.54, subd. 3 (1986); Zagar v. Zagar, 396 N.W.2d 98, 101 (Minn.Ct.App.1986). While a maintenance award is from the future income of a spouse, such an award may not be preserved upon the expectation that the obligor liquidate assets in order to make maintenance payments. Id. Once the pension is no longer considered “property” but “income” under the majority’s rationale, the very evil this court sought to avoid in Zagar will have resulted.
III.
The majority has adopted the rationale and result of the Wisconsin Court of Appeals in Pelot v. Pelot, 116 Wis.2d 339, 342 N.W.2d 64 (Wis.Ct.App.1983). In Pelot, the trial court awarded the marital property equitably, with the husband awarded his pension benefits and ordered to pay maintenance. Upon the husband’s motion for modification following his retirement, the trial court considered the pension as income. The Wisconsin appellate court reversed, and ordered the trial court to exclude the monthly retirement benefits from income. Id. at 342-43, 342 N.W.2d at 66. The court further held:
It is arbitrary * * * to treat [the husband’s] pension payments as income and therefore to deprive him of it before he has had the present enjoyment of the [amount] assigned to him in the property division. [The wife] had the continuous enjoyment of the property she received.
Id. at 345, 342 N.W.2d at 67.
The majority follows Pelot in reaching its decision, holding that pension benefits should be considered income once the pension’s full assigned value (as determined in the earlier dissolution proceeding) has been recovered. Id. at 346, 342 N.W.2d at 68. However, both the Pelot decision and the cases it relies upon delayed the decision to classify pension benefits as income until after the party received the pension’s original value. In fact, the decisions relied upon by the Pelot court held that whether the pension payments should be considered income at a later date “is left to another day.” Id. at 345-46, 342 N.W.2d at 67 (quoting D’Oro v. D’Oro, 187 N.J.Super. 377, 380, 454 A.2d 915, 917 (Ch.Div.1982)).
As a result, both the majority and the Pelot court have left a number of questions unanswered, and failed to provide a much needed end to this litigation. While ruling the pension may not be included as income for maintenance purposes, the opinion invites litigation at a later date when William has received the “full value” of his pension.
As the result adopted by the court today creates more problems than it solves, I do not accept it as a correct statement of the law. At first glance, the result reached in both the Wisconsin and New Jersey courts is appealing; it seems to uphold the integrity and finality of the property division, while allowing for consideration of the property at some later date. However, the application of the rule will foster a never ending string of litigation that will serve to embroil the parties and the courts in needless and endless litigation. Additionally, the court’s decision today creates or leaves unanswered a number of questions, a few of which I will briefly outline.
First, this litigation will return to this court. The trial court, on remand, has been instructed to consider William’s pension, but not to award maintenance out of the income from the pension. The trial court could order William to pay over his entire social security benefit and still come within the rule announced in the opinion. On the other hand, the trial court could order him to pay her nothing. Obviously, such a legal principle will need further clarification; it will be done at the expense of these parties.
Second, this case will return to the trial court in early 1990, when William will have received from the pension an amount equivalent to its original value. But when *126should its value be computed? Is it equitable to assume its value at the time of the property division when Dorothy has had use of her property for a number of years and William has not?
At any rate, the pension interest suddenly will have undergone its transformation from property to income. Will this constitute a change in circumstances, as William’s income will have increased substantially?
The parties will then be forced to appeal that decision to this court, where we will once again be faced with what essentially amounts to the same issue the majority purportedly decides here today.
We will also be faced with a host of problems relating to the disposition of the funds Dorothy received from the sale of her share of the marital assets. If she has chosen to dispose of the funds, whether in a prudent or imprudent manner, what will be the result on the maintenance award? If she has made substantial gifts to her children or to friends, will this amount be considered when awarding maintenance? Again, the myriad possibilities need not be enumerated. I point out a few of the more obvious problems in order to emphasize the difficulties in allowing continued use of the marital property to determine the appropriate amount of maintenance.
IV.
Minnesota has provided a number of avenues for spouses to assure that their needs will be met following a dissolution of marriage. See, e.g., Minn.Stat. § 518.64, subd. 2; Fans v. Faus, 319 N.W.2d 408 (Minn. 1982). I agree that both parties’ financial circumstances must be examined by the trial court in determining the propriety and amount of continued maintenance. See Minn.Stat. § 518.552, subds. 1 and 2. However, consistency, fairness, and equity dictate the conclusion that pension benefits previously awarded in an equitable property division not be considered in determination of maintenance payments on a subsequent motion for modification. It is important to resolve, rather than to perpetuate, litigation over marital assets and maintenance obligations.
In this case, William’s uncontradicted affidavit indicates Dorothy has well over $95,000 to meet her current monthly needs, which have diminished from the time of the dissolution. William’s income (for maintenance purposes) has decreased substantially, while his monthly needs have increased. Under these facts, Dorothy is not entitled to maintenance, and I would direct the trial court to bring this dissolution to a conclusion and order the discontinuance of maintenance payments.

. Additional Minnesota case law supports the separate and distinct treatment to be afforded property and income when marital property is being divided and maintenance is being determined. In Faus, the trial court awarded the respondent maintenance until the appellant retired, and gave her a 50% interest in future pension benefits (found by the court to be marital property). In affirming, the supreme court noted that although the respondent would continue to receive payments after appellant's retirement, those payments would actually be "in recognition of her interest in appellant’s pension benefits," rather than maintenance. Id., 319 N.W.2d at 413. The court recognized the distinction and awarded each party a portion of the property interest in the pension. See also Elliott v. Elliott, 274 N.W.2d 75, 78 (Minn.1978) (pension rights are to be considered as property rights and social security benefits as income in determining property division and alimony); Sward v. Sward, 410 N.W.2d 442, 444 (Minn.Ct.App.1987), pet. for review granted (Minn. Sept. 30, 1987) (although military disability benefits may not be divided as a marital asset, they can be considered as income in setting maintenance awards); O'Brien v. O’Brien, 343 N.W.2d 850, 852 (Minn.1984) (if the valuation of property awarded is based on the capitalization of an income stream, that income is properly excluded in determining maintenance).