Petitioner's Brief on the Merits - Supreme Court of Texas

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3. The “plan” in this case The divorce decree here awarded Treadway 25% of Shanks’ “pension or retirement plan.” CR 12. Actually, Shanks had two plans: a defined benefit plan and a defined contribution plan. Specifically, he had what American calls a “variable income” plan which is a defined contribution plan, specifically a money purchase plan. As with other defined contribution plans, participants such as Shanks have individual accounts subject to ready valuation. A participant’s interest in the plan is measured in units, similar to shares in a mutual fund. The exact number of shares at divorce depends in part on when in a calendar year the shares are funded and whether and how they are pro-rated to the exact divorce date. The amount of units Shanks owned at his retirement was based, in part, on his age at retirement as well as additional contributions to the plan after divorce. See ARR 13. American calls its second type of plan the “fixed income” plan (which is also referred to as a “fixed benefit” or “retirement benefit” plan). This plan is a defined benefit plan. The benefit in this plan increases over time based on a formula typical for defined benefit plans in that the length of time a participant works for the employer and increases in the participant’s salary over the last five years of employment have a dramatic impact on the benefit’s value. ARR 13. Shanks’ benefits under the plan increased dramatically after the divorce due to his post-divorce promotion to captain with the commensurate pay raises, and his additional seventeen years of service. 10
C. To accurately segregate community interests courts should note which factual situation the divorce presents as each requires a different analysis to preserve marital property rights. Division of retirement benefits in divorce can occur in four different factual sequences resulting in different implications for marital property rights. If the sequence results in a combination of separate property and community property interests in the retirement benefits, the benefits must be apportioned between community and separate property, properly attributing any post-divorce, pre-retirement increases to each one. If the divorce occurs before retirement or cessation of accrual of benefits, the effect of postdivorce contingencies on the amount of the retirement benefit must be considered, as they present valuation issues, particularly in the case of defined benefit plans. These contingencies include the length of continued employment, any promotions or raises in salary, early retirement incentives, cost of living increases, changes in the terms of the plan, gains and losses in investments (in the case of defined contribution plans), and subsequent marriage by the plan participant, which would of course create a community property interest of the new spouse in the retirement benefit. 21 To be fair to both spouses, valuation cannot be as simple as valuing the benefit “at the time of divorce” or “at the time paid,” which was the simplistic analysis the court of appeals used in this case. Valuation includes two analyses: the value of the community 21 See e.g., Reiss, 40 S.W.3d at 611 n.5 (describing post-divorce contingencies and noting which are strictly separate property and which can increase community property); Wilson v. Uzzel, 953 S.W.2d 384 (Tex. App. – El Paso 1997, no pet.) (allowing a non-employee spouse interest in a retirement plan even though the employee spouse retired under a plan that did not exist at divorce per an early retirement incentive); cf. May v. May, 716 S.W.2d 705, 711 (Tex. App. – Corpus Christi 1986, no writ) (refusing to award cost of living increases, finding them the employee’s separate property). 11
Page 1 and 2: No. 00-1325 IN THE SUPREME COURT OF
Page 3 and 4: AMENDED IDENTITY OF PARTIES AND COU
Page 5 and 6: III. 2. The court of appeals relied
Page 7 and 8: County of Maverick v. Texas Ass’n
Page 9 and 10: Reiss v. Reiss, No. 01-0251, 40 S.W
Page 11 and 12: VICTOR B. MEYEN & MARK W. DUNDEE, Q
Page 13 and 14: STATEMENT OF JURISDICTION This Cour
Page 15 and 16: STATEMENT OF FACTS A. The Divorce.
Page 17 and 18: one for the defined benefit plan an
Page 19 and 20: ARGUMENT I. Given the proliferation
Page 21 and 22: earnings less applicable plan expen
Page 23: Thus, unlike defined contributions
Page 27 and 28: Sequence Marital Property Defined C
Page 29 and 30: e paid to the alternate payee “if
Page 31 and 32: Moreover, such cursory divestiture
Page 33 and 34: of section 9.007 as the basis for i
Page 35 and 36: §§ 9.001-.002. Courts were also g
Page 37 and 38: intended to apply this restriction
Page 39 and 40: Whether the decree is unambiguous i
Page 41 and 42: entirely from non-divorce judgments
Page 43 and 44: [Treadway]. It is further ORDERED t
Page 45 and 46: (court recognizing that accrued ben
Page 47 and 48: Decrees that appear unambiguous whe
Page 49 and 50: This formula preserves marital prop
Page 51 and 52: D. When divorce precedes retirement
Page 53 and 54: In the Marriage, Employment, Divorc
Page 55 and 56: plan participant approaches retirem
Page 57 and 58: PRAYER This Court should grant Shan
Page 59: No. 00-1325 IN THE SUPREME COURT OF

Petitioner's Brief on the Merits - Supreme Court of Texas

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