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

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when retirement precedes divorce, courts and litigants have a much easier analysis before them. The Marriage, Employment, Retirement, Divorce sequence of events is the simplet scenario, as the entire value of the retirement benefit is earned entirely during the marriage and is thus all community property at divorce. Dividing benefits, as paid, by the percentage of community property awarded the alternate payee as part of the just and right division (often 50%) accurately divides the community interests for either a defined contribution or a defined benefit plan. 66 The Taggert formula when properly applied provides a reasonable estimate of the community interest in retirement benefits. The Employment, Marriage, Retirement, Divorce sequence of events creates a period of separate property benefits, followed by the community property interest. For defined benefit plans in this fact situation, there are no problems with being unable to accurately value the retirement benefits at divorce. The only calculation necessary is to apportion the benefits to segregate out the community property share by applying the Taggert formula. 67 The amount an alternate payee would receive, assuming the trial court orders that ½ is a just and right division of the community share, is: ½ [share of community property] X Years in marriage Years of employment Prior to divorce [apportionment of community property] 66 Often, benefits do not commence for some period of time after retirement. In the case of a defined contribution plan, however, the participant’s account will often be segregated upon divorce, and subsequent earnings and losses are allocated separately. This is particularly the case when a defined contribution plan permits participants (and alternate payees) to designate their own investment options. 67 See Albrecht, 974 S.W.2d at 263 (the Taggert formula is used when the value of the plan is not at issue). X Accrued benefit at divorce [community property] 36
D. When divorce precedes retirement, divorce decrees must necessarily be applied to future facts via a QDRO or other Chapter 9 post-divorce proceeding. As in this case, when a divorce decree is entered before retirement the decree will inevitably have to be interpreted and applied to final facts whether by a QDRO proceeding, or by a clarification, enforcement or contempt proceeding under Chapter 9 of the Family Code. To comply with the Texas Constitution’s marital property law, retirement plan benefits must be valued at divorce for the purpose of an apportionment formula in a QDRO or a divorce decree. 1. Valuation must respect separate property rights. Defined benefit plans cannot be valued at divorce in the same sense that defined contribution plans can. Rather, the ‘value’ at divorce is a matter of determining the accrued benefit, that is the amount the employee will receive under the plan’s formula at normal retirement age, given the years worked and salary at the time of divorce. As illustrated by the examples at Tab B, valuing the community property interest in a defined benefit plan at retirement will give the alternate payee value attributable to post-divorce years of service and promotions — which are not part of the divisible community estate. Specifically, Example 1 notes that if the plan participant (the husband in the example) terminated employment shortly after divorce, the difference in the amount payable, even if valued at retirement, would be negligible. Likewise, Example 2 shows that if the plan participant’s compensation level stays the same, the alternate payee’s benefit would about the same 37
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 and 24: Thus, unlike defined contributions
Page 25 and 26: C. To accurately segregate communit
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: This formula preserves marital prop
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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