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California Supreme Court decides family law pension issue

Many people already own property (or have assets in some form) when they decide to marry. Most couples amass a variety of assets during a marriage. And if a marriage breaks down, it is no secret that California family law has standards used to aid in determining how marital property can be divided.

But, as a recent high court decision highlights, property division issues can be complex. Tracing assets, and determining what may be included in the marital estate, or what may not be marital property can involve complex legal issues.

The California Supreme Court ruled unanimously Monday that a U.S. Air Force veteran earned a pension increase before he married during his military service and therefore does not have to share his future pension increase with his now ex-wife.

The issue was before the state’s highest court because the woman argued that her ex-husband purchased military service credits with marital income during the marriage that will later increase his future state pension available through his career as a California firefighter.

The court ruled that the ex-wife is entitled to receive a refund of half of the amount paid to purchase credits during the marriage, but not entitled to receive a share of the increase in pension benefits that are related to the purchase of credits. The man’s pension is administered by CalPERS and allows members to purchase credits for pre-employment public service.

The East Bay man had purchased credits based upon his prior military service. The payments totaled more than $11,000 of installments that were submitted during the couple’s marriage. The woman argued that because the money earned during the marriage that was paid to buy credits is community property, she should be entitled to share in the increased pension. A state appellate ruling agreed, but the state Supreme Court overruled that decision.

While the ruling was unanimous, one justice wrote separately to point out that the couple was not married when the husband started working as a firefighter and initially entered the CalPERS plan. The high court as a whole ruled that the husband had earned the credits based upon his military service, and in the end, those credits are premarital property.

Source: San Francisco Chronicle, “Ex-spouse loses in state court pension ruling," Bob Egelko, June 24, 2013

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