The Indiana Court of Appeals ruled the family trial court erred in its application of a financial formula on a husband’s retirement accounts. For this reason, in Ahls v. Ahls, the appellate court ruled wife should receive $115,000 more than she was granted in the original divorce settlement.
This is a good example of why it’s important to carefully review retirement accounts when determining a divorce settlement.
According to court records, husband and wife married in 1993 and had one child together. After 20 years of marriage, wife filed a petition for divorce.
At that time, the child was leaving for college and was considered emancipated, so there was no need to work out a child custody or support arrangement.
Among the marital assets that needed divvied up were three vested retirement accounts: A Military pension, a Civil Service Pension and a Thrift Savings Plan. The two parties presented expert witnesses that offered conflicting valuations of those accounts.
According to the husband’s expert, the military pension was valued at $265,500, the thrift pension was valued at $311,200 and the civil pension was valued at $290,000.
Both sides did agree that 62 percent of the civil and thrift accounts were earned during the marriage and 36 percent of the military pension was earned during the marriage. The rest of those accounts were earned by the husband before the couple married, and thus they were set aside and not considered marital assets for consideration in the Indiana divorce settlement.
The court adopted the husband’s calculation of the account values, awarding wife 15.5 percent of each the thrift and civil accounts and 9 percent of the military pension account. Husband was ordered to pay $52,000 on top of that as part of an equalization judgment. The order did not mention survivor benefits, should the husband die first. The court also ordered both parties to pay their own respective attorney fees.
Wife appealed, arguing the calculations of her share of the retirement accounts were incorrect and also challenging the decisions not to award her survivor benefits or attorney fees.
Specifically, wife contended the court improperly applied the coverture fraction. This is a formula that a trial court can use to distribute retirement plan benefits or pensions from the earning spouse to the non-earning spouse. This method involves taking the value of the retirement account and multiplying it by a fraction (based on the period of time during which the marriage lasted).
The problem was the coverture fraction method was applied incorrectly, she argued – and the Indiana Court of Appeals agreed.
For example, with regard to the civil and thrift plans, where 62 percent of the plans were considered marital assets. By dividing this 50/50, as the courts had decided to do, the wife should have received 31 percent – not 15.5 percent. The court had in effect divided the amount twice, instead of just once. Under the court’s calculation, she was awarded just one-fourth of the two-thirds that had accrued during the marriage, when in fact, she was entitled to one-half of the two-thirds.
The same issue was raised with regard to the military pension, of which she was entitled to 18 percent – not 9 percent.
Ultimately, that means wife was entitled to $116,000 more than what trial court awarded to her.
However, with regard to attorney fees and survivor benefits, the appeals court found the trial court acted appropriately within its discretion.
Indiana Family Law Attorney Burton A. Padove handles divorce and child custody matters throughout northern Indiana, including Gary and Hammond. Call Toll Free 877-446-5294.
Ahls v. Ahls, March 11, 2016, Indiana Court of Appeals
More Blog Entries:
Carr v. Carr – Survivor Benefit is Marital Asset, Indiana Appeals Court Rules, Feb. 20, 2016, Hammond Divorce Lawyer Blog