The California Supreme Court will take a second look at a precedent-setting appeals court decision on how pension credits and community property mix in a divorce.
Back in May, the First District Court of Appeals ruled a husband’s state pension credit for his four years of premarital military service is community property, because he bought the credit using community funds from the marriage.
The appeals court said the credits were not entirely his separate property and had to be allocated between community and separate property in the divorce.
The state Supreme Court said it would reconsider that ruling in a Contra Costa County case.
Appellate Decision
Justice Patricia K. Sepulveda classified four years of U.S. Air Force service credit in the California Public Employees’ Retirement System (CalPERS) as community property, even thought Timothy Green, the husband, had completed all his service before marrying Julie Green.
CalPERS permits employees to buy credit for up to four years of military service and apply it toward a final pension benefit. Timothy paid $185 per month during the marriage for the credit. He contributed $11,500 of community funds in the installment payments during the marriage.
Sepulveda said, “We agree with Julie that because the contractual right to receive four additional years of retirement credit based on premarital military service was obtained during the marriage, it was ‘stamped a community asset from then on.’”
Her decision overturned the trial judge’s holding that the service credit was Timothy’s separate property, giving his wife only reimbursement of half the cost of the service credit.
The complex legal question prompted the court to invite the American Academy of Matrimonial Lawyers, Northern California Chapter (AAML) to weigh in on the topic. Even the AAML was split over how to handle it.
The AAML provided a brief with two diverging opinions. One section advocated for reimbursement with interest, the position taken by Timothy, and the other supported allocation of separate and community property interests in the credit, as Julie wanted.
For our earlier coverage, see this story by Katie Burke.
Case: In re Marriage of Green, No. A129436
Supreme Court case No. S203561
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