2016 IL App (1st) 141652
FOURTH DIVISION October 27, 2016
No. 1-14-1652
In re MARRIAGE OF KELLIE S. COVIELLO, ) Appeal from the ) Circuit Court of Petitioner-Appellant, ) Cook County ) and ) No. 11 D 04857 ) JASON R. COVIELLO, ) Honorable ) Thomas J. Kelley Respondent-Appellee. ) Judge Presiding.
PRESIDING JUSTICE ELLIS delivered the judgment of the court, with opinion. Justices Howse and Cobbs concurred in the judgment and opinion.
OPINION
¶1 Petitioner, Kellie S. Coviello (Kellie), appeals from the trial court’s judgment for
dissolution of her marriage to respondent, Jason R. Coviello (Jason). The issue before this court
is whether the trial court abused its discretion in not awarding Kellie the survivor benefit of
Jason’s military retirement plan.
¶2 We hold that the court did not abuse its discretion. The trial court, both in writing and
orally from the bench, discussed several factors it considered in trying to strike an equitable
distribution between the parties. We find no basis to disturb that judgment and thus affirm.
¶3 I. BACKGROUND
¶4 A. General Background of the Parties and the Litigation
¶5 Jason is a naval officer. He began his service in the United States Navy on July 29, 1991,
approximately twelve years before the parties married in 2003. The parties have one minor child
who was born in 2005. In May 2011, Kellie separated from Jason and filed a petition for
dissolution of marriage. The trial in this case took place over four days in 2013: February 13, No. 1-14-1652
February 14, March 20, and March 21. At the time of trial, Kellie was 43 years old, Jason was 41
years old, and the minor child was 8 years old.
¶6 Kellie received a degree in English in 2012. At the time of trial, she was a student
working towards a master of divinity degree, with an expected graduation date of May 2017. She
testified that she believed she would earn $40,000 to $50,000 in her first position. Once she
becomes a minister, she could earn between $40,000 and $140,000.
¶7 Jason expects to continue in the military and does not know when he will retire. Jason’s
pay includes a base rate and certain allotments that vary and are based on numerous factors,
including where he is stationed. The trial court noted that, because of additional allotments Jason
received in 2011 and 2012, his gross income for those years was higher than in 2013. The trial
court noted that Jason’s gross income was $122,503.73 in 2011, $109,490.22 in 2012, and
$83,562.00 in 2013 before entitlements. Jason testified that his gross income was approximately
$109,000 in 2013. He was expecting to receive $104,000 in 2014. Jason’s pension will be based
on his highest 36 months of base pay, which could be the last three years he works for the Navy
or could be some other three years. Before getting the pension benefit, the Navy will deduct, off
the top, the premium for the survivor benefit plan.
¶8 Slightly more than half of Jason’s pension is nonmarital property, because it was accrued
before Jason and Kellie married. Jason joined the military on July 29, 1991, and married Kellie
on May 8, 2003. Thus, at the time of the trial court’s final order on April 30, 2014,
approximately twelve years of Jason’s pension was nonmarital property and nearly eleven years
was marital property, a roughly even split. Because the parties had agreed that Kellie would
receive half of the marital portion, this meant that, at the time of the court’s ruling, Kellie
received about one-half of one-half of the pension, or 25%, while Jason received 75%.
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¶9 Jason has a $400,000 life insurance policy through the Navy. At the time of trial, the
minor child was the beneficiary of $300,000, and Jason’s father was the beneficiary of $100,000.
¶ 10 B. Military Survivor Benefits
¶ 11 That brings us to Jason’s military survivor benefit plan. Though the parties disagree on
whether the trial court should have awarded military survivorship benefits to Kellie, there is no
disagreement on how these plans operate.
¶ 12 Military survivor benefit plans “are a creature of Federal law,” and “[a]ny right to create,
modify, or revoke such plans is prescribed by Federal statutes.” In re Marriage of Lipkin, 208 Ill.
App. 3d 214, 218 (1991); see also 10 U.S.C. §§ 1447 through 1455 (2012). The survivor benefit
plan provides benefits to a survivor after the service member’s death. As a “former” spouse,
Kellie would not be entitled to a survivor benefit unless Jason voluntarily elected her as the
beneficiary or was ordered to do so by the court. See 10 U.S.C. § 1448(b)(2)(A) (2012) (former
spouse may be voluntarily named as beneficiary); 10 U.S.C. § 1450(f) (4) (2012) (“A court order
may require a person to elect *** to provide an annuity to a former spouse***.”).
¶ 13 Survivor benefits are not divisible, meaning if Jason named Kellie as the beneficiary of
the survivorship benefits, he could not name a future spouse as well—he could not split the
benefits between them. 10 U.S.C. § 1448(b)(2)(B) (2012) (naming a “former spouse” as
beneficiary “prevents payment of an annuity to” a current spouse). In this way, the question of
the survivorship benefit, unlike many other questions regarding marital property, is very much an
all-or-nothing proposition; the trial court was faced only with the options of giving all of the
survivor benefits to Kellie or none of them.
¶ 14 The amount of survivor benefit may be elected by the service member; that is, Jason
could decide how much of his military retirement pay should be included (to a limit, not relevant
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here) and then would have to pay premiums (6.5% of the gross retirement pay selected) based on
the amount selected. So if the court awarded Kellie this survivorship benefit, Jason’s monthly
pension payment (and thus Kellie’s share, too) would be reduced accordingly by the premiums
paid for that benefit.
¶ 15 Two other aspects of military survivorship plans are of note here. First, even if Kellie
were named as the beneficiary, were she to remarry before the age of 55, she would lose the
survivor benefit. Second, if Kellie were to die before Jason, Kellie’s estate would not be entitled
to the survivor benefit.
¶ 16 C. The Circuit Court’s Ruling
¶ 17 The court issued its oral ruling on April 18, 2014, and entered its written judgment for
dissolution of marriage on April 30, 2014. Regarding the survivor benefit, the written judgment
states:
“If [Kellie] is enrolled in the Survivor Benefit Plan on [Jason’s] pension, the
parties’ monthly retired pay would be reduced. The Court finds that it would be
unequitable to award [Kellie] the Survivor Benefit on [Jason’s] military pension,
as more than 50% of his pension is non-marital. The parties agree that [Kellie]
should receive 50% of the marital portion of [Jason’s] military pension. The Court
further finds that it would be devastating financially if [Kellie] were to lose her
share of the marital portion of [Jason’s] military benefit prior to the minor child
becoming emancipated.”
¶ 18 The court further explained its reasoning in its oral ruling. The court noted that the facts
of this case were undisputed. The parties had agreed that Kellie should receive half of the marital
portion of Jason’s military pension, which would be approximately $930 gross per month if
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Jason were to retire that day (and approximately $800 after taxes). The actual amount will
depend on the date Jason retires and the salary he earns in the coming years (which could
increase or decrease). The court acknowledged that, unless Kellie received the survivor benefit,
she would receive her monthly pension benefit only so long as Jason is alive.
¶ 19 In discussing the survivor benefit, the court acknowledged the parties’ ages, that they had
been married 11 years, and that the last three of those years had been “spent fighting in divorce
court.” The court also discussed the contingent nature of the benefit. If Kellie remarried before
the age of 55, she would not be entitled to the survivor benefit. Also, if Kellie died before Jason,
her estate would not get the benefit. The court found that the value of the survivor benefit in this
case was not determinable.
¶ 20 The court noted that Jason is not retired and that, although the parties could “tell the court
that the benefit is calculated on a percentage of the base pay,” the parties did not know how long
Jason would stay in the military and did not know what the amount of the monthly premium
would be.
¶ 21 The court also took into consideration that Jason wanted the option to name a future wife
as the beneficiary of the survivor benefit, which he would be unable to do if it were awarded to
Kellie. As the court reasoned: “Jason’s 41 years old. It would be unfair to Jason if he were
married *** if he remarried, had a long marriage of 30 years, and was unable to give his new
wife the survivor benefit.” The court noted that it could not divide the survivor benefit between
Kellie and some future spouse; she either received all of it or none of it. The court also took into
account that premiums for the survivor benefit come out of the pension payments, 75% of which
belong to Jason, and thus, were the court to award the survivor benefit to Kellie, Jason would
receive none of the benefit but disproportionately pay for the cost.
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¶ 22 On the other hand, the court also considered Kellie’s interests and noted that “it would be
unfair to Kellie and the minor child [who was eight years old at the time of the ruling] if Jason
passed away in the near future and Kellie lost that additional income from Jason’s pension.”
¶ 23 The court found that “the fairest and best way to handle this issue” was to have Kellie
named as the beneficiary of Jason’s $400,000 life insurance policy; specifically, with the minor
child as the beneficiary of $200,000 to secure Jason’s child support obligations and Kellie as the
beneficiary of the remaining $200,000. The court also found that it would be financially
devastating to Kellie if she lost her pension benefit before the minor child became emancipated
and that it was in Kellie’s best interest for Jason to keep her as the beneficiary of $200,000 of
any life insurance proceeds until the minor child was emancipated. The court also ordered that
Jason pay the premiums on the life insurance policy.
¶ 24 The court found that Kellie’s portion of the life insurance would secure the loss of the
survivor benefit of Jason’s military pension (should he die), as well as the $50,000 lump sum
maintenance award. The court explained its reasoning: “[I]t’s cheaper and the parties really can’t
afford [an] additional life insurance policy at this time.” As the court further explained, Kellie
could choose to secure additional life insurance on Jason’s life, at her own expense. The court
also reduced the portion of the life insurance awarded to the minor child by $20,000 per year
once the child turned 14, which would continue until the child graduated from college or turned
23, whichever was later.
¶ 25 Kellie appeals from the trial court’s decision not to award her the survivor benefit of
Jason’s military pension.
¶ 26 II. ANALYSIS
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¶ 27 Kellie raises one issue on appeal. She argues that the trial court erred in its failure to
award her the survivor benefit of Jason’s military retirement plan.
¶ 28 A trial court’s distribution of marital assets will not be disturbed unless the court clearly
abused its discretion. In re Marriage of DeRossett, 173 Ill. 2d 416, 422 (1996). A court abuses its
discretion only where no reasonable person would take the view adopted by the trial court. In re
Marriage of O’Brien, 2011 IL 109039, ¶ 52. The test of proper apportionment of marital
property is whether it is equitable, and each case rests on its own facts. In re Marriage of Smith,
2012 IL App (2d) 110522, ¶ 71.
¶ 29 The primary issue Kellie takes with the circuit court’s ruling is the court’s finding that the
survivor benefit was not determinable. Property that cannot be given a value because of its
speculative or contingent nature in the future is not considered marital property subject to
division. See, e.g., In re Marriage of Abrell, 236 Ill. 2d 249, 266-67 (2010) (accrued vacation
and sick days were not marital property subject to division, as they had only a “future value” that
was indeterminate, speculative, and uncertain).
¶ 30 Kellie argues that survivor benefits are marital property, despite their somewhat
contingent nature. She relies primarily on Lipkin, 208 Ill. App. 3d at 219, which did indeed hold
that a survivor benefit constituted marital property, albeit in a setting where the husband had
already retired and thus his length of service and the amount of pay on which the survivor benefit
was based was fixed, not speculative. Other decisions have likewise held or noted in dicta that
survivor benefits are considered marital property. See In re Marriage of Moore, 251 Ill. App. 3d
41, 44 (3d Dist. 1993) (survivor benefit “is a property interest to be distributed in the dissolution
proceeding. Even though it is of a contingent nature, a survivor’s benefit has a determinable
value, computed by using life-expectancy tables, and it is properly considered a marital asset.”);
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Smithberg v Illinois Municipal Retirement Fund, 192 Ill. 2d 291, 302 (2000) (citing Moore and
noting that death benefit in that case was “similar to a survivor benefit, which has been held to be
a ‘distinct property interest’ and, though contingent in nature [citation], it, like any other property
right created by a judgment of dissolution, becomes a vested right when the judgment is final”).
¶ 31 Jason, on the other hand, argues that the value of the survivor benefit is too speculative
under the facts of this case, given such unknowns as his length of service, which spouse will
survive the other, and Kellie’s future marital status. He, too, can cite supporting case law. See
Kew v. Kew, 198 Ill. App. 3d 61, 66 (1990) (in dividing up marital assets equally, trial court did
not abuse discretion in failing to credit wife’s surviving-spouse annuity, as trial court was
“cognizant of the potential unfairness of these valuations should the life expectancy assumptions
prove to be incorrect”).
¶ 32 It is not necessary for us to decide this question, because even if the survivor benefit were
marital property, the circuit court was not required to award it to Kellie. The circuit court’s ruling
could be affirmed even under the assumption that the survivor benefit was marital property, as
long as the division of assets was equitable when considering the overall circumstances of this
case. See Smith, 2012 IL App (2d) 110522, ¶ 71. In other words, if we find that the court did not
abuse its discretion in denying Kellie survivor benefits, we may affirm the court’s judgment even
if we disagreed with the reason the trial court denied it. See City of Chicago v. Holland, 206 Ill.
2d 480, 491-92 (2003) (reviewing court considers trial court’s judgment, not reasoning, and thus
reviewing court “can sustain the decision of the circuit court on any grounds which are called for
by the record regardless of whether the circuit court relied on the grounds and regardless of
whether the circuit court’s reasoning was sound”).
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¶ 33 Indeed, as we read the judge’s reasoning below, we do not think the court was ruling that
the survivor benefit was not marital property. If that had been its ruling, it would have had no
reason to continue discussing the equities of the case (that Jason had earned more of his pension
premarriage, that he would have to pay for the survivor benefit disproportionately, that he would
be forever denied the option of naming a future wife as beneficiary). None of these facts would
have been relevant if the trial court believed that the survivor benefit was not marital property in
the first place; such a finding would have been the beginning and end of the discussion, barring
Kellie from any entitlement to that benefit.
¶ 34 It is true that the trial court noted that there were various contingencies involved in
valuing the survivor benefit—the length of Jason’s employment in the military, whether Kellie
remarried before the age of 55, the amount of the monthly premium—that rendered its value
indeterminate, but we read that as part of the trial court’s weighing of the equities in determining
a fair result for the parties, not a legal ruling on the marital versus nonmarital status of the
property interest. It seems just as likely to us that the trial court was considering the contingent
nature of the survivor benefit in comparison to the less contingent nature of the life insurance
that the court ordered Jason to pay for on Kellie’s behalf as a substitute for the survivor benefit.
¶ 35 In any event, whether the trial court believed that the survivor benefit was not marital
property (which we doubt) or that it was marital property but should not be awarded to Kellie
(the interpretation we favor), the trial court’s distribution of assets, and in particular its denial of
survivor benefits to Kellie, was not an abuse of discretion. The trial court carefully considered a
number of factors as it tried to reach a fair result for the parties, including the length of Jason’s
premarriage military service; the fact that Kellie’s estate would not get the survivor benefit if
Kellie predeceased Jason but would get life insurance benefits in that scenario; and the fact that
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Jason was relatively young, could well have a long-lasting second marriage, and should be able
to name any future spouse as a beneficiary. And as we have noted, the trial court did not deny
Kellie the survivor benefit in a vacuum; it awarded her insurance on Jason’s life, at Jason’s
expense, to compensate for the lack of a survivor benefit. The court expressly stated that it felt
this was the fairest result for the parties. We cannot say that its judgment was so arbitrary that no
reasonable person would agree with the trial court.
¶ 36 On April 20, 2016, after full briefing of this appeal, we granted Kellie’s motion for leave
to cite additional authority, namely, an amendment to the Uniformed Services Former Spouses’
Protection Act (amending 10 U.S.C. § 1448 (2012)). The amendment, titled “Effect of death of
former spouse beneficiary,” provides, in part, that where a former spouse has been elected to
receive the survivor benefit, and the “former spouse subsequently dies,” the member can “elect a
new spouse beneficiary.” Pub. L. No. 114-92 § 641, 129 Stat. 852-854 (amending 10 U.S.C.
§ 1448(b)(7)). In other words, if Kellie were to be awarded the survivor benefit, and Jason
remarried, he could elect to have his new spouse as the beneficiary, but only after Kellie dies.
Although we allowed Kellie’s motion, we conclude that the amendment does not affect the
disposition of this appeal.
¶ 37 Jason correctly notes that the judgment for dissolution of marriage was entered one year
and eight months prior to the effective date of the amendment. Jason argues that, if this court
were to reconsider the judgment for dissolution of marriage with this statutory amendment in
mind, it would be contrary to the Dissolution Act, which seeks finality between the parties. He
claims that if this court were to reconsider judgments based on legislative acts passed after the
date of the final judgment, it would open the floodgates to unending, perpetual litigation and
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allow petitioners to go behind every court decision entered. Finally, Jason argues that the
statutory amendment is not retroactive.
¶ 38 We do not need to get into the questions of finality and retroactivity, because this
statutory amendment would not change our holding in any event. It is true that one of the reasons
that the trial court felt it would be unfair to give Kellie the survivor benefit was that it would
deny Jason the ability to name a future spouse as beneficiary, even if he had a long and happy
marriage to that person. This statutory amendment does not alleviate that concern in whole; it
alleviates it only to the extent that Jason would now be freed up to name a new spousal
beneficiary if Kellie died before he did, obviously an unknown at this point.
¶ 39 And the circuit court articulated more than one reason why it thought it would be
inequitable to give Kellie the survivor benefit, as we have discussed above, to say nothing of the
life-insurance coverage that the court ordered Jason to provide as compensation for the lack of a
survivor benefit. This statutory amendment does not tip the scales so significantly that it changes
the result.
¶ 40 We appreciate that Kellie may consider it harsh that she was denied all survivor benefits,
but the unfortunate fact is that this asset was not divisible; the judge faced an all-or-nothing
proposition. The court decided that the most equitable result was to deny her the survivor benefit
but to order Jason to name her and their child as beneficiaries of a life insurance policy, first and
foremost to ensure that Kellie received some compensation for the loss of survivor benefits and
to ensure the financial well-being of their child at least during his childhood. We cannot say that
the court’s judgment was arbitrary or fanciful or that no reasonable person would adopt the view
of the trial judge. We affirm the trial court’s ruling in all respects.
¶ 41 III. CONCLUSION
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¶ 42 The judgment of the circuit court is affirmed.
¶ 43 Affirmed.
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