J-A25009-23
2024 PA Super 150
ROBERT V. MARTIN, JR. : IN THE SUPERIOR COURT OF : PENNSYLVANIA : v. : : : CHERRI A. MARTIN : : Appellant : No. 1495 WDA 2022
Appeal from the Decree Entered November 23, 2022 In the Court of Common Pleas of Westmoreland County Civil Division at No(s): 2153 of 2016-D
BEFORE: BOWES, J., KUNSELMAN, J., and COLINS, J.*
OPINION BY BOWES, J.: FILED: JULY 22, 2024
Cherri A. Martin (“Wife”) appeals from the economic component of the
divorce decree entered on November 23, 2022.1 We affirm in part, vacate in
part, and remand for further proceedings.
Wife and Robert V. Martin, Jr. (“Husband”) married in 1998, and on
December 6, 2016 Husband filed a complaint in divorce seeking, inter alia,
equitable distribution and exclusive possession of the marital residence. Wife
responded by raising counts of equitable distribution, alimony pendente lite
____________________________________________
* Retired Senior Judge assigned to the Superior Court.
1 Wife does not challenge the dissolution of the marriage. Instead, she challenges the trial court’s May 24, 2022 order addressing the parties’ respective exceptions to recommendations issued by the divorce master. As this Court quashed Wife’s prior appeal from the May 24, 2022 order as interlocutory pending the entry of the divorce decree, we review the merits of her economic challenges at this juncture. J-A25009-23
(“APL”), and alimony. Pending the resolution of the competing economic
claims, the parties entered into a consent decree that granted Husband
exclusive possession of the marital residence as of February 1, 2017 and
awarded Wife $2,400.00 monthly APL as of the same date. See Order 1/5/17,
at 1. While Husband did not reside at the property, he had exclusive
possession, maintained it, and paid the mortgage until the couple ultimately
sold the residence, receiving net proceeds of $203,329.25. During the
separation, the court divided the couple’s savings account and advanced Wife
$17,500.00. Husband retained $9,000.00 in the account, which he continued
to use post-separation.
Following evidentiary hearings before the divorce master on October 25,
and November 2, 2021, and the parties’ briefing of their respective positions,
the master issued a January 20, 2022 report and recommendation, which the
trial court adopted as an order entered on January 24, 2022. Consistent with
the master’s recommendation, the trial court divided the marital estate sixty
percent/forty percent in favor of Wife. Specifically, the trial court awarded
Wife, among other things, a sixty-percent share of each of the marital portions
of Husband’s military pension that was in pay status and administered by the
Defense Finance and Accounting Service (“DFAS”), two private-sector
retirement savings plans that accrued during Husband’s post-military service
employment as an engineer with Bechtel Marine Propulsion (“Bechtel”) and its
successor Fluor Marine Propulsion (“Fluor”), and the proceeds from the sale of
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the marital home, minus a $43,773.12 credit for Husband’s post-separation
mortgage payments. In sum, the court awarded Wife $95,733.62 for her
portion of the marital home, $47,157.77, representing her sixty-percent share
of the balance in the couple’s Navy Federal Credit Union savings and checking
account at date of separation, $88,738.82 from the Fluor/Bechtel retirement
savings plans, and $1,156.20 per month, which is sixty percent of the military
pension’s monthly marital component. However, it denied Wife’s claim for
alimony, in part, “due to the length of time in which [Husband paid APL,]”
approximately five years, and permitted Husband to remove Wife from the
survivor benefit plan (“SBP”). Trial Court Opinion, 8/19/22, at unnumbered
3.
Husband and Wife both filed timely exceptions to the master’s
recommendation. Husband challenged the 60%-40% equitable distribution
scheme, generally, and specifically assailed the court’s: (1) calculation of the
marital component of Husband’s Bechtel retirement plan; (2) failure to award
a credit for the purported overpayment of APL; and (3) division of the military
pension in contravention of the Uniformed Services Former Spouses’
Protection Act concerning the “[p]ayment of retired [military] pay in
compliance with court orders.” 10 U.S.C. § 1408. As to the military pension,
Husband argued that § 1408 prohibited the distribution of more than one-half
of the retirement benefit to a former spouse.
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Wife, meanwhile, contested the termination of the SBP component of
the military pension, the $43,773.12 credit awarded to Husband for the post-
separation mortgage payments, and the denial of alimony. On May 24, 2022,
the trial court entered the above-captioned order that denied all of Wife’s
exceptions and granted Husband’s exceptions relating to the calculation of the
Bechtel retirement plan and § 1408’s restrictions on the distribution of military
pensions.
This timely appeal followed. Wife complied with the trial court order to
file a Pa.R.A.P. 1925(b) statement, and the court issued a responsive Rule
1925(a) opinion.
Wife presents five issues for our review, which we re-order for ease of
disposition:
I. Whether the trial court erred by not granting [Wife] alimony.
II. Whether the trial court erred in its calculation of [Wife’s] share of [Husband’s] retirement plan.
III. Whether the trial court erred [in] granting [Husband] credit for payments made towards the principal amount of the mortgage on the marital residence.
IV. Whether the trial court erred by granting [Husband’s] exception to reduce the amount the Appellant is eligible to receive under 10 U.S.C. [§] 1408.
V. Whether the trial court erred by permitting [Husband] to eliminate or remove the [SBP] from his military retirement, including the elimination or removal of [Wife] as the beneficiary of such a designation.
Wife’s brief at 8 (unnecessary capitalization omitted).
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Wife’s first issue concerns the trial court’s denial of her alimony claim,
which we review for an abuse of discretion. See Conner v. Conner, 217 A.3d
301, 315 (Pa.Super. 2019). As we have explained:
[T]he purpose of alimony is not to reward one party and to punish the other, but rather to ensure that the reasonable needs of the person who is unable to support himself or herself through appropriate employment, are met. Alimony is based upon reasonable needs in accordance with the lifestyle and standard of living established by the parties during the marriage, as well as the payor’s ability to pay. Moreover, alimony following a divorce is a secondary remedy and is available only where economic justice and the reasonable needs of the parties cannot be achieved by way of an equitable distribution award and development of an appropriate employable skill.
Id. at 315-16 (cleaned up). The Divorce Code provides that, “[i]n determining
whether alimony is necessary and in determining the nature, amount, duration
and manner of payment of alimony,” the trial court must consider the following
seventeen non-exclusive factors:
(1) The relative earnings and earning capacities of the parties.
(2) The ages and the physical, mental and emotional conditions of the parties.
(3) The sources of income of both parties, including, but not limited to, medical, retirement, insurance or other benefits.
(4) The expectancies and inheritances of the parties.
(5) The duration of the marriage.
(6) The contribution by one party to the education, training or increased earning power of the other party.
(7) The extent to which the earning power, expenses or financial obligations of a party will be affected by reason of serving as the custodian of a minor child.
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(8) The standard of living of the parties established during the marriage.
(9) The relative education of the parties and the time necessary to acquire sufficient education or training to enable the party seeking alimony to find appropriate employment.
(10) The relative assets and liabilities of the parties.
(11) The property brought to the marriage by either party.
(12) The contribution of a spouse as homemaker.
(13) The relative needs of the parties.
(14) The marital misconduct of either of the parties during the marriage. The marital misconduct of either of the parties from the date of final separation shall not be considered by the court in its determinations relative to alimony, except that the court shall consider the abuse of one party by the other party. As used in this paragraph, “abuse” shall have the meaning given to it under [§] 6102 (relating to definitions).
(15) The Federal, State and local tax ramifications of the alimony award.
(16) Whether the party seeking alimony lacks sufficient property, including, but not limited to, property distributed under Chapter 35 (relating to property rights), to provide for the party’s reasonable needs.
(17) Whether the party seeking alimony is incapable of self- support through appropriate employment.
23 Pa.C.S. § 3701(b).
Wife asserts that the trial court erred in adopting the master’s
recommendation because it disregarded the enumerated factors and simply
rejected alimony based upon the length of time in which APL has been paid.
See Wife’s brief at 21-22. She contends that the focus on the prior APL award
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was misplaced because that temporary, need-based remedy served a different
purpose than alimony, i.e., economic justice. Id. at 22-23. Wife also
maintains that her earning capacity continues to be limited by the fact that
the parties agreed that she would not work during the marriage, and highlights
that, while she earns approximately $12.00 per hour, Husband earns more
than $110,000 annually. Id. at 23. She also contests the trial court’s finding
that she did not adduce evidence of her bills or expense, reasoning her
“financial status and need was present throughout the entire hearing” and
“[b]oth parties acknowledge Wife’s far inferior living situation[.]” Id. at 24.
In this vein, she opines that “nearly all of the evidence and testimony
presented during the two days of testimony demonstrates a need.” Id.
Ultimately, Wife posits that focusing on the duration of APL was error
considering the disparity in the parties’ respective earning capacity and her
demonstrable need for alimony pursuant to the relevant factors outlined in
§ 3701(b). Id. at 25. As explained infra, we reject both aspects of Wife’s
assertion.
While the master mentioned the duration of APL in rejecting alimony,
he also discussed several of the relevant statutory alimony factors outlined in
§ 3701(b) when he addressed the ultimate issue of equitable distribution. See
Trial Court Opinion, 8/19/22, at unnumbered 9; Master’s Report, 1/20/22, at
19. Specifically, the master’s recommendation included discussions
concerning the age, conditions, and relative earnings and earning capacities
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of the parties, their respective sources of income, the duration of the marriage
and the “upper-middle class” standard of living that the couple enjoyed while
the marriage was intact, Wife’s contribution as a homemaker, and her relative
needs and the probability that she will never realize a significant increase in
earnings. Id.
Thus, while not expressly enumerated in the report and
recommendation, the master considered alimony factors one through five,
eight, twelve, thirteen, sixteen, and seventeen. As it relates specifically to
whether Wife had sufficient property to maintain her reasonable needs, the
report also notes that Wife received $95,733.62 in proceeds from the sale of
the marital home, $47,157.77 from the checking and savings account, and
sixty percent of the marital portion of Husband’s retirement accounts. Id.
at 20, 22, 23. Thus, notwithstanding the roughly $144,000 that Wife received
in APL over a five-year period, her portion of the equitable distribution scheme
was approximately $400,000. As this Court has observed, “the factors
in Section 3701(b) do not create an exhaustive list. In fact, the trial court
should also consider the assets the petitioning spouse received in equitable
distribution.” Schultz v. Schultz, 184 A.3d 168, 180 (Pa.Super. 2018)
(citation omitted). Here, the certified record supports both the trial court’s
finding that the master considered the relevant alimony factors, and its
concomitant determination that alimony was not warranted where, as here,
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Wife’s reasonable needs could be achieved through equitable distribution. No
relief is due.
Wife’s remaining issues relate to the equitable distribution of the marital
estate. We review these claims in light of the following principles:
Our standard of review in assessing the propriety of a marital property distribution is whether the trial court abused its discretion by a misapplication of the law or failure to follow proper legal procedure. An abuse of discretion is not found lightly, but only upon a showing of clear and convincing evidence.
Busse v. Busse, 921 A.2d 1248, 1257 (Pa.Super. 2007) (citation omitted).
Additionally:
In determining the propriety of an equitable distribution award, courts must consider the distribution scheme as a whole. We measure the circumstances of the case against the objective of effectuating economic justice between the parties and achieving a just determination of their property rights.
Moreover, it is within the province of the trial court to weigh the evidence and decide credibility and this Court will not reverse those determinations so long as they are supported by the evidence. We are also aware that a master’s report and recommendation, although only advisory, is to be given the fullest consideration, particularly on the question of credibility of witnesses, because the master has the opportunity to observe and assess the behavior and demeanor of the parties.
Carney v. Carney, 167 A.3d 127, 131 (Pa.Super. 2017) (cleaned up).
In fashioning an equitable distribution award, “the trial court must
consider, at a minimum, the eleven factors set forth in 23 Pa.C.S. § 3502[.]”
Gates v. Gates, 933 A.2d 102, 105 (Pa.Super. 2007) (cleaned up). These
are as follows:
(1) The length of the marriage.
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(2) Any prior marriage of either party.
(3) The age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties.
(4) The contribution by one party to the education, training or increased earning power of the other party.
(5) The opportunity of each party for future acquisitions of capital assets and income.
(6) The sources of income of both parties, including, but not limited to, medical, retirement, insurance or other benefits.
(7) The contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as homemaker.
(8) The value of the property set apart to each party.
(9) The standard of living of the parties established during the marriage.
(10) The economic circumstances of each party at the time the division of property is to become effective.
(10.1) The Federal, State and local tax ramifications associated with each asset to be divided, distributed or assigned, which ramifications need not be immediate and certain.
(10.2) The expense of sale, transfer or liquidation associated with a particular asset, which expense need not be immediate and certain.
(11) Whether the party will be serving as the custodian of any dependent minor children.
23 Pa.C.S. § 3502(a).
In reviewing a trial court’s distribution order, this Court will not engage
in a factor-by-factor review of the trial court’s rulings. Rather, “we look at the
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distribution as a whole, in light of the court’s overall application of the . . .
§ 3502(a) factors for consideration in awarding equitable distribution. If we
fail to find an abuse of discretion, the order must stand.” Lee v. Lee, 978
A.2d 380, 383 (Pa.Super. 2009) (cleaned up).
Wife’s first challenge to the court’s equitable distribution order concerns
her share of Husband’s Bechtel retirement plan. Despite how this issue is
phrased in her statement of questions presented, Wife does not assert that
the trial court made a miscalculation. Rather, this issue relates to the master
holding the record open so that Husband could introduce evidence to establish
his non-marital contributions to the plan. Although Husband submitted the
pertinent exhibit, the master failed to calculate the respective shares of the
pension using the updated evidence. However, the trial court granted
Husband’s exception, reasoning “if the record was left open for [Husband] to
submit an additional statement showing non-marital contributions, the
[m]aster meant to rely on this information.” Trial Court Opinion, 8/19/22, at
11. It continued, “The purpose of the exhibit was to provide a more precise
calculation of [Husband’s] non-marital portion of his interest in the [s]avings
[p]lan. Even if the master intentionally disregarded the evidence provided
after the conclusion of the hearing, the trial court was within its discretion to
utilize this evidence.” Id. For the following reasons, we do not discern an
abuse of discretion in the trial court’s decision to consider evidence that the
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master overlooked, regardless of whether the omission was inadvertent or
intentional.
It is well-settled that the trial court is not bound by the master’s report
or recommendation. Carney, 167 A.3d at 131. Indeed, the master’s report
“does not come to the court with any preponderate weight or authority which
must be overcome. The reviewing court must consider the evidence, its
weight and the credibility of the witnesses, de novo. The [m]aster’s report is
not controlling, either on the lower court or on the appellate court.” Rothrock
v. Rothrock, 765 A.2d 400, 404 (Pa.Super. 2000); see also Snyder v.
Snyder, 275 A.3d 968, 976 (Pa.Super. 2022) (“[A]lthough the master’s report
is entitled to great weight, the final responsibility of making the distribution
rests with the trial court.”) (cleaned up).
Here, the master expressly held the record open so Husband could
provide a statement updating his contributions and account balances from the
Bechtel retirement account. See N.T., 11/2/21, at 8-9. Upon receipt of that
document, Husband’s counsel informed Wife and the master by email of its
inclusion and advised, “with that as our final exhibit, the record should now
be complete.” See Husband’s Exceptions to Master Report, 2/4/22, at Exhibit
A. Once it became clear that the master had omitted the updated figures from
the report submitted to the trial court, Husband subsequently attached the
document and above-mentioned correspondence as an exhibit to the
exceptions he filed to that report. Id. Wife did not object to the decision to
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hold the record open or admit the document into the record once Husband
confirmed its receipt. Indeed, even in replying to Husband’s exception, Wife
did not object to the document. Instead, she argued, “our response to the
retirement information is fairly simple. We do not believe that the master is
obligated to follow the number in which the Husband and counsel wish for him
to follow.” N.T., 4/11/22, at 11.
Insofar as the trial court neither erred nor exercised unreasonable
judgment in relying upon the master’s decision to hold the record open for
Husband to submit the updated information, we do not disturb it. Carney,
167 A.3d at 131. Just as Wife argues that the master was not bound to agree
with evidence that Husband ultimately provided, the trial court was not bound
by the master’s apparent disregard of it. See Rothrock, 765 A.2d at 404;
Snyder, 275 A.3d at 976.
Next, we confront Wife’s assertion that the trial court erred in granting
Husband credit for the post-separation mortgage payments on the marital
home. The following tenets inform our review. The trial court may award
credits to a party in equitable distribution for the payment of mortgage and
taxes to the spouse who does not have the use and occupancy of the real
estate during separation. However, credit is not mandatory and may be
denied as long as the total distribution scheme is equitable. Middleton v.
Middleton, 812 A.2d 1241 (Pa.Super. 2002) (en banc) (credit denied where
payments were voluntary and credit would result in economic injustice);
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Schmidt v. Krug, 624 A.2d 183 (Pa. Super. 1993) (credit denied where both
spouses had access to the property).
Instantly, the trial court adopted the master’s report crediting Husband
$43,773.12, which is approximately forty-one percent of the $106,000
Husband claimed to have paid to preserve the marital home since the 2016
separation.2 N.T., 4/11/22, at 9. Thus, rather than reimbursing Husband for
the full amount he actually paid toward the mortgage principal, the master
fashioned an award that aligned with Husband’s share of the sixty-forty
equitable distribution scheme.
Highlighting her fiscal problems throughout the separation, Wife
contends that because Husband sought exclusive possession of the marital
residence, he was responsible for maintaining the marital asset even though
he did not reside in the home. Wife’s brief at 20. She phrases her argument
thusly: “[R]ewarding Husband with a credit for paying . . . down the balance
on the mortgage on a vacant house while [she] slept in a car sets a dangerous
precedent in divorces.” Id. at 21; see also id. at 19 (arguing that the credit
“rewards predatory tactics by the party of a divorce that has greater earning
capabilities.”).
2 The master calculated the credit by awarding the difference between the principal at the time of separation, $282,592.20 and the amount used to pay off the mortgage following the sale, i.e., $238,819.08.
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Noting that Wife acquiesced to Husband’s exclusive possession because
she could not afford to maintain the home or pay the mortgage, the trial court
rejected Wife’s value-based position on its face. It concluded, “We do not
believe awarding [Husband] credit for the mortgage payments sets a
dangerous precedent, as [he] continued to maintain the marital asset even
though he did not reside in the home and continued to make timely mortgage
payments.” Trial Court Opinion, 8/19/22, at unnumbered 8.
We do not discern an abuse of discretion. In contrast to a typical case
involving a dispossessed spouse’s request to receive credit for post-separation
mortgage payments made on property that the dispossessed party could not
access, Husband was granted post-separation possession of the property
specifically because Wife was not able to maintain it. See, e.g., Middleton,
812 A.2d 1241; Schmidt, 624 A.2d 183 (credit denied where both spouses
had access to the property). Nevertheless, the central tenet of those cases,
effectuating economic justice between the parties, applies equally under the
facts of the case at bar, where Husband assumed the financial obligation
specifically to preserve the marital asset pending equitable distribution. The
trial court determined that the partial credit was fair under these
circumstances, and we defer to the trial court’s judgment. Plainly, the court’s
decision to grant the credit was a reasonable exercise of discretion in
fashioning the overall equitable distribution scheme that awarded Wife sixty
percent of the marital estate.
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Wife’s final two issues relate to the division of Husband’s military
pension pursuant to the Uniformed Services Former Spouses’ Protection Act
(“USFSPA”). First, she challenges the trial court’s application of Section
1408(a)(1) of USFSPA, which, inter alia, restricts the manner that the
disposable retired pay in a military pension can be divided with a non-military
spouse.
We begin with a primer on the USFSPA. The statute defines “disposable
retired pay” generally as “the amount of retired pay to which the member
would have been entitled using the member’s retired pay base and years of
service on the date of the decree of divorce, dissolution, annulment, or legal
separation.” 10 U.S.C. § 1408(a)(4)(B). The USFSPA distinguishes between
total monthly retired pay and disposable retired pay because the latter
excludes specific deductions, such as amounts of retired pay waived to receive
disability benefits and the premium for survivor benefit plan coverage, which
we discuss infra. See 10 U.S.C. § 1408(a)(4)(A)(i-iv).
As it relates to the case at bar, the USFSPA authorizes states to divide
disposable retired pay in equitable distribution as follows:
(c) Authority for court to treat retired pay as property of the member and spouse.—(1) Subject to the limitations of this section, a court may treat disposable retired pay payable to a member . . . either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court.
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10 U.S.C. § 1408(c)(1)(emphasis added). Pennsylvania classifies disposable
retired pay as marital property that is subject to equitable distribution.
Morgante v. Morgante, 119 A.3d 382, 387 (Pa.Super. 2015).
While § 1408(c)(1) confirms that disposable retired pay is a divisible
marital asset, pursuant to § 1408(e)(1), “[t]he total amount of the disposable
retired pay of a member payable under all court orders pursuant to subsection
(c) may not exceed 50 percent of such disposable retired pay.” Thus, the
statute limits direct government payments to former spouses to fifty percent
of disposable retired pay.
Instantly, the master’s report recommended dividing the marital portion
of the military pension consistent with the global sixty/forty split of marital
assets in favor of Wife. In arguing Husband’s exceptions to the master’s
report, Husband’s counsel informed the trial court that he contacted the DFAS
retired pay center and the representative advised him that, regardless of the
percentage awarded to an ex-spouse in a domestic order, DFAS will not pay
out greater than fifty percent of the marital portion of the pension. See N.T.,
4/11/22, at 6. Counsel reported the exchange as follows: “[The
representative] just said look, we will not honor it if it’s more than 50/50. And
I said, but is that the marital portion, or is that the whole pension? And [the
representative] said if we get an order that says more than [fifty percent] of
anything, [Wife’s] not getting it.” Id. Upon review of Husband’s exception,
the trial court reduced Wife’s share of the marital component to fifty percent.
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On appeal, Wife asserts that the trial court erred in reducing the
master’s recommended distribution because Husband joined the military eight
years prior to the marriage. As a result, approximately one-third of his
disposable retired pay is non-marital property that is not subject to equitable
distribution. Wife continues that since her sixty-percent share of the marital
portion of the retirement pay is less than the fifty-percent maximum permitted
by the USFSPA, the trial court erred in granting Husband’s exception and
altering the master’s recommended award. For the following reasons, we
agree.
In rejecting Wife’s exception, the trial court implicitly adopted Husband’s
position, determined that USFSPA does not differentiate between marital and
non-marital assets, and concluded, “based on [its] interpretation of the federal
statute,” it does not have “legal authority” to award Wife more than fifty
percent of the marital share. This conclusion is legally erroneous.
Instantly, the pertinent sections of USFSPA are clear and unambiguous.
Insofar as “disposable retired pay” refers to a service member’s gross retired
pay less the deductions authorized by § 1408(a)(4), the term necessarily
includes both marital retirement pay and non-marital retirement pay that
accrued before the marriage. Phrased differently, Husband’s disposable
retired pay is the gross amount of retired pay that he will receive based on
his total years of service up until the date of separation. See 10 U.S.C.
§ 1408(a)(4)(b).
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Husband’s total disposable retired pay currently is $2,695.47 per month,
and the marital portion of the monthly benefit is $1,927. Thus, Wife’s sixty
percent share of this marital asset equals $1,156.20 per month, which is
approximately forty-three percent (42.894%) of the total disposable retired
pay. Accordingly, it does not exceed USFSPA’s fifty-percent limit on the
distribution of disposable retired pay. Therefore, as Wife accurately asserted,
while § 1408 limits direct payments to former spouses to fifty percent of
disposable retired pay, the master’s recommended distribution order directing
payment of sixty percent of the marital share would not result in her receiving
more than fifty percent of the gross pension. As Wife’s sixty-percent share of
the marital portion of the retirement via direct pay is less than the fifty-percent
maximum permitted by the USFSPA, the trial court erred in granting
Husband’s exception and reducing that amount on the basis that USFSPA
would not permit Wife to receive the full sum awarded.
Accordingly, we vacate the portion of the equitable distribution order
that reduced Wife’s recommended share of the marital portion of the military
pension to fifty percent. As explained supra, the master’s recommended
distribution did not violate the fifty-percent maximum permitted by the
USFSPA. To the extent that the trial court is concerned that DFAS will refuse
to honor any order that purports to award more than fifty percent of the
marital component, the trial court can simply fashion the award to give Wife
$1,156.20 per month, an amount that equals both sixty percent of the marital
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portion of Husband’s disposable retired pay and roughly forty-three percent
of the total disposable retired pay.
Wife’s final issue concerns the trial court’s decision to permit Husband
to remove her from the survivor benefit plan (“SBP”). We start by outlining
the pertinent background information. The SBP is an annuity plan under which
a surviving beneficiary can continue to receive a monthly benefit following the
death of a service member. See 10 U.S.C. §§ 1447–1455. A state court is
authorized to require a service member to provide an SBP annuity to a former
spouse as part of equitable distribution. Id. at § 1450(f)(4). When SBP is
elected, the participating service member designates the former spouse as a
primary beneficiary and surviving children as alternate beneficiaries.3 Id. at
§ 1450(a). Pursuant to the plan, a beneficiary under sixty-two years of age
receives fifty-five percent of the base amount of the pension for life.4 Id.
at 1451(a)(1)(A). The annuity payments generally cease upon the death of
the spouse or former spouse, or their remarriage before reaching fifty-five
years old. Id. at § 1450(b). Significantly, the cost of SBP is subtracted from
3 SBP coverage for a former spouse is not automatic, and it must be affirmatively elected. See 10 U.S.C. § 1448(b)(2), (b)(3)). Furthermore, designating a former spouse as the beneficiary precludes the designation of a current, future, or any other former spouses as additional beneficiaries. Id. § 1448(b)(2)(B), (C).
4 In this context, “base amount” is defined as the gross amount of monthly
retired pay. See 10 U.S.C. § 1447.
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the service member’s gross pay before calculating the net disposable retired
pay that is subject to equitable distribution. Id. at § 1408(a)(4)(D). Hence,
the parties share the cost of survivor benefits in the same proportion as their
respective share of the disposable retired pay that we discussed supra.5 The
premiums for participation in the SBP program are withheld from the monthly
payment of the respective retirement benefits. Id. at § 1452. Finally, if a
service member is required by court order to provide an SBP annuity to a
former spouse and he fails or refuses to make such an election, the member
shall be deemed to have made such an election upon the written request from
5 Brett R. Turner explained this dynamic in his treatise Equitable Distribution
of Property:
For example, assume that the service member’s benefit is $3,000 per month, that the survivor annuity deduction is $200 per month, and that the benefit is divided equally between the spouses. Under the present statute, the service member’s disposable retired pay is $2,800 per month, and each party receives $1,400 per month. Since each party would receive $1,500 per month if no survivor benefit had been elected, federal law has forced the parties to share the $200 cost in the same ratio as they are sharing the retirement benefits—in this hypothetical situation, equally.
2 BRETT R. TURNER, EQUITABLE DISTRIBUTION OF PROPERTY, § 6:46 at n.9 (4thed. 2024 January Update). Instantly, awarding Wife SBP would carry an expense of $231.76 per month that would be deducted from Husband’s retirement before calculating the monthly disposable retired pay, currently $2,695.47, that is subject to equitable distribution, less the non-marital component. Thus, contrary to the assertions that Husband alone would bear the cost of the SBP, Wife would share in any reduction of the net retirement benefits and have a proportionate amount withheld from her monthly benefit. See 10 U.S.C. §§ 1408(a)(4)(D), 1452.
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the former spouse and a copy of the court order within one year of the date
of such court order. Id. at § 1450(f)(3)(A),(C).
Instantly, the divorce master recommended, without explanation, that
the equitable distribution order relieve Husband of the obligation to elect SBP
and designate Wife as the beneficiary pursuant to § 1450(a) and (f)(4). The
trial court adopted this aspect of the master’s recommendation and, in
denying Wife’s ensuing exception, it reasoned as follows:
We do not believe that permitting [Husband] to remove the SBP was in error. Even without the SBP, [Wife] will receive a substantial amount of the military pension and equitable distribution. Thus, there is certainty that [Wife] will continue to benefit from the marital asset. Additionally, the SBP is subject to change regardless of the [c]ourt’s decision since the SBP can be impacted by numerous factors other than [Husband]’s death, such as if one of the parties remarries or [Husband]’s disability. These other factors which can affect the SBP lead this [c]ourt to believe that new entanglements could arise by requiring [Husband] to keep the SBP. If [Husband] were to remarry and designate his new wife as the beneficiary, this would certainly lead to entanglements between the parties.
[Wife] has and will, with absolute certainty, continue to benefit from Husband’s military pension. [Wife]’s argument for keeping the SBP is merely circumstantial and [Husband]’s SBP is subject to change, meaning that it was never completely certain. Allowing [Husband] to remove the SBP was not in error.
Trial Court Opinion, 8/19/22, at unnumbered 7.
Wife argues that the trial court erred in rejecting her exception. First,
she accurately highlights that by refusing to order Husband to designate her
a beneficiary of SBP benefits, her rights to Husband’s pension are far from
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guaranteed and, indeed, will terminate with his death.6 Wife’s brief at 15-17.
Noting that the trial court previously acknowledged that the SBP was
essentially an insurance policy for that marital asset, Wife continues that the
trial court misapprehended the law by concluding that her access to the asset
was certain and focusing on perceived entanglements between Husband and
Wife if it required Husband to elect the SBP benefits. Finally, Wife invokes the
public policy argument that the court’s decision to forgo insuring that she will
realize her share of the retirement benefits creates financial uncertainty. Id.
at 18. She phrases her position thusly, “Wife should have the security of
knowing the largest asset of the marriage is protected by requiring Husband
to continue to have Wife named [as a beneficiary] on the SBP.” Id. at 18.
6 Husband does not confront Wife’s argument directly. Instead, he adopts the trial court’s position that the marital portion of his military retirement benefit is certain because it is already in pay status. See Husband’s brief at 5-6 (arguing Wife “already benefited from same and will continue to do so under the terms of the [equitable distribution o]rder.”). Ironically, while Husband discounts the effect of his death on Wife’s access to her share of the marital asset, one of the reasons that he raises for objecting to the SBP is “his complete disdain for [Wife] having a financial interest in his death.” Id. at 4.
In addition, while Husband accurately highlights that Wife’s share of the marital component is approximately forty-three percent of the total disposable retired pay but the SBP benefit will award her up to fifty-five percent of the asset if Husband dies, we reject Husband’s related assertion that this discrepancy is sufficient grounds to completely divest Wife of her share of the military pension upon his death. Id. at 4-5. Instead, if it is deemed necessary to resolve this difference, the fairest course is for the trial court to adjust the equitable distribution scheme to account for the contingency if it arises.
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As explained below, we find that the trial court erred in permitting
Husband to eliminate the protections afforded by the SBP. The trial court’s
reasoning has two interwoven facets: (1) Wife’s access to the asset is certain;
and (2) requiring Husband to elect the SBP will prolong entanglements
between the parties. Both viewpoints are flawed.
Instantly, the trial court adopted the master’s recommendation to award
Wife sixty percent of the marital estate, and the marital component of the
military pension as one of the largest assets. Husband received a
proportionate share of the pension and other marital assets to balance the
equitable distribution. However, because the marital estate lacked sufficient
liquid assets to provide Wife an immediate offset of her share of the retirement
in a lump sum, the court directed that Wife collect her proportionate share of
the pension in monthly payments directly from DFAS. Thus, the parties’
interest in the asset are necessarily entwined and insofar as the monthly
pension payments are directly contingent upon Husband’s continuing vitality,
Wife’s ability to receive her proportionate share of the equitable division
through the deferred distribution of the pension is dependent on her continued
access to that resource. Hence, not only is the trial court’s “certainty”
concerning Wife’s sustained ability to access this marital asset misplaced, its
preoccupation with potential future entanglements between Husband and Wife
also misses the mark.
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It is beyond argument that, absent the SBP, the monthly direct-pay
pension benefits that Wife collects will cease automatically upon Husband’s
death. See 10 U.S.C. § 1408(d)(4) (“Payments [to a former spouse] from
the disposable retired pay of a member pursuant to this section shall terminate
in accordance with the terms of the applicable court order, but not later than
the date of the death of the member or the date of the death of the spouse
or former spouse to whom payments are being made, whichever occurs first.”
(emphasis added)). In fact, the precise purpose of the SBP that Wife seeks is
to avoid that situation and to continue to provide her a monthly benefit if
Husband dies. Thus, both the law and certified record belie the trial court’s
finding of “certainty that [Wife] will continue to benefit from the marital asset.”
Trial Court Opinion, 8/19/22 at 7.7 Similarly, while the trial court never
outlined its specific concern about future entanglements between the parties,
we presume the court was referencing the fact that both parties would benefit
from a total resolution of the economic issues if the marital estate permitted
7 Relatedly, although the trial court accurately observed that the SBP is subject
to either termination if Wife remarries or potential reduction if Husband increases his disability waiver, the court failed to explain how Wife’s current rights to the asset are affected by the fact that those contingencies exist. The court simply reasoned that because the “SBP is subject to change, . . . it was never completely certain.” Trial Court Opinion, 8/19/22, at unnumbered 7. Furthermore, the trial court’s theory that Wife’s SBP would be affected if Husband remarried and listed his new spouse as a beneficiary is incorrect. As discussed in note three of this opinion, pursuant to § 1448(b)(2)(B), and (c), Wife’s designation as the beneficiary precludes the designation of a current or future spouse. Once designated as the SBP beneficiary, Wife’s interest is virtually static, subject to some exceptions that are not relevant in this case.
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it. However, as previously noted, the estate is insufficient for an immediate
setoff and nothing in the record supports the court’s position that denying Wife
the benefit of the SBP will further the goal of a final, ultimate division of assets.
Phrased differently, Husband and Wife are bound by their respective monthly
pension payments regardless of whether Wife’s marital interest is protected
by the SBP.
As Wife’s access to this military pension is decidedly conditioned on
Husband’s lifespan and because the ultimate equitable division of the marital
assets is no less final with the selection of the SBP, the trial court erred in
denying Wife’s claim for relief on these two bases. Hence, we find clear and
convincing evidence from the certified record which demonstrates that the
trial court committed an abuse of discretion in misapprehending the facts and
the law in permitting Husband to terminate the SBP and remove Wife as a
beneficiary. Busse, 921 A.2d at 1257 (observing that an abuse of discretion
is found upon a showing of clear and convincing evidence of, inter alia, “a
misapplication of the law or failure to follow proper legal procedure.”).
Accordingly, we vacate the portion of the equitable distribution order allowing
Husband to terminate the SBP and instruct the trial court to fashion an order
that utilizes its authority to direct Husband to provide an SBP annuity to Wife
as part of the equitable distribution scheme. See 10 U.S.C. § 1450(f)(4).
In sum, we do not disturb the trial court’s decisions to deny Wife
alimony, award Husband a $43,773.12 credit for post-separation mortgage
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payments on the marital residence, or compute the marital component of the
Bechtel retirement savings plan based on an exhibit the master held the record
open to receive but neglected to consider. However, we vacate the
distribution order insofar as it limits Wife’s share of the marital component of
Husband’s military retirement benefits to fifty percent and permits Husband
to eliminate or remove Wife from the SBP ensuring her equitable share of the
military pension. We therefore remand for the trial court to fashion an
equitable distribution award that is consistent with this opinion.
Decree affirmed in part and vacated in part. Case remanded for further
proceedings. Jurisdiction relinquished.
DATE: 7/22/2024
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