COA: Survivor benefit plan is a marital asset

Jennifer Nelson for www.theindianalawyer.com

Ruling on an issue barely touched upon in a previous decision, the Indiana Court of Appeals determined that a survivor benefit plan of a military pension should have been included in the marital pot when calculating asset distribution in a divorce.

Courtney and Beth Carr were married for 16 years when the husband filed for divorce. He had worked in the military 14 years prior to marriage and continued his service after the union.  He began earning his military pension before his marriage, but the pension vested during the marriage.

At issue in In Re the Marriage of: Courtney Carr v. Beth E. Carr
03A01-1505-DR-436, is whether the survivor benefit plan as part of the husband’s military pension, which the wife would receive in the event of his death, should have been included in the marital pot. The trial court excluded the benefits because the election for the SBP was not agreed upon until the dissolution was filed and ruled it was speculative if the wife would even collect on the benefits.

The trial court deviated from the presumptive 50/50 split based on the wife’s smaller earning capacity and divided the marital assets 60/40 in favor of Beth Carr. She ended up with a little more than $800,000 of the total marital estate of $1.345 million.

Husband argued that the SBP, with a value of $226,433.86, should have been included as a marital asset. Judge John Baker noted that the only Indiana case to deal with a military pension survivor benefit plan,Leonard v. Leonard, 877 N.E.2d 896, 901 (Ind. Ct. App. 2007), stated, “James correctly notes that his survivor benefit plan is a marital asset. Likewise, Karen’s survivor benefit annuity is a marital asset.”

“Both parties fully expected the SBP to be counted as a marital asset, and both parties expected the value to be counted as an asset going to Wife. To hold that SBPs are not marital property would be to remove any incentive a pension-earner would otherwise have to elect the benefit. By making the election, the pension-earner reduces the income he or she would have received during his or her lifetime; if the SBP is not counted in the marital pot, the pension-earner would clearly benefit financially by not making the election. Electing a SBP provides value to the other spouse, which the law acknowledges by counting that value as part of the marital pot,” Baker wrote Wednesday in Carr.

The judges remanded for the trial court to make new findings either justifying the 65/35 split, rather than the 60/40 split when the SBP is added to the marital pot; or reallocate the marital assets from wife to husband to bring the actual allocation into conformity with the previously decided 60/40 split.