Brief Fact Summary.
A married couple divorced two years before the husband’s pension rights would vest and the trial court determined that these rights were contingent and not divisible as marital property.
Synopsis of Rule of Law.
Pension rights that have not yet vested at time of divorce are divisible marital property.
Throughout our decisions we have always recognized that the community owns all such rights attributable to employment during marriage before separation.View Full Point of Law
Robert and Gloria Brown were married for more than 20 years. During that time, Robert was an employee of a large corporation that granted pension rights to employees after a certain number of years of employment. Robert and Gloria divorced two years before his pension rights would vest. The trial court found the pension rights to be contingent and therefore not property subject to division. Gloria appealed.
Are pension rights that have not yet vested at time of divorce divisible marital property?
(Tobriner, J.) Yes. Pension rights that have not yet vested at time of divorce are divisible marital property. The trial court’s determination of these rights as an “expectancy” was incorrect. An expectancy is a potential property right over which a party has no enforceable right. A contingent interest in proceeds is not the same thing. A person holding a contingent interest cannot enforce that interest presently, but it is still a contractual right that will become enforceable when the contingency is met. To hold otherwise would be to allow for inequal distribution of marital property, as pension rights may be the most valuable marital asset many couples have. Pension rights that have not vested are divisible martial property. Reversed and remanded.
This opinion leaves many open questions. For example, what may the nonearning spouse do if the earning spouse continues to work instead of taking the pension?