Two decisions last week highlighted the need for precision and the anticipation of issues when using the term “pension” in divorce settlement agreements.
In Gluck v. Gluck, the Appellate Division, Second Department, affirmed an order of Suffolk County Supreme Court Justice Cheryl A. Joseph that vacated a QDRO that was deemed to divide both the service and disability portions of the husband’s pension and replaced it with a QDRO dividing only the service portion.
The parties’ divorce stipulation of settlement provided that the wife was to receive 50% of the “marital portion” of the husband’s New York City Police Department pension. The husband’s entire career as a Police Officer occurred during the marriage. The husband’s pension payments included a portion for service and a portion for accident disability. The stipulation of settlement did not differentiate between those portions but did state that the wife would receive an “estimated amount” of $1,100 per month.
In August 2018, the lower court signed a Qualified Domestic Relations Order (“QDRO”). After it was served, the Police Pension Fund informed the husband that it would begin paying the wife $3,139.70 per month, representing 50% of the husband’s total pension.
The husband moved to vacate the QDRO and for the issuance a new QDRO clarifying that the wife was to receive 50% of only his service pension, not of his entire pension. Justice Joseph granted the husband’s motion.
Does the term “pension” include both the service and disability portions?
The issue presented was whether the term “pension” in the parties’ settlement stipulation included only the deferred compensation related to the husband’s length of employment during the marriage, i.e., marital property; or did it also include the disability portion that was compensation for personal injuries, i.e., separate property.
The Second Department held that the parties’ stipulation was not clear and unambiguous. It was susceptible to more than one reasonable interpretation. As a result, the court could consider extrinsic evidence to determine the parties’ intent.
Here, the stipulation had recited the estimated amount to be paid to the wife. The estimate was substantially similar to 50% of the husband’s service pension alone. Thus, it was proper for Justice Joseph to determine that the parties’ intent was to differentiate between the service and accident disability portions of the pension,
Comment: The Court did not expressly state that the parties’ use of the term “marital portion,” itself, was extrinsic evidence of their intent to exclude the disability portion of the pension. However, just as the Majauskas formula is the method used to divide the service pension into its marital and separate property portions, using the term “marital portion” would be evidence that the parties intended to only divide the marital portion of the entire pension asset. That would totally exclude the disability pension.
May “pension” be a generalized term and include other retirement assets?
A pension may be defined as a defined-benefit program (it provides a fixed monthly payment) provided by the employee’s employer or union, sometimes requiring employee contributions.
In D.J. v. C.R., the husband commenced this divorce action after some 13 years of marriage with no children. As is relevant, the husband had a pension but also a Voluntary Retirement Savings Plan annuity account; the wife also had a pension and also a Union Annuity Trust Fund annuity account.
In October 2018, the matter was assigned to Court Attorney Referee Marie McCormack for trial. In February 2019, the entered an oral stipulation on the record. The parties specifically agreed that their “pension shall be split equally pursuant to the Majauskas formula and each party will be responsible for 50 percent of the costs.” During their allocution, the parties affirmed their understanding that the stipulation was a “full and final settlement of this matter resolving all issues in this matrimonial action.” The equal division of the pensions per Majauskas was included in the husband’s proposed Findings of Fact and the Judgement of Divorce.
The wife filed a counter-proposed Judgment of Divorce that provided for the distribution of both parties’ pensions and their annuities. Referee McCormack signed the husband’s proposed judgment. 18 months after the Judgment of Divorce was entered, the wife’s counsel filed a proposed Qualified Domestic Relations Order (QDRO) to divide the husband’s annuity.
Both parties made motions addressed to the division of the annuities. The husband argued that each party waived the division of the other’s annuity account. The wife claimed the parties negotiated and agreed to distribute all their retirement assets. She believed the term “pension” in the stipulation included all four of their retirement accounts.
Nassau County Supreme Court Justice Joseph H. Lorintz decided the motions. The Court held that the annuities were not to be divided. Justice Lorintz stated the terms of the stipulation were clear and unambiguous. Justice Lorintz noted that both parties had been represented by counsel, all retirement assets were disclosed and valued well before the settlement was entered, and the parties were allocuted on the record. There was no mutual mistake as to the definition of the term “pension,” nor was the a unilateral mistake induced by a fraudulent representation by the husband.
Denying any division of the annuities, Justice Lorintz stated:
Considering all the facts and circumstances discussed herein, the [wife’s] conclusory allegations are insufficient to overcome this State’s strong public policy of ensuring finality in divorce proceedings.
How can we avoid definition problems?
Comment: Oral stipulations on the record will never be as crisply and fully stated as a well-prepared written stipulation. However, dictating the stipulation in open court with both parties, their counsel and the judge present, often provides the opportunity for clarification by answering questions, or the giving of examples to make a calculation clear.
It is a understandable desire of a trial court to button down a settlement by having a binding oral settlement stipulation placed on the record before sending the parties home.
For counsel, it should not be unexpected that there is a possibility (if not likelihood) of an oral stipulation. As a result, counsel should have methods to give the oral stipulation the clarity of a full, formal written stipulation of settlement.
Certainly, making use of the Statement of Proposed Disposition, or having a single Marital and Separate Property Table at your fingertips that can be placed into the record can make things easier. Having a master checklist can accomplish the same thing. Before the trial, making use of pension evaluators or consultants and tax experts can identify issues that should be addressed in any settlement.
Perhaps a full written stipulation of settlement should be drafted in advance. While there may be a large number of blanks, just having the table of contents and boilerplate will likely assure that all topics will be covered; a proper Child Support recitation will be there, as will all waivers and disclaimers, etc. Moreover, one can place in the pension boilerplate a sentence that will require an answer to whether a disability pension will or will not be divided.
Using examples of how things are to be calculated or done, or providing estimates as was done in Gluck, will also be helpful.
Regardless of the method used to make sure all issues are covered and covered clearly, settling in the courthouse is to be anticipated.
In Gluck, Brittany C. Mangan, of [now] McGuire Condon Mangan, P.C., of Huntington, represented the wife. Michael W. Meyers, of Petroske Riezenman & Meyers, P.C., of Hauppauge, represented the husband.
In D.J., Georgia E. McCarthy PLLC, of Brooklyn, represented the husband. Roach Bernard, PLLC, of Valley Stream, represented the husband