Are Unvested Military Retirement Benefits Considered Marital Property?

The divorce process can be combative and contentious for a couple. A divorce can become even more heated when the parties fight over the division of marital property, which often is the case. The spouse with more property wants to keep as much as property as possible. Naturally, the spouse with less property wants to get as much from the other side.

This can create a situation where parties fight over what marital property must legally be included or excluded from the division of property in a divorce. Sometimes, courts even disagree as to what constitutes marital property, as evidenced by a recent Ohio Supreme Court decision.

Dispute Over Unvested Retirement Benefits

Recently, the Ohio Supreme Court had to determine whether unvested military retirement benefits count as assets to be considered in a divorce property division. In the divorce proceeding at issue, Daniel v. Daniel, the husband and wife were married from 1995 until their divorce decree in 2011. The marriage produced three children.

Prior to the marriage, the husband enlisted in the National Guard, and by the time of the divorce, the husband had been enlisted for 16 years. Prior to the divorce, the husband reenlisted for an additional six years, which means that he will be able to accumulate retirement benefits after 20 years of service. The wife wanted the retirement benefits to be included in the division of property.

A magistrate judge presided over the couple's divorce hearing to determine the division of property and debt. In regards to the husband's retirement benefits, which the husband could not receive until at least 20 years of service, the court held that, "Ohio law does not permit the court to divide a non-vested pension benefit." The wife, however argued the she was entitled to half of the retirement benefits because that husband had already contractually committed himself to remain in the military through vesting age.

The trial court disagreed and adopted the magistrate's opinion. The trial court found that the non-vested retirement benefit constituted a "mere expectancy" and there were no retirement benefits to divide. On appeal, the court affirmed the trial court's decision.

Unvested Retirement Benefits Are Marital Property

The dispute went all the way to Ohio's Supreme Court. The Supreme Court disagreed with lower court decisions and held that the husband's unvested military pension was a divisible asset. It did not matter that the benefits had not vested nor did it matter that the exact amount could not be calculated until the husband completed the required 20 years of service. Instead, the court focused on the fact "the percentage of ownership of the benefits on the date of divorce can readily be discerned."

Ohio Supreme Court Justice Paul Pfeifer published an article discussing the ruling. Justice Pfeifer discussed that Ohio law on marital property does not distinguish between vested and unvested benefits. In 1990, the Ohio Supreme Court held that vested benefits are included in marital property, but the Court never addressed the issue of unvested benefits until now.

Addressing the issue now, Justice Pfeifer said that the Court had all the information it needed to determine the wife's percentage share of her husband's unvested military benefits. Namely, the only information needed were the dates of the marriage, the dates of husband's military service, and the dates the two overlapped. All of this information existed, and therefore, the wife had a right to the unvested benefits.

Contact a Cleveland, Ohio Divorce Attorney

If you are going through the divorce process, Laubacher & Co.'s Cleveland divorce attorneys can help guide you through this process. It is important to have an experienced divorce attorney who will help fight for you to ensure that your rights and marital property are protected. Contact our divorce attorneys today for a free initial consultation.

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