California Supreme Court Rules Pre-Marital Military Service Credit Not Community Property

July 4, 2013
By Thomas M. Huguenor on July 4, 2013 4:54 PM |

1193021_dark_dollar_2.jpgCalifornia is a community property state. This mean that in places like San Diego, and in cities throughout the state, all assets (as well as debts) that have been accumulated during the course of a marriage should be divided equally in divorce. Identifying marital property and properly assigning value to such items is not always a simple task. There are times when the courts have to get involved to determine the extent of community versus separate property, and how it should be divided. Laws pertaining to the division of property upon divorce can vary from state to state. It is important to contact an experienced, local family law attorney who can protect and maximize your rights to a fair and just settlement.

In California, it is established law that retirement benefits attributable to service rendered during a marriage are considered community property, divisible equally in divorce. But as we can see in the recently decided Supreme Court decision discussed below, the matter concerning the extent or limitation of community property is not necessarily clear.

In this case, a husband rendered his military service before the marriage from 1982 to 1986. He began working as a firefighter in 1989. The Fire Authority participated in the California Public Employees‟ Retirement System (CalPERS), which afforded husband the option to purchase up to four years of service credit towards his retirement benefits for his military service. The couple married in May, 1992. During the marriage, husband exercised his right to four years' worth of retirement credit for his premarital military services. Husband paid for the additional credit at least partially with community property funds.

At issue before the court was how much, if any, of the value of the four additional years of credit is community property. In determining whether retirement benefits are separate or community property, the court looked at the husband's marital status when the services on which the benefits are based were rendered. The court agreed with the trial court's conclusion that because the husband's military service was rendered before the marriage, the four years of additional credit are the husband‟s separate property. The trial court ruling compensated the wife for her share of the community's interest in the property. The Supreme Court affirmed the decision, holding that the court acted within its discretion in awarding the wife one-half of the amount (plus interest) that the community spent to obtain the credit.

Identification, valuation and division of marital versus separate property can be complicated, and often is the cause of many unexpected disputes between divorcing spouses. Here are some items to consider: 1) will retirement accounts be part of community property; 2) are there business accounts; 3) has one spouse tried to hide assets in anticipation of divorce; 4) will a house be valued at purchase price or current fair-market value; and 5) are there joint loans that you will continue to be liable for after the settlement is reached?

Identifying all marital and personal property as part of a San Diego divorce case is critical to winning what rightfully belongs to you and securing the quality-of-life and financial well-being for you and your family.

Thomas Huguenor, a divorce attorney certified in family law by the State Bar of California’s Board of Legal Specialization, has 35 years of experience guiding the people of San Diego through the family law process. If you have questions concerning the division of property, contact us either online or at (858) 458-9500 for a free and confidential consultation.

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