A spouse’suse of community funds during the marriage to purchase military service credit in CalPERS makes the service credit community property even though the spouse’s military service was completed before the parties married.
In a recent case, IRMO Green (2012) H served in the USAF for four years ending in 1986. In 1989, he began working as a firefighter in Dublin. The department was a participant in CalPERS. Wife and Husband married in 1992.
In 2002, H exercised his right to buy four years of PERS service credits for his military service. H elected to pay for credits through monthly installment payments over 15 years. Before the parties separated in 2007, $11,462 in community earnings was spent to purchase the military service credits. H argued that because the purchase of the credits was for a pension acquired before the marriage, the the community was only entitled to a reimbursement of the $11,462 rather than a full community interest in the actual pension.
The court found that, "In characterizing pension rights as separate or community property, ‘what is determinative is the single concrete fact of time. To the extent -- and only to the extent -- that an employee spouse accrues a right to property during marriage before separation, the property in question is a community asset.’ (Irmo Lehman (1998) 18 Cal.4th 169, 183.) Once a spouse ‘has accrued a right to retirement benefits, at least in part, during marriage before separation, the retirement benefits themselves are stamped a community asset from then on.’ (Ibid.) Where a retirement benefit is payable pursuant to a contract entered into during parties’ marriage before separation, it is a community asset. (Irmo Drapeau (2001) 93 Cal.App.4th 1086, 1093.) ‘For property characterization purposes, the critical question is when the right to [a] stream of income accrued. (Irmo Rossin (2009) 172 Cal.App.4th 725, 736.)"
Here, the military service credit was indisputably purchased during the marriage with community funds. Thus the contractual right to receive four additional years of retirement credit based on premarital military service was obtained during the marriage and it was "stamped a community asset from then on" (Lehman at p. 183) notwithstanding the fact that the credit was based on service that predated the marriage. (Brown at p. 842; Drapeau at p. 1093; Benson at p. 110.)
If you have any questions regarding the Green ruling or need assistance with dividing pensions, please don’t hesitate to call attorney, Paul A. Eads at (626) 524-8418.