Pension Pitfall

Why Careful Drafting and Review of Marital Settlement Agreements is Needed

The Toussaints divorced by agreement in May, 1999.  With regard to the husband’s military retirement benefits, the marital settlement agreement read:

“As an equitable distribution of marital property, not an award of alimony, the Respondent/Husband shall pay or cause to be paid, to the Petitioner/Wife, as a property right from the Respondent/Husband’s United States Air Force retirement pay fifty percent (50%) of the Respondent/Husband’s net retirement pay. The Petitioner/Wife’s right to receive the payments described herein, shall terminate immediately upon the Petitioner/Wife’s death.”

In another paragraph of the marital settlement agreement, a provision relating to non-marital property read that the parties waived:

“any and all claims to any right, title, and interest in the non-marital property of the other except as specifically agreed to”.

In pension cases, a party’s retirement pay has a marital and non-marital component.  The husband argued that his ex-wife was only entitled to half of the marital portion of his pension (the second quoted paragraph) while the wife argued that the equitable distribution paragraph (the first quoted paragraph) applied giving her half of his NET retirement pay as the words there indicate.  The parties have been litigating this since April, 2011 through the district court and up to the First District Court of Appeals.  In January, 2013, the First District Court of Appeals sent the case back to the trial court with further instructions as to how to proceed.  Had the parties’ marital settlement agreement been clearly drafted and carefully reviewed, the parties would have had closure in May, 1999 and they would not be still litigating about the division of assets almost fourteen years after divorce.