Are unvested military benefits marital assets?

Ohio Supreme Court to decide whether unvested military retirement benefits are subject to division in divorce proceedings.

This week, the Supreme Court of Ohio will hear oral argument in the case of Christen M. Daniel v. Sean M. Daniel, 2012 -2113. The issue before the Court is whether unvested military retirement benefits are marital assets subject to division in divorce proceedings. Law professor Marianna Brown Bettman gives the facts on this intriguing case on her blog, Legally Speaking Ohio.

Case background.

Plaintiff-Appellant Christen and Defendant-Appellee Sean were married in 1995, just prior to Sean’s enlistment in the Ohio National Guard. By the time of the divorce hearing, Sean’s military service with the Guard had accumulated sixteen years of retirement benefits credit. Also during the marriage, he had re-enlisted for an additional six years of military service. He will be eligible to receive retirement benefits once he has accumulated 20 years of military service credit.

The magistrate who heard the case ruled that because Sean’s retirement benefits had not vested, there were no retirement benefits to divide. The trial court concurred with the magistrate, and the divorce decree was entered.

“In a split decision, while acknowledging a split of authority over the question of whether an unvested military pension may be considered in the equitable division of property, the Third District Court of Appeals found no abuse of discretion in the decision not to include Sean’s unvested pension as a marital asset,” Bettman wrote. “The dissent would find that the portion of the retirement benefit attributable to the years of the marriage should be deemed marital property subject to division.”

Christen Daniel’s Argument

Christen argues that an equitable division of assets would include Sean’s military benefits. Because Sean had already served 16 of the required 20 years prior to the divorce hearing, a portion of the unvested military retirement benefits should be considered marital.

To totally strip Christen of her share of any retirement benefits, 80 percent of which were accumulated during the marriage, would be unethical. Otherwise, she argues, one spouse would receive all of the benefits accumulated during the marriage, while the other spouse would get nothing. When a party receives retirement benefits that were unvested at the time of the divorce but that vest at a later date, he or she is receiving compensation earned during the marriage.

Christen argued that although Sean’s benefits had not yet vested by the time of the divorce hearing, he had already re-enlisted for an additional six-year term. Therefore, during the marriage he contractually committed to more than twenty years of military service, and the benefits will certainly vest. If Sean’s benefits never vest, for example, if he is dishonorably discharged, neither party would receive anything. However, if they do, the portion accredited to the time accrued during the marriage would be subject to equitable distribution, Bettman said.

“Christen urges the Supreme Court to follow the Third District’s dissenting opinion and find that military retirement benefits accumulated during a marriage, whether vested or unvested, are marital assets subject to division in a divorce,” Bettman wrote. “Unvested benefits should be divided using a formula based on the proportion of the benefits earned during the marriage.”