With the aging of the Baby Boomer generation and the increase in "gray divorces" that we are seeing in the Dallas, Texas area, I am more frequently being asked about the effect of social security benefits in divorces.
Social security benefits are not a divisible asset upon divorce. But, Jimmy Verner reports in the Section Report newsletter of the State Bar of Texas Family Law Section on two recent cases from other states where a disparity in social security benefits was considered in the overall division of the assets of the marital estate.
In Vermont, a court of appeals held that social security benefits were too speculative to form the basis of an offset in the property division because the benefits are subject to the will of Congress. In Manning v. Schultz, 2014 VT 22, ___ A.3d ___, 2014 WL 840815 (2014), the Vermont Supreme Court reversed a trial court that credited a husband’s share of the marital estate with $88,158, and allowed an equivalent offset to the wife’s estate, the $88,158 representing the difference between the present value of the parties’ respective projected Social Security benefits, because Social Security benefits can be revised “at congressional will” and therefore cannot be valued “without excessive speculation.”
On the other hand, an Oregon decision upheld a ruling where the husband’s share of the estate was reduced by an amount equivalent to the disparity in social security benefits. In In re Marriage of Herald & Steadman, 355 Or. 104, 322 P.3d 546 (2014), a divided Oregon Supreme Court affirmed a trial court’s decision to reduce a former husband’s share of a former wife’s pension by the amount of Social Security benefits the former wife would have received had her federal employment allowed her to contribute to Social Security in lieu of pension contributions, the trial court reasoning “that it would be unjust for husband to receive half of the value of wife’s CSRS pension at her retirement and, at the same time, enjoy his own full share of Social Security benefits.”
It will be interesting to see where Texas courts head with this issue as more people get divorced later in life. From a practical standpoint, if a question of disparity of social security benefits arises in a case, it may be worthwhile to bring on an expert who can offer opinions about social security benefits to the court to illustrate a disparity between the parties.