California Supreme Court Issues Key Decision on Divorce and Pensions

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The California Supreme Court ruled this week that a man who served in the military before marriage doesn’t have to share certain funds earned during the marriage during a divorce, according to a report from the San Francisco Chronicle.


According to reports, the court ruled that a man who serves in the military before marriage, and then later uses funds jointly owned with his spouse to purchase military-service credits that increase his future pension payments, doesn’t have to share those payments with his spouse after a divorce.

Sources say the landmark case, which involved Timothy and Julie Green, could change the way pensions are distributed during a divorce, particularly for state workers in California.

The Greens, who were married in 1992, filed for divorce in 2008. Before the two married, Timothy Green served for four years with the Air Force, and then started working as a firefighter in California for the Alameda County Fire Department.

Reports indicate that the California Public Employees’ Retirement System (CalPERS), which operates Timothy Green’s retirement fund, allows users to purchase credits for previous public service that adds to their pensions.

Green took advantage of this program in 2002, and started making payments on a 15-year installment plan. Sources say he paid roughly $11,000 into the fund before filing for divorce.

The problem, however, is that the funds used to purchase the pension credits were jointly owned by Julie Green, who argued in court that she should receive a portion of the future pension increase owed to her husband.

An appellate court agreed with Julie Green, ruling that she could share the pension increase, but the state’s highest court overruled that decision this week.

In a unanimous decision, the court ruled that Timothy Green “rendered his military service before the marriage, making the military service credit his separate property,” according to reports.

The former wife, though, is still entitled to be paid half the amount her husband paid into the system, which amounts to a little more than $6,000, sources say.

One justice noted that the case may have had a different result if Timothy and Julie Green had married after the husband accepted a job as a firefighter, but under the laws of this community property state, all seven justices agreed with the majority decision.

And while the case seems like a relatively mundane dispute between a single couple, sources expect the decision to have widespread consequences for couples looking to divorce in California.

In particular, the decision may have an impact on every divorce involving an employee whose pension is controlled by the California Public Employees’ Retirement System or the State Teachers’ Retirement System, sources say.

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