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Social Security Issues
1997 National Legal Research Group, Inc.

Federal Preemption. Several recent decisions have been added to a growing body of case law that precludes equitable distribution of Social Security benefits.

Federal law precludes Social Security benefits from being divided or given any consideration when dividing property upon divorce, according to the Nevada Supreme Court. Wolff v. Wolff, 112 Nev. Adv. Sh. 163, 929 P.2d 916 (1996). The court also held that an agreement to share future Social Security benefits with a spouse is invalid and unenforceable as a matter of federal law. Boulter v. Boulter, 113 Nev. Adv. Sh. 10, 930 P.2d 112 (1997). Together, these two opinions provide strong ammunition to resist any request for sharing Social Security benefits.

Likewise, the Arkansas Supreme Court held that a spouse's agreement to divide future Social Security benefits cannot be enforced because federal law prohibits the transfer or assignment of such benefits. Gentry v. Gentry, ___ Ark. ___, 938 S.W.2d 231 (1997).

What about dividing Social Security benefits already received by a spouse? The North Dakota Supreme Court held that lump-sum Social Security benefits paid to a wife could not be classified as marital property in view of the Social Security Act's antialienation provision. Identifiable Social Security moneys in the hands of a divorcing spouse cannot be counted as marital assets in calculating property division, the court declared. Kluck v. Kluck, 561 N.W.2d 263 (N.D. 1997).

Government Pensions as Substitutes for Social Security. Under many public pension plans, government employees do not participate in the Social Security system. For these employees, their pensions constitute a replacement for Social Security. An Ohio appeals court held that hypothetical Social Security credits were properly deducted from the value of the husband's Postal Service pension, where equivalent sums had been deducted from his earnings and from his employer and had been credited to his pension plan in lieu of Social Security contributions. Walker v. Walker, 112 Ohio App. 3d 90, 677 N.E.2d 1252 (1996).

A Pennsylvania appeals court held, however, that hypothetical Social Security contributions should not be deducted from the value of the husband's Postal Service pension where the wife had no appreciable Social Security benefits of her own. The wife's lack of Social Security benefits distinguished the case from some other Pennsylvania cases which have approved or required an offset or deduction to account for a government pension plan participant's lack of Social Security benefits, the court noted. Given the wife's lack of Social Security benefits of her own, it would be inequitable to give the husband credit for his lack of Social Security benefits, the court reasoned. McClain v. McClain, ___ Pa. Super. ___, 693 A.2d 1355 (1997).

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