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Property Division, Alimony, and Security After Death
2004 National Legal Research Group, Inc.

An Illinois case decided almost a year ago posed an interesting dilemma involving the relationship between property division and alimony. The holding may ultimately have been correct, but the court failed to discuss several ways to reach the same result in a much fairer manner.

Stating the Problem

In In re Marriage of Gaumer, 336 Ill. App. 3d 1012, 785 N.E.2d 122 (2003), the parties were divorced after a 38-year marriage. The husband, age 69, had worked for a steel company during the marriage, and he had a defined benefit pension. The wife, age 66, had been a homemaker during the marriage. She had no retirement benefits in her own name, and her only source of income was Social Security benefits.

The trial court awarded the wife almost all of the parties' tangible marital assets, leaving the husband with little more than his retirement benefits and personal property. The award to the wife was 84% of the marital estate. The trial court did not, however, award the wife alimony. The appellate court described the trial court's rationale as follows:

During the hearing on William's post-trial motion, the trial court judge explained his reasons for not splitting the property equally and not awarding Barbara maintenance:

"While that appears to be an equal distribution, the Court ultimately decided that such a distribution would be inequitable, not because of any preference for either of the parties, but it would fail to meet the Court's goal of permanently separating the lives of the parties as neatly and completely as possible.

One of the primary problems the Court encountered in the case was that an equal division of the pension is not truly equal because it remains dependent on Mr. Gaumer's life. In the event he would pass, it would result in a sudden decline in Mrs. Gaumer's financial status without any doing on her part.

One of the things the Court, therefore, looked at was using the real estate in lieu of any maintenance, which leaves Mr. Gaumer with approximately six thousand dollars a year additional money in social security [greater] than Mrs. Gaumer receives, which the Court believed in general terms would be sufficient to provide him approximately five hundred dollars a month towards rent.

The real problem in the case was what to do with the equity of the house. I saw no easy or simple way to divide that, so the home was left with Mrs. Gaumer to make sure that both parties would have residential capacity. Unfortunately, given the age of the parties * * *, the Court had to be concerned with the potential that Mrs. Gaumer may significantly outlive Mr. Gaumer and that she will continue to have needs for her upkeep beyond his passing.["]

785 N.E.2d at 124-25.

To summarize, given the length of the marriage and the wife's own lack of retirement benefits, Gaumer was obviously a case in which the wife was entitled to significant alimony. The trial court was concerned, however, over the wife's ability to meet her financial needs after the death of the husband. Since alimony ceases upon death, an award of alimony would leave the wife with only her half of the marital property after the husband died. That property apparently produced insufficient income to meet the wife's reasonable needs. The problem faced by the court therefore was how to provide for the wife's needs over a long-term basis, including the period both before and after the death of the husband.

The Trial Court and Appellate Majority Opinions

The trial court chose to solve the problem before it by making an unusually large equitable distribution award, 84% of the marital estate, and no alimony award at all. Since the wife's property award would obviously survive the husband's death, this trial court's approach left the wife's financial security completely free from any dependency upon the husband's lifespan. The trial court's approach also had the significant benefit of avoiding the need for alimony, which would force the parties to deal with each other in the future, and might result in future litigation over enforcement or modification.

Stressing these advantages, a majority of the Illinois Court of Appeals affirmed the trial court:

We find that the trial court's disposition of the parties' property is in just proportions considering all relevant factors. See 750 ILCS 5/503(d) (West 2000). William worked outside the home to acquire a secure pension, but Barbara worked at home, which supported William's efforts in earning that pension. The marriage was lengthy, and the parties are not young. Neither of them can look forward to earning even a moderate income through outside employment, so the distribution of their assets was the only realistic way to provide for their futures.

The trial court recognized that Barbara is in need of maintenance but that maintenance would cease upon William's death, potentially leaving Barbara without sufficient resources at the end of her life. The court also recognized that finality and a complete separation of the parties' lives are worthy goals for formerly married couples, goals that are more difficult to achieve the longer the parties have been married.

Id. at 125.

The Dissenting Opinion

A dissenting opinion in the court of appeals would have reversed the trial court. The dissent found that an 84%-16% split of marital property is too inequitable on its face:

I agree with respondent's arguments that an 84% to 16% split of the property is not equitable. Although I acknowledge that the trial court did not award maintenance and awarded respondent his entire pension, which results in respondent's annual income being substantially higher than that of petitioner's, even considering the greater annual income awarded to respondent, I do not believe that an 84% to 16% split of the property is equitable. I believe that this lopsided division of property amounts to an abuse of discretion and that the trial court should have made a better effort to evenly distribute the property such that both parties could begin their new lives as close as possible to the standard of living that each enjoyed during the marriage, even if this requires an award of maintenance.

Id. at 126 (Welch, J., dissenting).

The dissent correctly noted that the 16% property award was unfair to the husband over the short term. It suggested that a more equal division, combined with an award of alimony, would have been a fairer result. The trial court would probably have conceded as much, during the husband's lifetime. But the dissent did not suggest how it would deal with the core of the problem: ensuring a reasonable standard of living for the wife after the husband's death. Alimony was not the answer, for alimony does not survive the death of the payor. If the dissent considered the problem at all, it must have concluded that fairness for the husband during his lifetime was a more important goal than fairness for the wife after the husband's death.

Better Solutions

The dissent points out important problems with the majority's opinion. It is indeed inequitable to award the husband only 16% of the marital property. The majority noted that the inequity is less than it seems, because the husband is not burdened with alimony. But the extent of that burden depends upon the lifespans of the parties. The trial court's holding protects the wife if the husband dies first. Assume, however, that the wife dies first. In that event, the husband is left with only 16% of the marital property. The lack of a support award has limited value, because support would have terminated in any event upon the wife's death. To ensure a fair result if the husband dies first, the trial court created a significantly unfair result if the wife dies first.

Of course, for the reasons identified above, the dissenting opinion is equally unfair to the wife in the event that the husband dies first. Since the wife was three years younger than the husband, and since women generally live slightly longer than men, the risk of harm created by the trial court and the majority was slightly less than the different risk of harm which the dissent would create. In that narrow sense, the trial court's holding is the lesser of two evils. But there is no way to reliably predict which spouse will die first; with only three years' difference in ages, it is by no means certain that the wife will survive the husband. Both opinions create a relatively high degree of financial risk if the wrong spouse dies first.

Is there a way in which future decisions can reach a result which is fair to both spouses, regardless of which spouse dies first? The author can see three possible solutions, none of which received any attention in any of the Gaumer opinions.

To begin with, the problem of providing for one spouse after the death of the other is not unique to the divorce setting. Exactly the same problem would have been presented in Gaumer even if the parties had remained married; the wife would have needed protection against the possibility of the husband's premature death.

One of the major tools for addressing the risk of a spouse's premature death is the survivor benefit feature of defined benefit pension plans. Survivor benefits are benefits payable to the nonowning spouse after the death of the owner. From all indications, the husband's pension in Gaumer was a defined benefit plan. If so, it almost certainly had a survivor benefit option. If such an option existed, then the trial court could have ordered that the wife be treated as the husband's spouse for purposes of survivor benefits even after the divorce.

Indeed, the general rule is that the trial court must treat survivor benefits as marital property, at least to the extent they are acquired during the marriage. Since post-retirement survivor benefits are almost always acquired with a reduction in post-retirement retirement benefits, a contrary result would give the owning spouse unlimited license to convert marital property retirement benefits into separate property survivor benefits. See, e.g., In re Marriage of Kelm, 912 P.2d 545 (Colo. 1996); Bender v. Bender, 258 Conn. 733, 785 A.2d 197, 216 (2001); Herman v. Herman, 624 So. 2d 342 (Fla. Dist. Ct. App. 1993); Moore v. Moore, 251 Ill. App. 3d 41, 621 N.E.2d 239 (1993); Pleasant v. Pleasant, 97 Md. App. 711, 632 A.2d 202 (1993); Harris v. Harris, 261 Neb. 75, 621 N.W.2d 491 (2001); Irwin v. Irwin, 121 N.M. 266, 910 P.2d 342 (Ct. App. 1995); Nappi v. Nappi, 256 A.D.2d 558, 682 N.Y.S.2d 444 (1998); Nemeth v. Nemeth, 325 S.C. 480, 481 S.E.2d 181 (Ct. App. 1997); Wilson v. Wilson, 18 Va. App. 193, 442 S.E.2d 694 (1994). See generally Brett R. Turner, Equitable Distribution of Property 6.14 (2d ed. 1994 & Supp. 2003).

A division of survivor benefits would have given the wife additional financial security after the divorce, without harming the husband at all. The effect might have been to solve entirely the dilemma before the court.

None of the opinions in Gaumer mentions the existence of survivor benefits. Since survivor benefits must normally be elected at retirement, and the husband in Gaumer retired before the divorce, perhaps he failed to elect them. But, in that event, one must ask how the husband would have provided for the wife after his death in the event that there had been no divorce. If the husband did not elect survivor benefits, and intended all along that the wife would be supported with income from assets, the trial court's opinion merely created the situation which the husband expected all along. If the husband had never thought about supporting the wife after his death, that is obviously less than ideal financial planning, and again it is hard to summon much sympathy for the husband. Either way, the possible existence of survivor benefits merited more attention than it was given in the various Gaumer opinions.

Where survivor benefits are not available, as they are not in most defined contribution plans, security after death is traditionally provided by another common financial instrument: life insurance. None of the Gaumer opinions mentions any life insurance policy owned by the parties. If the parties did have life insurance, the court could have awarded that life insurance to the wife, therefore giving her significant post-death security at a much lesser degree of present cost. For sample cases holding that life insurance acquired during the marriage is a marital asset, see In re Marriage of Goodwin, 606 N.W.2d 315 (Iowa 2000); Wear v. Mizell, 263 Kan. 175, 946 P.2d 1363 (1997); Kambur v. Kambur, 652 So. 2d 99 (La. Ct. App. 1995); Traxler v. Traxler, 730 So. 2d 1098 (Miss. 1998); B.J.D. v. L.A.D., 23 S.W.3d 793 (Mo. Ct. App. 2000); O'Connell v. O'Connell, 290 A.D.2d 774, 736 N.Y.S.2d 728 (2002); and Graham v. Graham, 195 W. Va. 343, 465 S.E.2d 614 (1995). See generally Turner, supra, 6.26. If the parties did not have life insurance, one must ask again how they intended that the wife be supported after the husband's death, if divorce had not occurred, and whether the husband was not negligent in failing to consider the issue well before he reached age 69.

Unlike survivor benefits, life insurance can in theory be acquired at any point in time. If the parties did not have life insurance, therefore, there was some possibility that such insurance could have been acquired as part of the divorce. This may not have been financially feasible on the facts, given the advanced ages of the parties. If insurance was available, however, it was still another way to provide greater post-death security for the wife at lesser present cost to the husband.

The most intriguing way to avoid the problem faced in Gaumer, however, is one which has received little attention from state appellate courts. State courts dividing retirement benefits have traditionally used one of two division methods, immediate offset or deferred distribution. Immediate offset, an immediate tradeoff of the entire pension for cash or other property, is the method which Gaumer actually used. Deferred distribution gives the wife a share of each payment received by the husband during his lifetime, and it would have given the wife additional security before the husband's death. If survivor benefits had not been elected, however, a traditional deferred distribution would have given the wife no security after the husband's death.

There is, however, a new method for making a deferred distribution which gives each spouse reasonable security after the other's death. The Department of Labor is the federal agency charged with administering Qualified Domestic Relations Orders (QDROs) the special type of court order required to divide the great majority of private pension plans regulated under federal law. The Department refers to the traditional deferred distribution method as the shared interest approach, because both parties share the owning spouse's interest in the plan. United States Department of Labor, QDROs: The Division of Pensions Through Qualified Domestic Relations Orders 29 (1997) [hereinafter cited as "DOL QDRO Guide"]. Because that interest terminates upon the owning spouse's death, the shared interest approach provides no post-death security for a nonowning spouse who lacks survivor benefits.

But the Department also recognizes a second method for implementing deferred distribution. Under the separate interest approach, the court directs the plan administrator to compute the actuarial value of the owning spouse's benefits the amount he or she is likely to receive, over an average life expectancy, discounted to present value. That value is divided between the spouses equitably normally, awarding the nonowning spouse 50% of the value acquired during the marriage. Then, and this is the key point, the process is reversed to give each spouse an independent pension equal in actuarial value to his or her equitable share of the owner's benefits. The nonowning spouse becomes a beneficiary under the plan, entitled to receive benefits over his or her entire lifetime regardless of when the owning spouse dies. See generally id. at 30. For example, in Gaumer, where the husband's pension of $18,745.80 per year was 70% marital property, the separate interest approach would have left both parties with independent pensions, with the wife's benefits being roughly $5,000-$6,000 per month. (The precise amount would depend upon actuarial calculations, and would probably be less than 50% of 70% of the husband's benefit, because women live longer than men, and the wife was three years younger than the husband.)

The Department of Labor has clearly taken the position that federal law requires defined benefit pension plans in most instances to recognize any separate interest QDRO which a state court might issue. Id. at 30-31, 37. QDRO specialists clearly treat the shared interest approach and the separate interest approach as equally valid alternatives, at least from a federal law viewpoint. See, e.g., Gary A. Shulman, Qualified Domestic Relations Order Handbook ch. 7 (1999); David Clayton Carrad, The Complete QDRO Handbook 102 (2001). Yet state court decisions applying the separate interest approach are few and far between. Gaumer might have been a good situation for applying the separate interest approach, resulting in increased post-death security for the wife, and a larger present award for the husband.

One cannot fault either of the Gaumer courts for failing to apply the separate interest approach, of course, as there is no evidence that either party raised the issue. There are also some potential state law issues with applying the separate interest approach in some states. See generally Brett R. Turner, A Possible New Alternative for Deferred Distribution of Retirement Benefits: The Separate Interest Approach, 13 Divorce Litigation 221 (2001) (extensive discussion of the separate interest approach under both federal and state law). In general, however, the separate interest approach is a very useful device for making deferred distributions in certain cases, especially those in which the nonowning spouse is of advanced age with few independent assets. There is a reasonable chance that application of the method under the facts of Gaumer could have benefited both parties.


The issues of survivor benefits, life insurance, and the separate interest approach merited more attention than they received in the Gaumer litigation. Still, assuming that survivor benefits and life insurance did not exist, it appears that the husband reached age 69 without a plan for supporting the wife after his death, other than using passive income from assets. Given the lack of financial planning, plus the fact that the husband as primary breadwinner was responsible for such planning, it is hard to fault the court for choosing a division which favored the wife. In future cases, however, it may well be possible to give the wife reasonable security against the husband's death without making such an unequal division of marital property.

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