Berry v. Berry
26 Tex. Sup. Ct. J. 266, 1983 Tex. LEXIS 273, 647 S. W.2d 945 (1983)
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Rule of Law:
In Texas, a divorced spouse's community property interest in the other spouse's retirement benefits is valued as of the date of divorce, not the date the benefits are actually received, to prevent the invasion of the employee spouse's separate property.
Facts:
- Elna Berry and Giles Berry were married on November 11, 1939.
- On May 22, 1940, Giles Berry began employment with Southwestern Bell Telephone Company.
- Elna and Giles Berry divorced on September 13, 1966, and the divorce decree was silent regarding the distribution of retirement benefits.
- Giles Berry continued working for Southwestern Bell until his retirement on July 8, 1978.
- Had Giles Berry terminated his employment at the time of the divorce (September 13, 1966), he would not have been entitled to any retirement benefits as he was not yet 60 years of age, a prerequisite under the non-contributory retirement plan.
- Evidence showed that the total length of service and the highest salary over a consecutive sixty-month period (which for Giles was his last five years of employment) were factors in computing the actual retirement benefits.
- At the time of trial, Giles Berry was receiving $946.34 per month in retirement benefits.
- Expert testimony indicated that if Giles Berry had been eligible to retire as of the date of divorce (September 13, 1966), his retirement benefits would have amounted to $221.21 per month.
Procedural Posture:
- After Giles Berry retired, Elna Berry initiated a lawsuit to claim her share of his retirement benefits.
- The trial court (court of first instance) found in favor of Elna Berry, awarding her $110.60 per month (one-half of the $221.21/month benefits that would have existed at the time of divorce) and $3,207.40 for accrued past benefits.
- Elna Berry appealed to the court of appeals (intermediate appellate court), which reversed the trial court's judgment.
- The court of appeals held that Elna Berry was entitled to 34.21% of the retirement benefits actually received by Giles Berry, rendering judgment for her in the amount of $6,702.20 for accrued benefits through April 1980, and 34.21% of all future benefits.
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Issue:
Is a divorced spouse's community property interest in the other spouse's retirement benefits to be valued as of the date of divorce, or as of the date the benefits are actually received?
Opinions:
Majority - Kilgarlin, Justice
No, a divorced spouse's community interest in retirement benefits is not to be valued at the time the benefits are actually received; rather, it must be valued as of the date of divorce. The Court affirmed that retirement and pension benefits are a form of employee compensation, and benefits accruing from services rendered after a divorce are not part of the community estate subject to division. Relying on precedent from Herring v. Blakeley (1965) and In re Marriage of Rister (1974), the Court reiterated that the community's interest is fixed and valued at the time of divorce. Post-divorce increases in benefits, resulting from additional years of employment, pay raises, or improved benefits plans, constitute the employee spouse's separate property. Awarding a portion of these increases to the ex-spouse would impermissibly invade separate property, as established in Cameron v. Cameron (1982). The Court clarified that while Taggart v. Taggart (1977) established an apportionment formula for determining the extent of the community interest in retirement benefits (i.e., the fraction of time married during employment), it did not address the valuation date. Therefore, the Court disapproved of intermediate appellate court decisions, such as Bankston v. Taft (1981) and Disbrow v. Thibodeaux (1980), insofar as they valued benefits at the time of receipt rather than divorce. The Court also rejected arguments that post-divorce increases were merely inflationary adjustments, finding no evidence to support this contention and declining to consider inflation as a valuation factor.
Analysis:
This case clarifies and solidifies the rule in Texas regarding the valuation of retirement benefits as community property in divorce cases, resolving a split among intermediate appellate courts. By mandating valuation as of the date of divorce, the Court reinforced the principle that only property acquired during the marriage constitutes community property, preventing an ex-spouse from benefiting from the other spouse's post-divorce efforts or economic conditions affecting their separate property. The decision provides a clear benchmark for attorneys and courts in valuing such assets, emphasizing the need for actuarial calculations at the time of divorce rather than relying on future, uncertain benefits.
