In Re Marriage of Lucero
173 Cal. Rptr. 680, 1981 Cal. App. LEXIS 1706, 118 Cal. App. 3d 836 (1981)
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Rule of Law:
The right to redeposit withdrawn retirement contributions to receive a higher pension benefit is a community property asset. If one spouse uses separate funds after separation to make the redeposit, the non-employee spouse is entitled to share in the resulting increased benefits upon payment of their pro-rata share of the redeposit cost.
Facts:
- Shirley Gay Lucero and George Lucero were married for the second time in March 1956.
- George worked for the federal government and was a member of its retirement system.
- In 1966, during the marriage, George withdrew his accumulated retirement contributions, which the couple then spent for community purposes.
- The couple separated in November 1976.
- After the separation, George used $9,373 of his separate funds to redeposit the previously withdrawn retirement contributions.
- This redeposit substantially increased his monthly retirement benefit, from what would have been $474 to $840 per month.
- George retired from his federal job in October 1977.
- Shirley also worked for the federal government at various times and had her own potential retirement benefits.
Procedural Posture:
- Shirley Gay Lucero (wife) initiated a dissolution proceeding against George Lucero (husband).
- The proceeding was bifurcated, and an interlocutory judgment dissolving the marriage was granted.
- A trial was subsequently held in the trial court on the issues of property division and spousal support.
- The trial court determined that the community's interest in the husband's pension was limited to the lower amount he would have received without the redeposit of funds.
- The trial court also denied spousal support to either party.
- Shirley Gay Lucero appealed the judgment on property and support to the intermediate court of appeal.
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Issue:
Does the community property interest in a pension extend to the increased benefits purchased by an employee spouse's redeposit of retirement contributions using separate property funds after separation?
Opinions:
Majority - Tamura, J.
Yes. The community property interest in a pension extends to the full amount of benefits after a redeposit of contributions, provided the non-employee spouse contributes their pro-rata share of the cost. The court reasoned that all pension rights attributable to employment during the marriage are community property, and this includes the right to redeposit contributions to maximize benefits. Citing In re Marriage of Brown, the court affirmed that contingent contract rights like this are divisible property, not mere expectancies. It would be inequitable to allow one spouse, by invoking a condition wholly within their control (the redeposit), to defeat the community interest of the other spouse. Therefore, the right to redeposit is a community asset, and the wife has the right to elect to share in the increased benefits by paying her portion of the redeposit cost.
Analysis:
This case establishes that a right to enhance a pension, even if exercised with separate funds after separation, is a community asset if the underlying service occurred during the marriage. It prevents an employee spouse from unilaterally using post-separation funds to transform a community asset into separate property, thereby divesting the other spouse of a valuable interest. The decision solidifies the principle that the community owns all pension-related rights earned during marriage and provides a clear remedy: the non-employee spouse can 'buy in' to the enhanced benefit by contributing their fair share, ensuring an equitable division of the asset.
