Laing v. Laing
741 P.2d 649 (1987)
Rule of Law:
A nonvested pension is a marital asset subject to division upon divorce, but it cannot be divided using the present value method at the time of divorce; rather, the court must reserve jurisdiction to equitably divide the pension if and when it vests.
Facts:
- Kenneth and Marla Laing were married in 1964 and divorced after approximately twenty years.
- At the time of marriage, Marla brought substantial premarital assets into the marriage, including a furnished home and benefits from her first husband's death, totaling approximately $25,500. Kenneth had no substantial assets.
- During the marriage, Kenneth was employed at Union Chemicals (UNOCAL) for seven and a half years and accrued nonvested pension rights.
- At the time of divorce, Marla, aged 49, suffered from significant health problems, including arthritis and a strong likelihood of multiple sclerosis, which limited her earning capacity.
- Kenneth's earning capacity at the time of divorce was substantially greater than Marla's; his income in the year prior to trial was $61,471, while hers was $18,750.
Procedural Posture:
- Marla and Kenneth Laing initiated divorce proceedings in an Alaska trial court.
- The trial court found an unequal division of marital property was equitable and awarded 58.25% of the assets to Marla and 41.75% to Kenneth.
- As part of this division, the trial court assigned a present value of $27,000 to Kenneth's nonvested pension, awarded the pension to him, and gave Marla offsetting marital assets.
- The trial court also ordered Kenneth to make payments for almost two years on real property awarded to Marla.
- Kenneth (appellant) appealed the trial court's judgment to the Supreme Court of Alaska. Marla is the appellee.
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Issue:
Is a nonvested pension considered marital property subject to immediate division upon divorce using the present value method?
Opinions:
Majority - Compton, J.
No. While a nonvested pension is a marital asset, it should not be divided using the present value method at the time of divorce because this approach unfairly allocates the entire risk of forfeiture to the employee spouse. The court held that nonvested pension rights are marital property because they represent a form of deferred compensation earned during the marriage. However, the court rejected the trial court's 'present value' approach, where a current lump-sum value is calculated and offset with other assets. The majority found this method 'inherently unfair' because if the pension never vests, the employee spouse would have given up other assets for a benefit that never materialized, while the non-employee spouse would have received their share risk-free. Instead, the court adopted a 'reserved jurisdiction' approach, directing trial courts to refrain from dividing the nonvested pension at the time of divorce. If and when the pension vests, the non-employee spouse can then petition the court for an equitable division of the marital portion of the now-vested asset.
Dissenting - Burke, J.
Yes. The dissenting opinion argues that there is nothing inherently unfair about using the 'present value' approach to divide a non-vested pension. The author would have affirmed the trial court's decision to assign a present value to the pension and divide it immediately as part of the overall property settlement.
Analysis:
This decision established a significant precedent in Alaska for the treatment of nonvested pensions in divorce actions. By classifying nonvested pensions as marital property, the court aligned with the modern trend recognizing such benefits as deferred compensation. However, its rejection of the common 'present value' method in favor of a mandatory 'reserved jurisdiction' approach created a unique procedural requirement. This ruling prioritizes equitable risk distribution over the finality of the divorce decree, forcing a degree of continued financial entanglement until the pension's status is certain. Future cases involving nonvested pensions in Alaska must now follow this 'wait-and-see' model, bifurcating the division of this specific asset from the rest of the marital estate.
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