Two Bites

Two Bites

Category:

Imagine the following situation:
After a long term marriage (more than ten [10] years), the parties enter into a Stipulation dividing marital assets and awarding Wife spousal support.

As part of the division of assets, Wife takes Husband’s interest in the family residence and, in return, she gives to Husband her community interest in his pension/retirement benefits. The two assets are of equal value and act to set each other off such that an equal division is achieved. So far so good, proper division of community property and proper support paid to Wife.

Now it’s ten years later and Husband wants to retire. After retirement, Husband’s sole income is realized from the proceeds of his pension/retirement plan. Husband requests Wife terminate spousal support because her interest in his pension/retirement benefits have already been “bought out,” meaning she took for herself Husband’s interest in the family residence, in exchange giving Husband her interest in the pension. Thus, claims Husband, to pay wife spousal support from the proceeds of his pension would be “double dipping,” or two bites of the same apple.

The Appellate Court disagreed, stating that support paid from an asset purchased from the other spouse is not double dipping, that “‘to treat a pension as marital property, award it entirely to the earner spouse (with an offsetting award of marital property to the non-earner spouse) and then to take the earner spouse’s receipt of pension benefits into account in determining whether there should be any alimony award to either spouse.'”

This is the rule set forth in the case of In re Marriage of White (1987) 192 CA3d 1022, 237 CR 764. It is often referred to as the supported spouse’s “two bites of the apple.” To avoid this result, the employee spouse should seek an order dividing the pension in-kind. If the pension is being assigned to the employee spouse by stipulation, then the stipulation could provide that the income from the pension will not be considered in any future spousal support modification proceedings.

This would be binding on the court pursuant to Family Code, §3590. If the parties wish to enter into such an agreement, the attorneys for both parties should carefully explain, in writing, the effect of such a stipulation on spousal support after retirement.