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WINDSOR – SAME SEX MARRIAGES – PENSIONS – DIVORCE

The Windsor decision by the U.S. Supreme Court on June 26, 2013 signaled the opening of a new area for Family Law disputes. As a result of this novelty, guidance facilitating resolution of issues relating to the division of property acquired during Same Sex Marriages is limited.

As with heterosexual couples, Single-Sex couples, fall in love. Unfortunately, not all loving couples remain sufficiently enamored to continue their relationship. When this shift in sentiment results in divorce, how are property rights and retirement expectancies of the couple transmuted from "husband and wife" to separate and distinct individuals?

The federal government appears to be taking a positive lead and in delineating the pension rights of Same Sex Married couples. [1] The treatment of ERISA benefits for "Civil Unions" is restrictive. This liberalized treatment of Same Sex couples by the new federal definition of spouse does not extend to "Domestic Partnerships". [2] At this time for Federal and military retirement benefits pension rights exist. [3]

Caution.

An enforceable right is not to be interpreted as "readily implemented". The actual implementation of retirement benefits assigned in a Same Sex Marriage will in many cases be stressful. At this moment virtually all ERISA Summary Plan Descriptions are devoid of language clarifying the rights of Same Sex Marrieds. Clearly, such language should not be necessary as married is married regardless of the gender of the participants. However, such presumption may be presumptuous. These circumstances are being monitored by Troyan, but at this time, enforceable rights against Retirement Benefits for this cohort are better established with care on a case by case basis. If you have guidance on this concern, please make Troyan aware of such data and we will integrate into our QDRO Guidance for Attorneys.

ERISA Plans.

We believe the greater challenge is the division of retirement benefits from plans sponsored by corporate entities.[4] These plans are termed "ERISA" plans.[5] There are two broad types of ERISA plans:

  • Qualified Defined Benefit Plan
  • Qualified Defined Contribution Plan

The structure of these plans is dissimilar. One operates like an Individual Account Balance (Defined Contribution Plan). For the Defined Benefit Plan, benefits are actuarially determined.

In this post-Windsor world, there are many unresolved issues regarding the dissolution of committed relationships and the division of pension benefits acquired during the existence of this relationship. At this time and for the intermediate term there is disparate treatment of ERISA benefits between:

  • Committed Relationship Partners
  • Married Same Sex Partners

ERISA Issues in Need of Swift Clarification.

  • The division of pension benefits payable over the lifetime of the retiree
  • The assignment of Former Spouse Survivor Annuity benefits to a Same Sex divorcing spouse.
  • A couple married in one of the approximately eighteen countries worldwide that recognizes Same Sex Marriage who are now U.S. citizens who are divorcing in a state that does not recognize Same Sex Marriage

There is currently minimal federal guidance on these issues. Recourse to the Plan's Qualified Domestic Relations Order (QDRO) Guide is not likely to be helpful as currently virtually all are silent on Same Sex issues. For now, practitioners will consider treating the Same Sex spouses as they would treat any other married couple and draft the Domestic Relations Order in a manner consistent with the Internal Revenue Code and Retirement Equity Act, without reference to the sex of the spouses. This "compliance" with existing federal law may not bring the anticipated result. For example, will "Hobby Lobby" type objections be raised as to actions considered contrary to the Plan Administrator's religious beliefs?

If "Hobby Lobby" type objections to implementation of a QDRO are anticipated, the practitioner is advantaged by complying with ERISA's general guidance. If this general compliance is manifest and the Plan Administrator nevertheless rejects of the Order, this ERISA compliance provides a foundation to transfer the QDRO qualification issue to a federal venue, where a more receptive hearing is likely.

For Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS):

The instrument to award a portion of these plan's annuity (living benefits) and survivor benefits to a Former Spouse is termed "Court Order Acceptable for Processing" (COAP). If the Same Sex couple's marriage is recognized in the state in which the divorce is granted, then treat the division of retirement benefits in the same manner as male-female divorcing partners. Then there is the issue of marriage in a jurisdiction that recognized Same Sex marriage and the dispute arising in another jurisdiction. On this point the court's decision in O'Connor was supportive of the rights of the surviving spouse of a Same Sex marriage. [6] The issue in O'Connor, did not involve divorce, but involved the survivor rights of the surviving spouse of a Same Sex marriage, when challenged by the parent of the decedent.

The position of Office of Personnel Management (OPM) regarding the traditional forms of federal retirement plans, extends to the Federal Thrift Savings Plan (TSP). The instrument to award all or a portion of a TSP to a Former Spouse is Retirement Benefits Court Order (RBCO). Make no distinction regarding the sex of the parties when crafting the RBCO for the division of martial assets.

Commentary:

The pension and survivor annuity benefit issues arising from the divorce of Same Sex couples has many variations. This firm continues to closely monitor relevant sources, e.g. Code of Federal Regulations, Federal Register, Office of Personnel Management releases and federal and state court decisions in order to keep interested parties current on developments.

Your comments on this issue are invited.



[1] See 5 C.F.R. 843.102.

[2] See 5 C.F.R. 875.213.

[3] This view is based on existing law and regulation. This firm believes a "Constructive Trust" argument could be made to advance the rights of Domestic Partners. Your input on this point is welcome.

[4] This includes corporations of all size, ranging from one person to the largest U.S. corporations.

[5] ERISA is the acronym for: Employee Retirement Income Security Act.

[6] See O'Connor v. Tobits, 2013 U.S. Dist. LEXIS 105507