Marriage of Peterson

Summary

The husband paid Social Security through mandatory payroll withholding. The wife's county pension (LACERA Plan E) barred her from Social Security, and the parties valued her pension at about $210,000 to $216,000 against his Social Security at $228,000. She sought reimbursement of his withholdings to the community, a separate-property carve-out of her pension, or a value-based offset. The court held the withholdings were never community property because the marital estate never had the option to receive them, so they are treated like taxes under Moore and Family Code 2640(a). Because the pension was the only community asset at issue, Family Code 2550 required an equal split. Affirmed.

What it means for the financial analysis

A present-value comparison of Social Security against a pension, or a calculation of what the non-participant spouse would have earned in Social Security, will not support an unequal division unless the parties stipulate to it. Section 2550 allows an unequal split by written agreement or oral stipulation in open court, so those numbers are useful in settlement negotiations. The court did not decide whether a court may merely consider Social Security in dividing a multi-asset estate, so this ruling should not be read to bar that.

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