Smith v. Smith, 2015 MT 256 (Sept. 1, 2015) (Rice. J.) (5-0, aff’d & rev’d)
Issue: (1) Whether the district court erred in ordering the division of Glenn’s social security benefits; (2) Whether the district court abused its discretion in ordering maintenance to Debora; (3) whether the district court abused its discretion in imposing conditions on the termination of maintenance; (4) whether the district court’s equalization payment was an abuse of discretion; and (5) whether the district court’s award to Debora of the SeaDoo was an abuse of discretion.
Short Answer: (1) Yes; (2) yes, as it made no findings to support her estimated expenses; (3) no; (4) no; and (5) no.
Affirmed and reversed and remanded for further proceedings
Facts: Glenn and Debora live in Polson. They married in 1978 and separated in 2010. Their two children are adults. Debora petitioned for dissolution in April 2011. During most of the marriage, Debora was a homemaker. She is currently unemployed but is eligible for social security benefits of $1,500 a month. Glenn works for CSKT as an investment manager, making $175,000 a year, and also received $28,000 a year in social security. Both have been diagnosed with PTSD, and Glenn has several other health issues that have led medical professionals to advise him to retire.
Glenn lives on Kings Point Road, which is on tribal land. He is an enrolled member of the CSKT; Debora is not. Glenn bought the Kings Pint property with money he obtained from mortgaging property that Debora’s family friends, the Fredericksons, had transferred to him. He encumbered that property with a $198,000 mortgage and used $150,000 of that money to buy the Kings Point property.
Debora lives in the parties’ marital home on Flathead Lake, which has a market value of $595,000 but is encumbered with a $536,982 mortgage. They also own property on Schaefer Road outside of Polson, with a market value of $90,000 and debt of $75,000, and a lot in Hungry Horse that is worth $15,000 and is unencumbered. The parties’ personal property includes a 2006 SeaDoo and a retirement account valued at $251,544.
The court held a two-day trial, made detailed findings and conclusions, and entered an order dissolving the marriage and distributing the marital estate.
Procedural Posture & Holding: The court ordered the immediate sale of the lake house, the Hungry Horse lot, and the Schaefer Road property, with net proceeds to be divided equally; ordered the retirement account to be divided equally; awarded Debora the SeaDoo; and awarded Debora and equalization payment of $164,500. The court concluded it lacked jurisdiction over the Kings Point property and did not consider the property a marital asset, but found that the proceeds from the Fredericksons’ property and $16,000 used for improvements to the Kings Point property were marital funds unilaterally taken by Glenn or otherwise concealed, and considered these assets to be marital property in determining the equalization payment. The court ordered Glenn to pay $2,500 a month in maintenance, which will cease of Debora remarries or cohabits with another adult who is not her relative, or if Glenn ceases to be gainfully employed and no longer receives income from investments other than retirement. Glenn appeals, and the Supreme Court affirms in part and reverses in part.
Reasoning: (1) Debora concedes that federal law prohibits the transfer or assignment of social security benefits. Debora argues the district court should offset the amount she would have received had the benefits been distributed. Addressing this issue of first impression, the Court joins the majority of state courts that have considered the questions and conclude that 42 U.S.C. § 407(a) prohibits an offsetting award. Social security benefits are not the equivalent to marital property. The Court further adopts the rule that social security benefits may be considered as a factor, among others, when dividing marital property. This rule adheres to federal law but advances Montana’s policy of equitable apportionment. This decision is reversed and remanded.
(2) The Court agrees that the district court erred in determining the maintenance award, as it made no findings of fact to support its determination of Debora’s monthly expenses. This decision is reversed and remanded.
(3) The district court’s conditions for terminating maintenance are legally permissible.
(4) The district court’s equalization payment was not greater than the net value of the marital estate. The fact that the Frederickson property was gifted to Glenn does not change its status as marital property subject to equitable apportionment. The Court finds no error in the district court’s findings about the Frederickson property proceeds and $16,000 of improvements to Kings Road. It reviews these issues as guidance to the district court on remand, as the ultimate distribution of the marital estate and calculation of an equalization payment may change on remand.
(5) The district court did not abuse its discretion in awarding the SeaDoo to Debora.