THE NINE YEARS OF PENSION CREDITS THE HUSBAND EARNED BEFORE THE MARRIAGE ARE HIS SEPARATE PROPERTY; HOWEVER THE MARITAL FUNDS USED TO PURCHASE THOSE CREDITS DURING THE MARRIAGE ARE SUBJECT TO EQUITABLE DISTRIBUTION (THIRD DEPT).
The Third Department, reversing Supreme Court in this divorce proceeding, in a full-fledged opinion by Justice Reynolds Fitzgerald, determined the pension credits earned by the husband during the nine years prior to the marriage were his separate property. But the marital funds used to purchase those credits during the marriage were subject to equitable distribution:
“[A] pension benefit is, in essence, a form of deferred compensation derived from employment and an asset of the marriage that both spouses expect to enjoy at a future date” … . “Even though workers are unable to gain access to the money until retirement, their right to it accrues incrementally during the years of employment. Thus, that portion of a pension based on years of employment during the marriage is marital property” … . In effecting the intent of Domestic Relations Law § 236 (B), the Court of Appeals held that “these post-divorce benefits were marital property to the extent that they were compensation for past services rendered during the marriage” … . Accordingly, “it becomes evident that an employee’s interest in such a plan, except to the extent that it is earned before marriage or after commencement of a matrimonial action, is marital property” … . * * *
… [C]ompensation for past services earned prior to the marriage is separate property. The nine years of premarriage … credits were earned outside the marriage and are based on the fruit of the titled spouse’s sole labors. As they are not due in any way to the indirect contributions of the non-titled spouse … , the wife’s contention that she is entitled to an equitable share of any “appreciation” in the value of credits that have been classified as the husband’s separate property is unpersuasive. The acquisition of the separate pension credits cannot serve to transform such property into a marital asset.
… [A]s marital funds were utilized to purchase the pension credits, said funds are subject to equitable distribution. Szypula v Szypula, 2022 NY Slip Op 06664, Third Dept 11-23-22
Practice Point: The husband earned nine years of pension credits before the marriage. Those pension credits are husband’s separate property. During the marriage the pension credits were purchased with marital funds. [T]hose funds are subject to equitable distribution.
