By Anita Robboy, Esq.
In Casey v. Casey, decided June 7, 2011, the Appeals Court addressed for the first time in Massachusetts the question of whether a military pension should be treated as a stream of income or as a marital asset subject to equitable distribution in the context of divorce. Under the Uniformed Services Former Spouses’ Protection Act (USFSPA), 10 U.S.C. Section 1408 (1982) the choice was left to the states and the Massachusetts Appeals Court elected to follow the vast majority of states in determining that a military pension, regardless of whether in pay status or not, should be treated as a divisible marital asset and not a stream of income as found by the Probate Court.
Casey v. Casey will also be cited for its important discussion of imputed income in setting child support. The concept of ‘imputed income’ applies not only to the payor of child support but also to the recipient of child support. Both parents are held to the same standard: applying themselves to earning full incomes unless the needs of the minor children prevent a parent from doing so or the market conditions prevent a parent from reaching such a goal.
Furthermore, the Casey case will be quoted extensively for its explanation of the interplay and interdependence of an award of alimony and division of marital assets in achieving an equitable distribution pursuant to the mandate of Chapter 208, Section 34. In the instant case, the Wife was prejudiced by the trial court’s failure to award her alimony, by finding that additional income should be imputed to her for only working 28 hours a week as a nurse and by treating the Husband’s military retirement pension as a stream of income which only reached her via child support. The Wife’s share of the marital assets, which was slightly less than half, failed to compensate for the modest support award and absent alimony order.
Facts:
The parties were married in Hawaii in August, 1990 and last lived together in Massachusetts in 2006 after spending many years in various posts abroad and in this country as a consequence of the Husband’s lengthy career in the United States Air Force. The parties had one child age sixteen at the time of the trial. After retirement from the service, the Husband became employed full time as a defense contractor. The Wife received a bachelor’s degree in nursing and completed some courses toward her master’s degree in nursing. The Wife worked off and on throughout the marriage (either full time or part-time) as a licensed nurse; however the Wife’s career was limited by the many moves during the marriage and by her role as the primary caregiver and home-maker.
By stipulation during the pendency of the litigation, the proceeds from the sale of the marital home and the parties’ other financial holdings, except for the Husband’s military pension, were divided equally. Although custody of the child was initially contested at trial, it was resolved with the Wife receiving primary physical custody and the parties having joint legal custody.
Several issues emerged on appeal as a result of the trial court’s judgment. The primary issue was the treatment of the Husband’s military pension. Other issues were the imputation of income to the Wife; the treatment of the Husband’s reimbursed expenses; and the interplay of alimony and division of assets. The trial court held that the Husband’s military pension in pay status should be treated as a stream of income and added to his gross income for purposes of determining child support. The lower court found that the Wife was underemployed as a nurse working 28 hours per week and imputed income to her based on a 40 hour work week. In contrast to the treatment of the Wife’s actual and potential earnings, the court declined to include in the Husband’s income any of his substantial reimbursed travel expenses for lodging, flights, rental cars, and miscellaneous travel expenses, including his per diem allowance for food expenses. The Wife sought, but was not granted alimony in addition to child support. As justification for not awarding the Wife current alimony, the judge opined that she could return to seek alimony after the emancipation of the parties’ teenage daughter.
The Appeals Court vacated so much of the judgment of the trial court as failed to include the Husband’s military pension as an asset of the marriage and vacated the order for child support since it was based in part on erroneous treatment of the Husband’s military pension. The trial court was ordered to make findings to support a new order as to the percentage of the military pension that the Wife was entitled to receive as a marital asset.
Discussion:
The importance of the Casey decision lies in its clear and direct finding that military pensions are divisible as marital assets, regardless of their pay status and regardless of their characterization as ‘an entitlement’. Pursuant to USFSPA, 10 U.S.C. Section 1408, payments to military retirees are left to the states for determination as to whether or not they are considered income or a marital asset subject to division. Prior to Casey, the Massachusetts Child Support Guidelines (CSG) and G.L.c.208, §34 created an ambiguity. The CSG indicates specifically that military pay and pensions may be considered as income when calculating child support. G.L.c.208, §34 states that, “In addition to or in lieu of a judgment to pay alimony, the Court may assign to either Husband or Wife all or any part of the estate of the other including but not limited to all vested and non-vested benefits… including military retirement benefits”.
The Casey decision may well be even more frequently cited for its discussion of the factors used to determine child support and its discussion of the need to analyze and evaluate the ‘fairness’ of the ultimate judgment by considering the interplay between the property division and support provisions as a whole. At the end of the day, are the parties left with approximately the same standard of living or was the “purported ‘evenhanded treatment’ illusory.” (Casey, citing Sampson v. Sampson, 62 Mass.App.Ct.366 (2004) and Grubert v. Grubert 20 Mass.App.Ct.811 (1985)).
Casey demonstrates that a close reading of the CSG is essential with careful consideration given to all the provisions of the Guidelines which may apply to the particular facts of each case. For example, there is an assumption in the CSG that a child spends at least a third of his/her time with the non-custodial parent. CSG II-D In the instant case, the parties’ teenage daughter was unable to see her father as much as a third of the time due to geographic impossibility. Where that is the case, the child support amount might be increased as the costs of the child to the custodial parent are greater than the Guidelines anticipate. In another example, one of the parties may have ‘reimbursement income’ or phantom income generated by his/her employer’s perks. The Husband in Casey, received substantial reimbursement checks from his employer for food, lodging, flights, and incidentals due to his extensive travel schedule. The Wife reasonably argued and demonstrated that the Husband’s normal and usual weekly expenses such as automobile, food, utilities and entertainment were less than otherwise due to travel away from home for at least half the month on a regular basis. The CSG provided that reimbursements may be included as income if they are significant and reduce personal living expenses. CSG I-C. Further, the CSG addresses the issue of imputed income. CSG II-H. A party’s work schedule should be studied and, if less than full time, explained – either by the need to be with small children or the unavailability of full time employment at the current job or at comparable employment. Not only is the payor of child support expected to maximize his/her earnings but also the recipient of child support has a duty to do the same unless there are reasons otherwise. The possibility of “imputed income” arises when part-time employment is present without cause or when a voluntary decrease in employment occurs. In short, the routine child support guideline analysis should not be mechanically applied to all cases but may have to be tailored to the specific facts of each.
The mantra of Grubert v. Grubert that the parties enjoy comparable post-divorce marital lifestyles is alive and well in the thinking of the Appeals Court. The inextricable nexus of division of assets and support orders are always the bedrock from which the ‘equitable’ judgment derives. In the instant case, the Wife was short-changed in her award of child support and her lack of any current award of alimony and this was not rectified or off-set by a generous division of assets – all of which, when taken together, troubled the Appeals Court. Despite the Wife’s claim that she was entitled to attorney’s fees because she was forced to appeal due to the inequitable result in the trial court, the Appeals Court denied her request.
Lessons to be learned from Casey v. Casey: