COURT OF APPEALS OF VIRGINIA
Present: Chief Judge Moon, Judges Fitzpatrick and Annunziata
Argued at Salem, Virginia
LILLIAN H. JOHNSON
OPINION BY
v. Record No. 3102-96-3 CHIEF JUDGE NORMAN K. MOON
AUGUST 5, 1997
EDGAR D. JOHNSON
FROM THE CIRCUIT COURT OF WASHINGTON COUNTY
Charles H. Smith, Jr., Judge
Timothy W. Barbrow (Gwyn & Tate, on brief),
for appellant.
Ralph M. Dillow, Jr. (Dillow & Esposito, on
brief), for appellee.
Lillian H. Johnson ("wife") appeals the judgment of the
circuit court deciding matters of equitable distribution and
spousal support. Wife asserts that the trial court: (1) abused
its discretion in dividing the parties' intangible marital
personal property; (2) erred in determining the amount of spousal
support to be paid to wife; and (3) erred in limiting the
duration of the spousal support award to thirty-six months.
We hold that the trial court erred in making the equitable
distribution award and accordingly, we reverse and remand for
reconsideration of the award consistent with this opinion.
Because we reverse the equitable distribution award, we also
remand for reconsideration of the spousal support award.
Wife and Edgar Johnson ("husband") were married on October
11, 1964. The parties have one child who was twenty-four years
old at the time of parties' divorce. When the parties married,
husband was serving in the United States Navy. In 1968, he was
hired by the Virginia State Police and has been employed as a
state trooper since that time. Wife left her work as an employee
at a sewing factory when the parties married and did not re-enter
the work force until 1976. At that time, wife began working
part-time as a school bus driver, driving a bus four hours a day.
Wife continued to work as a school bus driver throughout the
course of the parties' marriage and also worked part-time for
K-Mart for a brief period.
The parties' marital assets consisted of their residence
valued at $150,000, with equity of approximately $110,000, and
various investments and retirement benefits. These interests
included three hundred shares of Wal-Mart stock valued at $6,300,
a Virginia Credit Union account with a balance of $2,600, a
deferred compensation account in the husband's name with a
balance of $12,111.12, a deferred compensation account in wife's
name with a balance of $1,703.45, an individual retirement
account in the husband's name with a balance of $5,127.96, an
individual retirement account in wife's name with a balance of
$2,315, and a life insurance policy with a cash value of
$4,696.28. The marital assets also included husband's state
police pension benefits.
Husband asserted his pension's value to be $46,830.09, based
on the cash surrender value of his pension if he withdrew all
contributions and interest from his pension fund before
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retirement. No evidence was presented that the funds were to be
withdrawn at or near the time of the hearing. Wife, however,
argued that the pension was worth $510,539.22. This sum was
determined by multiplying husband's estimated monthly pension
benefit of $1,765.35, constituting husband's vested benefit
amount if he were to retire at the time of the parties' divorce,
by husband's remaining 24.1 year life expectancy as provided by
Code § 8.01-419. The $510,539.22 value did not reflect
discounting to present value.
The parties separated on October 21, 1993, allegedly
because husband became physically abusive. Wife sought and was
granted a protective order by the juvenile and domestic relations
court and was granted exclusive occupation of the marital
residence. The court also ordered husband to pay pendente lite
spousal support in the amount of $1,500 a month. On the basis of
their twelve month separation, the parties obtained a final
decree of divorce on November 13, 1996. Both wife and husband
were fifty-one years old at the time of the divorce and were in
good health. The trial court ordered an equal division of all
tangible personal and real property. The court awarded each
party one-half of the Wal-Mart stock, Virginia Credit Union
account, and the cash value of the life insurance policy. The
court further ordered that the parties were to retain their
respective individual retirement accounts, deferred compensation
accounts, and retirement benefits. As part of the equitable
distribution award, the court also ordered husband to pay wife
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the sum of $15,000 in order to "balance the equities."
The court vacated the pendente lite spousal support of
$1,500 and ordered husband to pay spousal support in the amount
of $400 a month for a period of thirty-six months or until wife's
death or remarriage, "whichever first occurs."
Pension Benefits
The trial court's letter opinion of October 4, 1996,
provided the following distribution of the parties' intangible
personal property:
The intangible personal property consists of
Wal-Mart stock, a Virginia Credit Union
account of [husband's], a deferred
compensation account of [husband's], the
parties' respective IRA's, cash value in Mr.
Johnson's life insurance policy, and the
parties' respective retirement accounts with
their respective employers.
(Emphasis added). After ordering the division of all assets
except the "parties' respective retirement accounts," the trial
court provided that "[t]he court will allocate [wife's]
retirement benefits 100% to her. The court will allocate
[husband's] retirement benefits 100% to him." The court's final
order incorporated its letter opinion and made no additional
reference to retirement benefits.
The trial court listed the parties' respective IRAs and
deferred compensation accounts in addition to "the parties'
retirement accounts with their respective employers," and
distributed each of these interests. However, we find no
evidence in the record that wife had a "retirement account" with
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her employer. To the contrary, husband testified that while wife
had an IRA and a deferred compensation account, he was not aware
of wife having any form of pension. Accordingly, because the
award was based upon the erroneous premise that wife had
retirement benefits, we reverse and remand for reconsideration of
the award.
Upon reconsideration of the equitable distribution award,
particularly regarding husband's pension benefits, we make the
following observations.
In considering valuation of the marital estate, we have held
that Code § 20-107.3 "`mandates' that trial courts determine the
ownership and value of all real and personal property of the
parties." Nevertheless, "consistent with established Virginia
jurisprudence, the litigants have the burden to present evidence
sufficient for the court to discharge its duty." Bowers v.
Bowers, 4 Va. App. 610, 617, 359 S.E.2d 546, 550 (1987).
Here, the parties introduced minimal credible evidence
regarding the value of husband's pension, rendering it virtually
impossible for the trial court to evaluate it effectively. The
husband's value was grossly understated and the wife's claimed
value was grossly overstated. The only evidence introduced by
husband regarding the value of his pension was husband's exhibit
number 6, a "Member Benefit Profile" produced by the Virginia
Retirement System ("VRS"), prepared for husband on June 30, 1994.
The VRS profile reported husband's vested benefits and indicated
that should husband choose to retire at age fifty-one, his
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monthly benefit would be $1,765.35, and if he retired at age
sixty, his monthly benefit would be $2,414.89. The VRS profile
indicated that these amounts did not include the "law enforcement
supplement" and no additional evidence was presented indicating
the amount or value of such supplement. The VRS profile also
reported that if husband terminated employment before retirement,
he was entitled to withdraw his contributions to the plan, with
interest. At the time the VRS profile was prepared this sum
amounted to $46,830.09, the value assigned by husband to his
pension benefits.
While no evidence other than the VRS profile was introduced
regarding the value of husband's pension benefits, the profile
was sufficient to establish that the pension benefits had value
well in excess of $46,830.09. Husband's vested monthly benefit,
had he retired at age fifty-one, paid out to him over the course
of his remaining life expectancy of 24.1 years, as determined by
Code § 8.01-419, would result in income to him of $510,539.22.
We have previously held that a court is not required to
place a present value on pension benefits if the court orders
deferred distribution of the benefit, using the formula set out
in Code § 20-107.3(G)(1). Indeed, to order deferred distribution
based on present value, is error. Zipf v. Zipf, 8 Va. App. 387,
382 S.E.2d 263 (1989). However, where an award of the entire
pension is made to the owning spouse at the time of the divorce,
the court must determine the present value of the pension fund
before such an award can be made. See Brett R. Turner, Equitable
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Distribution of Property § 6:12 (2d ed. 1994). The present value
of a defined benefit plan, such as the plan before the court, is
not simply the total value of the contributions of the
beneficiary at the time of the hearing. Turner, § 6:12 at 368,
374. Such a method would reach "inaccurate results, because it
does not recognize the fact that contributions appreciate in
value after they are made." Id. at 374. Instead, a multiple
step process is required to determine the present value,
including a determination of future benefits and the application
of various discount factors. Id. at 368-71. The party
suggesting such an award, must provide proof of value. Where, as
here, the evidence renders a precise determination of a pension's
value practically impossible an award of pension benefits to a
payee spouse, as those benefits are received by the payor spouse,
as permitted by Code § 20-107.3(G)(1), may prove the only
equitable method of considering the pension benefits in making an
award. See Rowe v. Rowe, 24 Va. 123, 143, 480 S.E.2d 760, 769
(1997).
Spousal Support
Because the equitable distribution award must be
redetermined, the spousal support award must also be
redetermined. Recognizing that some of the issues presented in
this appeal may arise upon rehearing, we make the following
comment.
Here, the record establishes that the parties were married
for nearly thirty years. During that time husband was employed
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full time as a state trooper, while wife worked as a homemaker,
mother, and for more than twenty years, as a part-time bus
driver. At the time of the parties' divorce, wife earned
approximately $9,600 a year while husband earned $48,899 a year.
The record also established that wife possessed an associates
degree from a community college, was fifty-one years of age, and
was in good health. Wife also introduced evidence of monthly
expenses in the amount of $2,305.83. While $581.51 of these
expenses were attributable to the mortgage payment which wife
would not continue to incur, wife would have to acquire
additional housing and thereby incur some significant expense in
the form of rent or mortgage payments.
Based on the evidence presented, wife's monthly income of
$800, combined with $400 of monthly spousal support, would not be
sufficient to sustain her standard of living or to enable her to
meet her monthly expenses. Further, the evidence did not support
a finding that wife, at age fifty-one, with an associates degree
and no work experience other than driving a school bus, was
likely in the immediate or reasonably foreseeable future to
acquire a position with substantially greater compensation.
Upon remand and upon the evidence presented, it would be
error for the court to limit the award of spousal support to a
thirty-six month period. Code § 20-107.1 provides that "[t]he
court, in its discretion, may decree that maintenance and support
of a spouse be made in periodic payments, or in lump sum award,
or both." Code § 20-107.1 does not empower the trial court to
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award periodic payments for a limited period without evidence
that the need for support will cease within the immediate or
reasonably foreseeable future. Thomas v. Thomas, 217 Va. 502,
229 S.E.2d 887 (1976).
Reversed and remanded.
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