In re the Marriage of Kelm,
912 P.2d 545 (1993)


Facts: At the time their divorce, Eloise Kelm (P) had accumulated six years of of Kelm service under her retirement plan ("PERA"), and Oliver Kelm (D) had accu¬mulated 19 years of service under his retirement plan ("CSRS"). The marital
assets did not permit immediate distribution of D's pension benefits on a net present value basis to be offset against other marital assets. The trial court awarded P 19/30 of one-half of D's pension benefits on an as-received basis- 31.7%. The trial court reserved jurisdiction in the event D took early retirement or was laid off due to cutbacks or early buy-out of his retirement benefits. The court awarded P all her PERA benefits, valued according to her actual contri-butions as of the date of the divorce. The trial court ordered D to keep P as beneficiary of his retirement funds in the event he died prior to retirement. The court of appeals held that the trial court had properly treated the parties' pension benefits, but erred in awarding P the entire lump-sum credits under D's pension plan if he were to die before retirement and remanded the case to the trial court to amend its order to provide that P "receive a lump-sum distribution of only the pre-dissolution contributions." D appeals.

Issue:Are post dissolution increases in pension benefits marital property?

Holding: Yes. Judgment affirmed in part, reversed in part, and remanded.
The Supreme Court, held that: (1) “time rule” formula applied to determine wife's marital share of husband's pension plan; (2) denominator of coverture fraction of time-rule calculation should have been left undetermined until husband's receipt of benefits; (3) district court failed to correctly calculate present value of wife's pension benefits; and (4) time rule formula was applicable measure for wife's share of husband's death benefits in his pension plan.

Analysis:Upon divorce of appellant husband and appellee wife, the trial court ordered a division of the marital property consisting primarily of the vested, unmatured retirement benefits of both spouses. Appellant sought review, and the appeals court affirmed in part and reversed in part, the effect of which was to award to appellee a portion of appellant's retirement benefits when received, all benefits from her plan, and a lump sum distribution of pre-dissolution contributions to the plan if appellant died before retirement. Appellant sought review. The court affirmed the award of future retirement benefits, rejecting appellant's argument that deferred distribution based on the "time rule" formula permitted appellee to share in increased benefits that accrued post-dissolution, holding that post-dissolution increases were marital property and subject to division because the right to the increase was acquired during the marriage. The court remanded to the appellate court to remand to the trial court to conduct a proper valuation of benefits of appellee's pension plan and to apply the same "time rule" formula to death benefits that was applied to the deferred retirement benefits.