Appeal from Circuit Court of Menard County. No. 92D10. Honorable Arthur R. Strong, Judge Presiding.
As Corrected July 15, 1994.
Honorable Robert J. Steigmann, J., Honorable Carl A. Lund, J., Honorable Frederick S. Green, J.
The opinion of the court was delivered by: Steigmann
JUSTICE STEIGMANN delivered the opinion of the court:
In November 1992, the trial court entered a judgment dissolving the 25-year marriage between Virginia Blazis, petitioner, and Robert Blazis, respondent. In April 1993, after receiving evidence and memoranda from both parties, the court entered an order distributing the marital property. In this order, the court also required respondent to pay a portion of petitioner's attorney fees. The court subsequently denied respondent's motion for reconsideration.
Respondent appeals, arguing that the trial court (1) abused its discretion in dividing his pension between the parties, (2) erred by finding that monies he received from his mother during the marriage were not a marital debt, and (3) abused its discretion by requiring him to pay a portion of petitioner's attorney fees without conducting on evidentiary hearing on the matter.
Petitioner (43 years old at the time of these proceedings) and respondent (44 years old) married in June 1967. They had two children during their marriage, who were both adults at the time of these proceedings. In January 1992, petitioner filed a petition for dissolution of the marriage, which the trial court granted in November 1992. The court held hearings in October and December 1992 concerning the division of the marital property.
At the time of these proceedings, respondent was employed by the Illinois State Board of Education (ISBE) as the assistant superintendent of administrative services. He had worked at ISBE for more than 20 years, and his current salary was over $76,000. Because he worked for the ISBE, he was mandatorily covered under the Illinois Teachers' Retirement System (ITRS) in lieu of participation in the social security system, and thus paid approximately 8% of each paycheck into ITRS. See Ill. Rev. Stat. 1991, ch. 108 1/2, par. 16-152.
During the hearings, Dr. Thomas Langford testified on behalf of petitioner as an expert concerning the estimated present value of respondent's ITRS pension. Langford determined that value by using generally accepted economic techniques and principles, as well as a "formula" method and an "actuarial" method. He used these methods because ITRS was statutorily required to calculate respondent's actual pension benefits under both methods. He explained that the amount of the actual pension benefits (when a covered employee actually retires) is determined by the greater of the benefit amount computed under the formula method or under the actuarial method. See Ill. Rev. Stat. 1991, ch. 108 1/2, par. 16-133(a).
In computing the value of respondent's pension benefit under both methods, Langford relied upon the following information: (1) respondent's current age; (2) an assumed retirement when respondent reached 60 years of age; (3) the Illinois mortality tables from the National Center for Health Statistics; and (4) an interest rate based upon the average effective yields for U.S. Treasury Bills as listed in the Wall Street Journal. Langford used this interest rate to calculate the present value (in 1992 dollars) of pension benefits respondent should receive after he retires. Langford also explained that he assumed respondent's retirement at 60 years of age because retirement at an earlier age could incur a penalty, resulting in a reduction in the amount of pension benefits. See Ill. Rev. Stat. 1991, ch. 108 1/2, par. 16-133(a)(B).
Langford noted that the formula method is based upon a mathematical formula set forth in the statutory framework for ITRS. (See Ill. Rev. Stat. 1991, ch. 108 1/2, par. 16-133(a)(B).) When employing this method, Langford relied upon the following additional information (not used by the actuarial method) to calculate respondent's estimated pension benefit: (1) respondent's years of credited service with ITRS at the time of the hearing; and (2) a final, averaged yearly salary based upon the last four years of respondent's employment prior to the hearing. Under this method, Langford determined that the marital portion of the present value of respondent's retirement benefits, as of the day before the October hearing, was $73,818.
Langford next testified about the results he calculated using the actuarial method. The actuarial method takes the balance of contributions an employee paid into ITRS, plus interest, and compares it to the value of an annuity that could be purchased in the private sector with that balance. Therefore, respondent's estimated pension benefit would equal the yearly payments from such an annuity. When using this method, Langford relied upon the following additional information (not used by the formula method) to calculate respondent's estimated pension benefit: (1) the total amount of contributions respondent made into ITRS, plus interest; and (2) an averaged interest rate available in the private sector on an annuity. Under this method, Langford determined that the marital portion of the present value of respondent's retirement benefits, as of the day before the October hearing, was $118,664.
During cross-examination, Langford testified that the basic difference between the actuarial method and the formula method is the difference in the interest rates used to arrive at respondent's estimated pension benefit. Under the formula method, the statute assumes a certain rate of earnings in its mathematical formula; whereas, under the actuarial method, the interest rate structure is based upon the market rate of a private sector annuity. He acknowledged that the actuarial method is subject to more future assumptions than the formula method--mainly that an annuity could be purchased in the future at the same cost it could be purchased today. He also acknowledged that respondent would incur a risk that he could die prior to his retirement and not receive any payments from his pension, while petitioner would not share this risk if she received her portion of the pension up front.
Jay Buck, a certified public accountant, testified as an expert for respondent on the estimated present value of respondent's pension. Buck determined the present value of respondent's pension by using only the formula method. Under this method, Buck calculated that the marital portion of the present value (as of June 1, 1992) of respondent's pension was $75,325. Buck noted that his calculations differed from Langford's because (1) he assumed a different interest rate, and (2) he used life expectancy probabilities, instead of the likelihood of death probabilities used by Langford. Buck stated that while his calculations differed from Langford's, both were done according to acceptable accounting principles and practices.
Buck wrote respondent a letter explaining that he did not utilize the actuarial method because it is based upon "assumptions, including future post[-]marital growth of contributions." Buck testified that assumptions about interest rates and mortality rates are also included in the assumptions underlying the actuarial method. He noted that ITRS does not provide specific calculations for the actuarial method as it does for the formula method. On cross-examination, Buck stated that ITRS does allow for valuing an employee's pension under both the formula method and the actuarial method at the time the employee retires, and at retirement, future assumptions must be made in order to calculate the employee's pension benefit under the actuarial method. Buck indicated that these future assumptions are similar to those Langford made in his calculations under the actuarial method.
Isabelle Blazis (Mrs. Blazis), respondent's mother, testified regarding money she gave respondent during his marriage with petitioner. In February 1985, she gave him a check for $10,000 after he had asked her for the loan, but she could not remember if he told her why he needed it. She testified that respondent filled out and signed a promissory note for the money when he received it, but she later stated that she could not remember if she had the promissory note forms back in 1985. Mrs. Blazis never requested or received any payments from respondent, intending instead to demand repayment "when she needed [the money]." She acknowledged that petitioner was not present when respondent signed the note, and she had never discussed the loan with petitioner.
When confronted with her responses at a deposition in September 1992, she acknowledged her previous statement that she was going to ask for the money when Mark, the parties' son, graduated from college. Her deposition also indicated that the money was for Mark's college expenses. When reminded that Mark was only in high school in 1985, she testified "well, whatever. I don't know. I don't know when he was in college." After further questioning, Mrs. Blazis stated that respondent had not asked her for the money in order to help with Mark's college expenses.
Mrs. Blazis next testified that she gave respondent a check for $16,720 in May 1991 as a loan for purchasing a car, but she did not know if he used the money for that purpose. Again, however, Mrs. Blazis was confronted with her inconsistent deposition testimony that she could not remember why respondent asked for the loan. When presented with a promissory note for $16,720 dated May 13, 1991, and asked if respondent signed it on that day, she testified "yeah. I can't remember, but I guess so. It says so." She also could not remember if she gave respondent the promissory note to fill out and sign or if respondent gave it to her. She testified that she has not yet demanded payment on the loan, but that she intended to do so after Mark graduated from college. She again acknowledged that petitioner was not present when respondent signed this note and that she never discussed it with petitioner.
Mrs. Blazis further testified that she made three loans to respondent of $1,000 on December 25, 1989, December 24, 1990, and December 20, 1991. Respondent also signed a promissory note for each of these transfers. She testified that none of these transfers were Christmas presents; they were loans she made to respondent upon his request. She did not know why he wanted any of these loans or how he used the money. She testified that she had not yet demanded repayment of any of these loans, but--again--that she might ask "when I need it or sometime after [Mark graduates from] college." Regarding each of these transfers, she again acknowledged that petitioner was not present when respondent signed these notes and that she had never discussed these loans with petitioner.
Respondent also testified about the money he received from his mother. He stated that for each check, he took a promissory note from a drawer in his mother's residence, filled out and signed the note, and then gave it to his mother. He did not discuss the three $1,000 loans with petitioner, and he did not think that she was aware, at that time, that he had received those checks. He testified that he told petitioner after receiving the $16,720 check that it was a loan they had to repay, but he did not show her the promissory note. He remembered that petitioner was unresponsive when he told her about the loan. He stated that he deposited the check in his savings account and used the money to buy a car, to go on a cruise with petitioner, and to pay other debts.
Regarding the $10,000 check that respondent received from his mother in February 1985, he testified that he told petitioner they borrowed this money from his parents in order to purchase a new car. He could not recall if he showed petitioner a copy of the promissory note, but he stated that she was aware they had to repay the money with 6% interest. He used this money to buy a minivan. He testified that the promissory note for the 1985 loan was actually a replacement note he made out in May 1991. He noted that his marriage at this time was experiencing difficulties, but they were "not extreme." He stated that the other notes were completed on the dates set forth on the face of each note.
Respondent further testified that his understanding with his mother regarding repayment of the loans was that respondent and petitioner would pay her back when they could do so. He could not remember if he had ever discussed this with petitioner; however, he thought that they probably had talked about it, and that she had concurred with it; however, he could not recall exactly what was said. He also testified that he borrowed another $2,750 from his mother in August ...