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In re Marriage of Judith E. Walker

April 15, 1999

IN RE: THE MARRIAGE OF JUDITH E. WALKER, PETITIONER-APPELLANT, AND JAMES E. WALKER, RESPONDENT-APPELLEE.


Appeal from Circuit Court of Logan County No. 96D197 Honorable Gerald G. Dehner, Judge Presiding.

The opinion of the court was delivered by: Justice McCULLOUGH

IN THE COURT OF APPEALS OF THE STATE OF ILLINOIS

Judith and James Walker were married on May 7, 1994. No children were born of the marriage. The marriage was dissolved on March 19, 1997. On appeal, Judith and James dispute the trial court's Disposition of James' thrift incentive plan under section 503 of the Illinois Marriage and Dissolution of Marriage Act (Act) (750 ILCS 5/503 (West 1996)). The trial court awarded Judith $17,643 as her share of the marital interest in the plan. The trial court ordered this amount to be paid to Judith under a qualified domestic relations order (QDRO), effec- tive the date of dissolution. We affirm.

On January 12, 1998, the trial court held a hearing on property distribution issues. On August 5, 1998, the trial court entered the supplemental property distribution order. The trial court split the nonpension marital property fairly equally. The trial court awarded Judith her pension. Judith earns $13,036 per year working full-time as a high school secretary and part-time in a restaurant. Judith has worked at the high school for 25½ years.

Finally, the trial court awarded Judith $17,643 as her share of the marital interest in James' thrift plan, to be allocated according to a QDRO, effective March 19, 1997. James had worked for Prairie Farms Dairy (Prairie Farms) for about 20½ years and, at the time of the January 12, 1998, hearing was a transportation coordinator. Evidence regarding the value of the thrift plan was presented in testimony by James at the January 12, 1998, hearing and in testimony given by Kris Rosentreter, Prairie Farms' payroll coordinator, at a separate hearing on February 9, 1998. According to James' August 4, 1997, financial affidavit, he earns approximately $48,012 per year. According to Rosentreter, James earned $43,200 (gross) in the fiscal year ending on September 30, 1994 (FY 1994); $43,800 for FY 1995; $46,680 for FY 1996; and $48,380 for FY 1997.

James testified that he has contributed 2% of his salary into an "employee account" in the pension plan for 19 years, and Prairie Farms also contributes into an "employer account" in the plan. Rosentreter testified that the employer contribution is subject to change but, for the past 12 years, the employer contributions had been 15% of the employee's wages. Rosentreter testified the value of the employer account fluctuates from financial quarter to financial quarter. Accord- ing to Rosentreter, the money is managed by a trust company, and he has no record of individual investments throughout the year. Rosentreter testified James was fully vested in his plan.

Rosentreter read from a summary of financial figures he had com- piled regarding James' thrift plan. Because these figures were only available on a quarterly basis, Rosentreter was unable to present the total accumulated earnings on May 7, 1994, the date of the marriage. As of March 31, 1994, the thrift plan contained a total of $165,549 ($148,708 in the employer account and $16,841 in employee contribu- tions). As of June 30, 1994, the thrift plan contained a total of $164,550 ($147,375 in the employer account and $17,175 in employee contributions). Both parties agree the pension's value at the date of marriage is $165,050, the average of these two estimates.

As of September 30, 1997, the pension was worth $302,540 ($278,777 in the employer account and $23,763 in employee contributions). Rosentreter estimated employee contributions for May 7, 1994, through December 2, 1997, to be $3,361, and employer contributions to be $27,125, though he mentioned several potential errors in these estimates. Rosentreter testified part of the increase in any given year is due to appreciation of contributions from prior years, including years before the marriage. Rosentreter testified that if a QDRO were entered, splitting the parties' interest in the thrift plan, a separate account would be set up for Judith, and she would be able to withdraw her funds when James began withdrawing his.

Both parties agree James' thrift plan is to be treated as a pension. Apportioning a pension in a marital dissolution is a three- step process. First, the trial court determines the present value of the pension, with a discount to reflect the possibility it will not vest. Second, the court determines the marital interest in the property. Third, the trial court divides that marital interest, just as it would divide any other marital property. In re Marriage of Wisniewski, 107 Ill. App. 3d 711, 717, 437 N.E.2d 1300, 1305 (1982).

The trial court determined the value of the pension on the date of dissolution by extrapolation, based on its average increase in value over time. In calculating the average increase, the trial court erroneously divided the total value of the plan by the months of marriage. Instead, it should have divided the change in the value of the plan ($302,540 minus $165,050) by the number of months in which that change occurred (40). After correcting for this error, the estimated value of the pension plan on the date of dissolution was $280,782.

Judith argues the trial court erred in using the value of the thrift plan as of the date of dissolution instead of the value as of the date of the most recent estimate. She argues this deprives her of the growth in the value of marital contributions after the dissolution. See In re Marriage of Wisniewski, 286 Ill. App. 3d 236, 244, 675 N.E.2d 1362, 1369-70 (1997); In re Marriage of Wenc, 294 Ill. App. 3d 239, 246, 689 N.E.2d 424, 428 (1998). Rosentreter testified that once a QDRO is entered, the parties' interests are split into separate accounts but remain invested in the pension. The value of Judith's marital share will continue to grow before it is paid out through the QDRO.

Both parties agree that $165,050, the pension's value at the date of marriage, is James' non-marital property (see 750 ILCS 5/503(a)(6) (West 1996)). The primary dispute in this case is over how to treat the increase in the value of the pension during the marriage. Any increase in the value of James' pre-marital contributions would be non-marital, as well. 750 ILCS 5/503(a)(7) (West 1996). Pension benefits attributable to contributions during the marriage are marital property. In re Marriage of Smith, 102 Ill. App. 3d 769, 772, 430 N.E.2d 364, 366 (1981). A trial court's method of determining the marital interest in a pension will only be reversed if it constitutes an abuse of discretion. In re Marriage of Blazis, 261 Ill. App. 3d 855, 863, 634 N.E.2d 1295, 1300-01 (1994).

James argues the trial court should determine the marital interest by multiplying the pension benefit by the ratio of years of marital participation to total years of participation. See In re Marriage of Hunt, 78 Ill. App. 3d 653, 663, 397 N.E.2d 511, 519 (1979). Hunt reflects a long line of cases that holds the trial court may use some formula based on contributions or years of participation in a pension plan to estimate the marital share of a pension. See Wisniewski, 286 Ill. App. 3d at 242, 675 N.E.2d at 1367.

However, another line of cases has held that a pension should be apportioned under statutory standards for commingled marital and non-marital property (750 ILCS 5/503(c) (West 1996)). See In re Marriage of Leisner, 219 Ill. App. 3d 752, 764, 579 N.E.2d 1091, 1098-99 (1991); In re Marriage of DiAngelo, 159 Ill. App. 3d 293, 296-98, 512 N.E.2d 783, 785-86 (1987). The second district recently reconciled these cases, holding the Leisner approach should be used where, as here, the majority of the value of the pension ...


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