Appeal from the Circuit Court of Lee County. No. 94-D-90 Honorable David T. Fritts, Judge, Presiding.
The opinion of the court was delivered by: Justice Byrne
Petitioner, Everett E. Hulstrom, appeals from the order of the circuit court denying his petition to modify the judgment dissolving the parties' marriage. We reverse as void the portion of the dissolution judgment dividing the marital property, and we remand the cause with directions.
On August 19, 1994, the trial court dissolved the parties' 46-year marriage and incorporated their marital settlement agreement into the judgment. At the time of the dissolution, petitioner and respondent, Ila J. Hulstrom, were 67 and 65 years old, respectively, and each was receiving social security benefits. The marital settlement agreement provides in relevant part:
"1. The Social Security paid on behalf of [petitioner] and [respondent] shall be combined monthly and paid to [respondent], where, on the tenth of each month, one-half of the combined Social Security payment shall be deposited by direct deposit from [respondent's] account into an account designated by [petitioner]. To the extent that such Social Security payments to either party are income, and to such an extent that the party who receives the greater amount of Social Security receives income from the party to whom the greatest amount of Social Security is paid, that amount of Social Security shall be income to the receiving party to the extent that it was income to the paying party.
8. To the fullest extent provided by law, each party waives maintenance now and all times in the future."
On May 24, 2002, petitioner petitioned to modify the portion of the judgment allocating the social security benefits. Petitioner alleged that paragraph 1 of the settlement agreement "purports to distribute a Social Security benefit as a property right when, in fact and in law, it is a support matter." Petitioner alleged that the parties should no longer share their social security benefits because (1) petitioner's income had decreased significantly; (2) his medical expenses had increased due to his failing health; (3) respondent had remarried and was financially secure; and (4) paragraphs 1 and 8 of the settlement agreement were inconsistent.
At a hearing on the petition, petitioner testified to his declining income and deteriorating health, including a form of Parkinson's disease from which he suffers. Petitioner and respondent had each remarried, but respondent did not notify petitioner of her remarriage.
On July 25, 2002, the trial court denied the petition to modify the judgment, finding that the parties had followed the settlement agreement for eight years and had never treated the equal division of social security benefits as maintenance. The court concluded that respondent's remarriage would not end her right to one-half of the couple's benefits because the parties had viewed them as marital property. The court emphasized that the parties considered the equal division of benefits when dividing the remaining marital assets. The court denied petitioner's subsequent motion to reconsider on August 30, 2002, and petitioner timely appealed on September 4, 2002.
On appeal, petitioner argues that the trial court erroneously determined that the equal division of the parties' social security benefits was an unmodifiable distribution of marital property, rather than a modifiable maintenance obligation that terminated automatically upon respondent's remarriage. Petitioner presents two theories on appeal: (1) because state trial courts lack jurisdiction to order the division of social security benefits in marriage dissolution cases, the marital settlement agreement disposing of the parties' social security benefits may not be enforced; and (2) even if the circuit court had jurisdiction over the issue, the social security benefits qualify as "maintenance" rather than "marital property" under the Illinois Marriage and Dissolution of Marriage Act (Marriage Act) (see 750 ILCS 5/503(a), 504(a) (West 2000)).
Respondent alternatively contends that (1) the agreement's social security provision is a valid allocation of marital property rather than a description of petitioner's prospective maintenance obligation and (2) if this court decides that the provision is invalid, a new hearing is necessary for the redistribution of the marital assets.
The issue of whether a state trial court lacks jurisdiction to enforce the provision of a marital settlement agreement dividing social security benefits is a question of first impression in Illinois. However, two other jurisdictions have ruled that a settlement agreement dividing such benefits as marital property is void for violating the anti-alienation provision of the Social Security Act (42 U.S.C. §407(a) (2000)). Gentry v. Gentry, 327 Ark. 266, 938 S.W.2d 231 (1997); Boulter v. Boulter, 113 Nev. 74, 930 P.2d 112 (1997). We find these cases to be persuasive and directly on point.
It is well settled that, under the supremacy clause of the United States Constitution, a federal law preempts a conflicting state law and the state law is nullified to the extent that it actually conflicts with federal law. U.S. Const., art. VI; In re Marriage of Wiseman, 316 Ill. App. 3d 631, 637 (2000).
Section 407(a) of the Social Security Act provides as follows:
"(a) The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the ...