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In re Marriage of Mueller

Supreme Court of Illinois

June 18, 2015


Appellate court judgment affirmed; Circuit court judgment affirmed; Cause remanded.

William F. Moran III, of Stratton, Moran, Sronce, Reichert & Nardulli, of Springfield, for appellant.

Michelle L. Blackburn and Emily A. Reid-Peterson, of Sorling Northrup, of Springfield, for appellee.

JUSTICE THEIS delivered the judgment of the court, with opinion. Chief Justice Garman and Justices Freeman, Thomas, and Kilbride concurred in the judgment and opinion. Justice Burke dissented, with opinion, joined by Justice Karmeier.



[¶1] The central issue in this divorce case is one that we declined to answer in In re Marriage of Crook, 211 Ill.2d 437, 452, 813 N.E.2d 198, 286 Ill.Dec. 141 (2004)--namely, whether a spouse who participates in a government pension program in lieu of Social Security must be placed in a position similar to the other spouse who participates in Social Security and whose benefits

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under that program are exempt by federal law from equitable distribution under section 503(d) of the Illinois Marriage and Dissolution of Marriage Act (Dissolution Act). See 750 ILCS 5/503(d) (West 2012).

[¶2] Here, the circuit court of Sangamon County refused to decrease the value of respondent Christopher Mueller's municipal police pension by the value of hypothetical Social Security benefits that he is not entitled to receive as a nonparticipant in that program. The appellate court affirmed the trial court's decision. 2014 IL App. (4th) 130918-U. For the reasons that follow, we affirm, as well.


[¶4] Shelley and Christopher Mueller were married in 1992. Shelley works for a private sector company, and has Social Security tax withheld from her pay. She expects to receive full Social Security benefits in 2033 at age 67. Christopher works for the Springfield police department as an officer, and does not have Social Security tax withheld from his pay. Instead, he contributes to the Springfield Police Pension Fund, and he can retire with full pension benefits in 2017 at age 50.

[¶5] In 2012, Shelley filed a divorce petition. The following year, the trial court held a hearing on the petition. Christopher offered a report from Sheila Mack, owner of Equitable Solutions, a self-described " pre-divorce planning" business. Mack's report stated that she computed the estimated present value of Christopher's pension benefits, but, in doing so, used a " Windfall Elimination Provision" or WEP. She explained:

" Participants in the Springfield Police Pension Fund do not pay into Social Security. Because of the ruling by the Illinois Supreme Court regarding Social Security benefits in divorce [presumably, Crook ], the question becomes how to place Mr. Mueller in a position similar to Mrs. Mueller whose Social Security benefits are exempt from equitable distribution[.] In other words, what portion of Mr. Mueller's monthly benefit would he receive 'in lieu of' Social Security?"

[¶6] That portion was derived from figures Mack generated with " Social Security's Online Calculator." She input Christopher's wages through August 2012, as if they were " covered by Social Security," and determined that his monthly Social Security benefit at age 67 would be $1,778 per month. She then input his wages " for only those years in which he contributed to Social Security," and determined that his monthly benefit at age 67 would be $230 per month. The difference of $1,548 per month was what Mack posited as " the dollar amount Mr. Mueller would receive 'in lieu of' Social Security," or his " WEP offset." And the difference between that amount and the amount he would receive from his pension was $2,479 per month, which yielded an estimated present value of $639,720.74.[1]

[¶7] At the hearing, Mack's testimony largely echoed the contents of her report. She stated that Social Security benefits are no longer " divisible" in divorce proceedings, pursuant to federal law. According to Mack, the " Social Security Administration has acknowledged that part of the pension for a person who doesn't contribute to Social Security is in lieu of Social

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Security[ ] because they instituted two Social Security offsets." Mack did not further describe those offsets, and when Christopher's attorney asked her to describe the goal of an offset, Shelley's attorney made an objection to Mack's report because the valuation method proposed there was contrary to Crook. Christopher's attorney discussed that case briefly, and asserted that it left " wide open" the issue of whether that method comported with federal law.

[¶8] The trial court reviewed Crook and sustained the objection. The court noted that this court, " while acknowledging the unfairness of this process, is pretty intent on keeping this Social Security benefit out of the pension, and basically the overall analysis of the marital estate." Thus, the valuation method proposed by Mack is " an offset by any other language" and violates federal law as interpreted by Crook. Although the trial court declined to weigh Mack's report in its decision to divide property, it allowed Christopher's attorney to examine Mack to create an offer of proof for purposes of appeal.

[¶9] Mack outlined how she used the Social Security Administration's website to find, based on Christopher's earnings history, what his Social Security benefit would be if he had participated in that program. Mack asserted that the present value of his pension, minus the Social Security benefit that she calculated for him, was the same figure in her report, $639,720.74. The marital portion of that figure was $614,323.83, and the nonmarital portion was $25,396.91.

[¶10] On cross-examination, Shelley's attorney asked Mack more about how she arrived at those figures. Mack stated that because Christopher has served as a police officer for 20 years, he could retire with full pension benefits at age 50. The present value was based on that scenario. Shelley's attorney then asked Mack about the effect of Christopher obtaining a subsequent, postretirement job, at which Social Security tax would be withheld, until age 67. Mack conceded that he would be entitled to Social Security benefits, but because he would lack 20 years of what the Internal Revenue Service calls " substantial earnings," there would be an offset. This offset, likely one of the two mentioned by Mack earlier in the hearing, serves to decrease Social Security benefits for people who have not participated in the program for a large part of their working lives. According to Mack, Christopher had only three years of substantial earnings before joining the Springfield police department, so his Social Security benefit at age 67 would be reduced by 55%, from $517 per month to $230 per month. Mack could offer no opinion on whether Shelley would suffer any detriment because Christopher did not pay into Social Security.

[¶11] At the close of evidence, the trial court ruled that Christopher could amend his calculations consistent with its ruling on the objection to Mack's report. Christopher filed a closing written argument, where he stated that Mack recalculated the present value of his pension benefits " without the Social Security offset" as $991,830.[2] The court adopted that figure, and ultimately awarded Shelley slightly more than 35% of Christopher's pension, or $350,000. Christopher appealed.

[¶12] A divided panel of the appellate court affirmed the trial court's decision. 2014 IL App. (4th) 130918-U.

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The appellate court majority discussed Crook, and the question it left for another day, then discussed In re Marriage of Herald, 355 Or. 104, 322 P.3d 546 (Or. 2014) ( en banc ), where the Oregon Supreme Court approved a similar valuation method to the one proposed by Mack. The majority held:

" Based upon the Crook holdings that (1) 'it is improper for a circuit court to consider Social Security benefits in equalizing a property distribution upon dissolution' [citation] and (2) Social Security benefits 'may not be divided directly or used as a basis for an offset during state dissolution proceedings' [citation], we decline to reverse the trial court's judgment for failing to apply the Social Security benefit offset to the value of Christopher's pension. Although the offset proposed by Christopher would (1) not require the court to consider the value of Shelley's Social Security benefits and (2) achieve a more equitable result, the offset would nonetheless 'cause[ ] an actual difference in the asset distribution.' [Citation.] We read Crook to prohibit such an outcome." 2014 IL App. (4th) 130918-U, ¶ 24 (quoting Crook, 211 Ill.2d at 449, 451).

Because the trial court did not err by refusing to make the offset in Mack's proposed valuation method, the majority stated that the trial court also did not err in ...

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