Survivorship Annuity - Maintaining the Status Quo

Gogan v. Gogan, No. 2012-CA-001634-MR (Ky. App. 2013)
Surviving Spouse Retirement Option Elected During Marriage is Martial Property

Rendered: October 25, 2013
Not to be Published
Opinion Affirming

This Opinion both revisits a previous holding of the Court and, in dictum, reminds us that there may be multiple means to achieve an end.  It will be interesting to see what effect the Court’s passing commentary may have upon future litigation with regard to the characterization of surviving spouse benefits and a trial court’s discretion as to equitable division of martial property and awarding maintenance.

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In Gogan, Wife had two pension plans from previous employment and Husband had a GE pension plan that was already in ‘pay-status’ when the petition for dissolution was filed.  At the time of Husband's retirement, the parties chose to have Wife listed with the survivorship beneficiary option. The trial court determined that 54% of Husband’s pension was marital in nature. The trial court also ordered both parties to maintain the status quo and keep the other spouse as the survivor beneficiary on their respective pensions.

Husband filed a motion to alter, amend, or vacate, arguing that keeping Wife as a survivor beneficiary on his pension lessened the amount he received per month. The trial court declined to change its order finding that the parties had made a joint decision during the marriage to economically protect Wife should Husband predecease her. The trial court also noted that if Wife was not guaranteed of this ongoing income, then she would be entitled to maintenance given the economic disparity of the parties.

Husband appealed, arguing that Wife was not entitled to survivor benefits as an indirect form of permanent maintenance because she had sufficient property and income to support her needs and because she did not qualify for the same under KRS 403.200(2).

In affirming the trial court’s award of the survivor benefit as marital property, the Court of Appeals rejected Husband’s depiction of the trial court’s distribution of the retirement benefits as permanent maintenance.  The Court instead relied upon well-settled law that vested retirement benefits earned during the marriage are to be divided as marital property and found that the trial court did not err in ordering the parties to maintain the status quo, keeping each other as survivor beneficiary.

In a final footnote to the Opinion, the Court of Appeals duly observed:

While the trial court noted that if Carla were not to receive the retirement benefits, then she would be entitled to maintenance, we do not believe this transforms the retirement benefits into permanent maintenance. Instead, we believe that the trial court was simply informing Tom that it had considered Carla’s financial position and that the distribution of the vested retirement benefits put Carla in a position where she was not entitled to maintenance and, thus, the court did not order maintenance.

The effect of this dictum will be arguably somewhat limited as this issue is largely confined only to defined benefit plans wherein the order dividing the pension utilizes a ‘shared interest’ and the pension being divided is not already in pay-status. In such cases it may be worthwhile for the parties to consider agreeing to the survivorship election and negotiating its cost, rather than - for instance - spending time and money litigating over maintenance.