H and W married in 1994. They separated in 2010. H is an attorney in private
practice. W is also an attorney, and is an employee of a California county
district attorney’s office. Throughout their entire marriage, H
has contributed to Social Security through mandatory payroll deductions.
However, as a local government employee, W mandatorily contributed to
her civil service pension and did not pay make social security contributions.
Under her pension plan, she is prohibited from contributing to social
security. Further, under the federal Windfall Elimination Provision of
the Social Security Act, 42 U.S.C. § 415(a)(7), and the Government
Pension Offset, 20 C.F.R. § 404.408a(a), W is barred from receiving
Social Security benefits, both individually and as the spouse of someone
who contributed to Social Security.
When they divorced, they entered into agreements regarding child custody/visitation
and distribution of their community property, but they could not agree
on the fair distribution of future retirement benefits. California law
considers W’s contributions to her retirement plan as community
property with her spouse entitled to his one-half share. Social Security,
however, considers payments to its program as property of the contributor
and not community property, even though California considers income accrued
during marriage as community property. Thus, H was entitled to one-half
of W’s retirement program, but W was not entitled to one-half of
H’s retirement program; a very unfair result.
Because of the unfair result, W petitioned the family court to provide
for an equitable (fair) distribution of their future retirement benefits.
She suggested the court either: “…(a) reimburse the community
estate for the amount of Social Security contributions withheld from H’s
pay, and then dividing the assets, (b) allocating a portion of the civil
service benefits to W as separate property based on the present value
of the Social Security benefits she would have accumulated had she been
a Social Security participant, or (c) consider the present value of H’s
Social Security benefits when dividing the civil service benefits to ensure
the parties received roughly equal retirement benefits…”
The court sided with H, determining that Social Security contributions
were not community property and W was not entitled to any benefits derived
from them. The court also held that W’s contributions to her civil
service pension plan were community property, and H was entitled to his
one-half community interest. The court also held, “…“Thus,
whether the result is inequitable or not, this court cannot adjust the
division of [W’s civil service] benefits or deviate from the requirement
of equal division…” because it was mandated by federal law.
The Appellate Court agreed with the trial court; stating H and W never
had the option to spend W’s Social Security withholdings in any
way other than on Social Security contributions because they were withheld
directly from his income as required by federal law. Therefore, “[H]
never ‘acquired’ those funds, and they never became community
The Appellate Court did suggest, however, if the California state legislature
wanted to, they could change the law to allow for this disparity like
other states had done.