RETIREMENT BENEFITS

In re Marriage of Cooper(2008) 160 Cal.App.4th 574

In re Marriage of Cooper

1963: H begins public employment Marriage: 11/91 H retires: 12/95 H chooses “option 2” survivor benefit plan

(provides reduced monthly payments, but retirement allowance goes to his designated beneficiary, until her death)

Irrevocable per Gov C, Sections 21492 and 21456, unless H awarded entire pension.

In re Marriage of Cooper

2005: Dissolution Disso judgment states there is a

community interest in CalPERS and W’s interest is 6.38%

3/06: W files an ex parte application for an OSC, seeking H to sign DRO that would award all of the survivor benefits to her.

In re Marriage of Cooper

H asks the court to allow him to buy her out, arguing she would otherwise receive a windfall of about $208,400, which would far exceed her community share (present day value = $33,900)

T/Ct: Denies request for buy out and approves W’s proposed DRO.

Court finds that CalPERS would get a windfall on H’s death, and that H by choosing option 2, had conferred a tangible benefit on W.

In re Marriage of Cooper

CA-2 (3): Reverses The disso court had discretion to divide

the pension by “cash out method” or “in kind” method.

The only possible solution was to order H to buy out W’s present value of that interest.

In re Marriage of Cooper

Court of Appeal dismisses as erroneous that CalPERS would receive a windfall, because H would be free to name a new beneficiary.

Court also noted that there was no evidence H intended to relinquish his interest, make a gift, or transmute his separate property.

In re Marriage of Cooper

Important lesson: Once CalPERS has made its first payment to a retiree, the beneficiary designation becomes irrevocable.

RELEVANT CODES

In re Marriage of Cooper Government Code, Section 21492 The designation of a beneficiary under optional settlements 2 and 3, or

if a benefit involving the life contingency of the beneficiary is provided under optional settlement 4, is irrevocable from the time of the first payment on account of any retirement allowance. Otherwise a designation of beneficiary under this system is revocable at the pleasure of the member who made it. A member's marriage, dissolution of marriage, annulment of his or her marriage, the birth of his or her child, or his or her adoption of a child shall constitute an automatic revocation of his or her previous revocable designation of beneficiary. A member's termination of employment and withdrawal of contributions shall constitute an automatic revocation of the previous revocable designation of beneficiary. Subsequent reemployment or reinstatement from retirement to employment covered by this system shall not reinstate the previous designation of beneficiary.

Upon revocation of any beneficiary designation, a member may designate the same or another beneficiary by a writing filed with the board, except as otherwise provided in Section 21490.

In re Marriage of Cooper Government Code, Section 21456: Optional settlement 2 consists of the right to have a retirement allowance paid a member until

his or her death and thereafter to his or her beneficiary for life.

If the beneficiary predeceases the member and the member elected this section to be effective on or after January 1, 1990, the member's allowance shall be adjusted effective the first of the month following the death of the beneficiary, to reflect the benefit that would have been paid had the member not selected an optional settlement.

If a nonspouse beneficiary waives entitlement to this allowance and the member elected this section to be effective on or after January 1, 1993, the member's allowance shall be adjusted effective the first of the month following the receipt of the waiver of the allowance entitlement from the nonspouse beneficiary to reflect the benefit that would have been paid had the member not selected an optional settlement.

If the marriage of a member is dissolved or annulled or there is a legal separation between the member and the beneficiary spouse and the judgment dividing the community property awards the total interest in this system to the member, and the member elects this section to be effective on or after January 1, 1994, the member's allowance shall be adjusted effective the first of the month following the filing of the judgment with the board to reflect the benefit that would have been paid had the member not selected an optional settlement.

THE END

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