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Wilkins v. Wilkins8/17/1993
Defendant contends that the trial court erred in rendering its 12 December 1991 equitable distribution order. We agree. We reverse the trial court's 12 December 1991 equitable distribution order and accordingly remand for a new trial.
I.
First, defendant contends that "the trial court erred in reducing the nominal value of the retirement benefits." We proceed with an examination of the trial court's order.
A. Valuation Pursuant to G.S. 50-21(b) (Date of Separation)
G.S. 50-20(b)(1) provides that " arital property includes all vested pension, retirement, and other deferred compensation rights."
Marital property must be valued as of the date of separation. G.S. 50-21(b). See G.S. 50-20(b)(3) ("vested accrued benefit" is to be "calculated as of the date of separation").
From findings of fact Nos. 12-16 and Conclusions of law Nos. 6 and 10, it is apparent that the trial court relied on hypothetical tax consequences arising from speculative early withdrawals, most of which defendant could not have made at the date of separation under the terms of the retirement plans. Conclusion of law No. 10 provided:
C. That based on the Court's determination that the said present value computation should include the calculation of the tax consequences of the receipt of said monies by the Plaintiff, the net present value of the Plaintiff's employment benefits is no greater than the sum of $93,084.60.
D. As an alternative Conclusion of Law, the Court finds that had the net present value not included the tax consequences, then the Court would have found that pursuant to N.C.G.S. Section 50-20(c)(11) the tax consequences of the receipt of these employment benefits by the Plaintiff should be a distributional factor in the amount of $64,158.21.
Conclusion of law 10(c), supra, was erroneous in that the Equitable Distribution Act requires that "marital property shall be valued as of the date of the separation of the parties." G.S. 50-21(b). The expert at trial testified that the "before tax" value of the pension plans was $157,242.81 as of the date of separation. Accordingly, the trial court erred in concluding that the net present value of the pensions as of the date of separation was $93,084.60. See Stiller v. Stiller, 98 N.C. App. 80, 83, 389 S.E.2d 619, 621 (1990) (holding that trial court erred in using the "withdrawal value" to determine the respective values of the parties' vested retirement benefits). Accord, Orgler v. Orgler, 237 N.J. Super. 342, 354-55, 568 A.2d 67, 73 (App.Div. 1989); Hovis v. Hovis, 518 Pa. 137, 143, 541 A.2d 1378, 1380-81 (1988); In Re Marriage of Marx, 97 Cal.App.3d 552, 159 Cal.Rptr. 215 (1979). Contra, In Re Marriage of Mulvihill, 471 N.E.2d 10 (Ind.App. 1984).
We note the trial court's reliance on Mishler v. Mishler, 90 N.C. App. 72, 78, 367 S.E.2d 385, 389 (1988) in determining the value of the retirement benefits on the date of separation. We find Mishler to be readily distinguishable. Unlike here, in Mishler
the defendant had already paid the taxes before the equitable distribution hearing was held. In Mishler, the defendant participated in her employer's "contribution pension plan" which was to vest in 1990. The defendant's employer dissolved its business in 1983 and a plan was adopted terminating the "contribution pension plan" in 1984. Approximately two years before the equitable distribution hearing was held, the defendant received a
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