HomeMy WebLinkAbout2003-4035 Civil
JEFFREY L. SHEAFFER, SR., : IN THE COURT OF COMMON PLEAS OF
PLAINTIFF : CUMBERLAND COUNTY, PENNSYLVANIA
:
V. :
:
:
FAYE A. SHEAFFER, :
DEFENDANT : 03-4035 CIVIL TERM
IN RE: EXCEPTIONS OF HUSBAND TO DIVORCE MASTER’S REPORT
BEFORE BAYLEY, J.
OPINION AND ORDER OF COURT
Bayley, J., February 27, 2008:--
Jeffrey L. Sheaffer, Sr., age 50, and Faye A. Sheaffer, age 50, were married on
August 13, 1977. They separated in July, 2003. They have three children, two are
emancipated and one is a minor who lives with wife and will graduate from high school
in June, 2008. Husband, who lives in Port Royal, works full-time as an electrician at the
Frog and Switch Company where his annual gross income in 2006 was $49,016. Wife,
who lives in Mechanicsburg, works full-time in the foodservice division of Ross
Distribution, where her annual gross income in 2006 was $19,289. Husband pays
spousal support in the amount of $428.50 per month, and child support in the amount of
$714.27 per month.
Husband served twenty years of active duty in the United State Marine Corps.
He retired on September 30, 1997. He has a taxable military pension with a net of
$1,112.07 per month. The pension has a marital value of $362,472. He also receives
non-taxable disability compensation, a VA waiver, in the amount of $775 per month,
with a value of $212,449. This disability compensation is not subject to equitable
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distribution. The value of the marital estate, other than the marital value of husband’s
pension subject to equitable distribution, is $71,211. Of that amount, $41,955 is equity
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in a marital home valued at $124,000. The remainder of the marital assets, less the
pension, includes a vehicle, some bank accounts, stock and some cash surrender value
in life insurance policies. The Master made the following equitable distribution analysis
pursuant to the Divorce Code at 23 Pa.C.S. Section 3502(a).
1. The parties were married and living together for twenty-seven
years. They have lived separate and apart for over four years.
2. Neither party has been married previously.
3. Both parties are 50 years of age and do not have any health
issues which affect their ability to engage in their current employment.
Their incomes derive from their earnings at their employment; husband
has income from his military pension and the VA waiver in addition to his
employment earnings. The VA waiver, which is not subject to equitable
distribution, has a value of $212,449.00.
4. Neither party has contributed to the education, training or
increased earning power of the other party.
5. The opportunity for future acquisitions that either party may have
would be from income and benefits provided through their employment.
Wife has no retirement income available to her and is, therefore,
dependent on sharing in husband’s retirement and military benefits earned
during the course of the marriage.
6. The source of income of both parties is their employment and
benefits attributed to that employment; as noted previously, husband does
have benefits arising from his retirement from the United States military.
7. Both parties have contributed to the acquisition of the marital
estate. Wife has moved numerous times as a result of husband’s military
service and has not had an opportunity during her lifetime to obtain a
position allowing her to accumulate long-term benefits. Wife has
contributed throughout the marriage as a homemaker and has had a
substantial part in raising the parties’ three children.
8. The value of any property set aside to each party will be what
they receive in the distribution of the marital assets. Husband, however,
Mansell v. Mansell,
In 490 U. S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989),
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the United States Supreme Court held that state courts in marital litigation can
Martin v. Martin,
only divide “disposable military retired pay.” See 385 Pa.
Super. 554 (1989).
The balance is a first and second mortgage totaling $82,045.16.
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does receive a benefit as a result of a monthly payment from the VA
waiver which is an asset of husband, not subject to distribution.
9. The standard of living of the parties was modest.
10, 10 (1) and 10 (2). No testimony has been offered nor has the
Master considered any federal, state, and local tax ramifications
associated with the assets except to note that net values are used with
respect to husband’s military pension. The VA waiver payment to
husband is non-taxable. No sale expenses of any assets have been
included. With respect to the real estate, wife intends to stay in that
property and so the Master has not taken into account any expenses
involved in sale or transfer or liquidation of the asset.
11. Wife is serving as the custodian of a dependent minor child
who will be graduating from high school in June 2008.
The Master concluded:
Based on the stipulations of the parties and counsel, the facts
found by the Master, and the analysis of the factors under Section 3502(a)
of the Domestic Relations Code, the Master believes that the distribution
of the assets, with the exclusion of husband’s military pension, as shown
on Joint Exhibit No. 1 should be 40% to husband and 60% to wife.
Consequently, of the assets shown on Joint Exhibit No. 1 which are
subject to the 40/60% distribution, husband is to receive a value of
$28,484.41 and wife will receive a value of $42,726.62. The value of the
distribution of the assets on Joint Exhibit No. 1 is considered in the
computation of the monthly benefit wife is to receive from the military
pension and the direct payment from husband to wife to effect the
distribution as recommended.
As referred to in the course of this report, husband has a military
pension which pays him $1,112.07 per month. Wife is not entitled to
receive from the military disbursement more than 50% of the distribution
so she would be entitled to have a specific payment from the military in the
amount of $556.00. However, the Master is recommending 70% of
husband’s military pension payment be paid to wife. In addition, the
amount of the payment also takes into account the distribution of assets
on Joint Exhibit No. 1. The total monthly payment from the pension,
therefore, will be $722.85. Payment of the pension amount that wife is to
receive will have to be supplemented by a direct payment from husband
for the amount not able to be deducted and paid to wife from the
retirement by the military. Since wife is only entitled to receive 50%
monthly from the military as her benefit through the distribution, the
husband will have to make up the difference through a direct payment to
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wife pursuant to a Court order in the amount of $166.85.
The stipulation which was entered by the parties on the record on
September 6, 2007, states the issue with respect to the VA waiver which
has a value of $212,449.00. Although this benefit was earned during the
marriage, it cannot be distributed as part of husband’s pension and is not
subject to equitable distribution. . . .
The Master believes that economic justice needs to be served by
allowing wife a larger portion of husband’s military pension which is
subject to distribution. The very large VA waiver benefit, which is not
subject to distribution, was earned during wife’s marriage to husband, and
the Master believes that this large non-marital, earned during the
marriage, benefit should be considered in providing wife economic justice
with respect to the distribution of the martial estate which is subject to the
distribution by the Pennsylvania Court. Therefore, the Master has
determined that wife shall receive, in addition to the 50% payment directly
from the military from husband’s military retirement pay, the sum of
$166.85 to be paid by husband to wife pursuant to a Court order. This
amount will take into account an additional payment to wife, from the
military pension, over and above the 50% which can be paid directly to her
and also in consideration of the substantial value of the VA waiver, which
is not subject to equitable distribution. The computation of the payment
has also taken into account the distribution of the marital estate less the
pension on Joint Exhibit No. 1 giving wife 60% and husband 40% of the
assets.
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See computations on the attached exhibit made part of this report. Note
the payment will change in 2008 and thereafter. See attached chart.
Based on his analysis and conclusions, the Master recommended:
a. Husband will receive 40% of the value of all items other than his
military pension and wife will receive 60% of all such value. Those items
total $71,211.00 in value. Therefore, in order to provide a 60/40
distribution, Wife should receive value of $42,728.00 and husband should
receive value of $28,483.00. However, wife retains in kind assets valued
at $61,628.00 and husband retains in kind assets valued at $9,583.00.
Therefore, in order to cause a 60/40 distribution as set out herein, wife’s
share of the military pension shall be reduced by $18,900.00. ($61,628.00
- $42,728.00)
b. Husband’s military pension shall be divided so that wife receives
70% of the pension and husband receives 30% of the pension. The
pension is valued at $362,472.00 and wife’s 70% share is valued at
$253,730.00. However, applying the credit which wife owes husband
pursuant to subheading (a) above, wife’s interest in the pension is
calculated at $234,830.00 or 65% of the pension’s value. Because the
Defense Finance Accounting Service (DFAS) will only distribute 50% of
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the disposable retired pay to wife directly, husband shall pay to her the
undistributed 15% by making direct monthly payments to her by the tenth
day of each month, commencing the month after the Decree in Divorce is
entered. Further, until DFAS directly pays wife one-half of the disposable
retired pay each month, commencing the month after the Decree in
Divorce is entered, husband shall pay to her 65% of his disposable retired
pay by the tenth day of each month. For 2007, the payment due wife by
husband shall total $722.85 per month (65% of $1,112.07). Commencing
January 10, 2008, the payment will be $836.19 per month until such time
as a DRO can be entered and the 50% payment directly from DFAS
commences and husband’s direct payment of 15% of disposable retired
pay commences.
Wife shall be entitled to receive the cost of living adjustment each
year on her 65% share of the pension. Because of the complexity in
calculating the amounts owed given phasing out of the VA waiver
pursuant to Federal law, Jonathan Cramer or Harry Leister of Conrad
Seigel Actuaries, or their designees, shall prepare a military Domestic
Relations Order to effect the division of the pension. Mr. Cramer or Mr.
Leister is also ordered to compute the amount of husband’s direct
payment to wife of that portion of her entitlement to the pension which will
not be directly paid to her by DFAS. Conrad Siegel Actuaries shall
provide, by December 15 of each year, any change to that amount paid
directly by husband to wife on account of the pension distribution and to
provide the amount of that payment to both parties who are ordered and
directed to keep Conrad Siegel Actuaries advised of their mailing address.
Husband filed exceptions to the Divorce Master’s Report which were briefed and
argued on January 23, 2008. At oral argument, husband narrowed his exceptions to
two issues: (1) Whether it was “error to award wife 70% of the marital portion of
Husband’s military pension,” and (2) Whether it was error “to order Husband to pay one-
half of all the actuarial services incurred by wife to date in the divorce action.” In
Tagnani v. Tagnani,
439 Pa. Super. 596 (1995), the Superior Court of Pennsylvania
stated:
Notwithstanding the fact that the Master observes and hears the
testimony of the witnesses, the trial court is not bound by the master’s
recommendations. . . . “[W]e must keep in mind that the court was free to
accept or reject the parties’ testimony.” “Although the master’s report is
entitled to great weight, that final responsibility for making the [equitable]
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distribution [of property] rests with the court.” (Citations omitted.) (Second
and third alterations in original.)
I. WHETHER IT WAS ERROR TO AWARD WIFE SEVENTY PERCENT OF
HUSBAND’S PENSION.
The Master made a thorough Section 3502(a) analysis which we adopt as part of
this decision. Husband argues in his brief:
A review of the Master’s Report and Recommendation clearly supports a
finding by the Court that the Master in essence, awarded Wife a portion of
the nonmarital disability component of Husband’s pension by giving her a
greater percentage of the marital portion of his military retirement since he
could not by law award her any portion of his disability retirement pay.
* * *
While Section 3502(8) of the Divorce Code specifically provides that the
Court shall consider all the relevant factors including “the value of the
property set aside to each party,” it is not permissible to increase the
percentage distribution of the marital property awarded to one party to, in
essence, make a distribution of a nonmarital asset.
The Master’s conclusions included the following:
The Master believes that economic justice needs to be served by
allowing wife a larger portion of husband’s military pension which is
subject to distribution. The very large VA waiver benefit, which is not
subject to distribution, was earned during wife’s marriage to husband, and
the Master believes that this large non-marital, earned during the
marriage, benefit should be considered in providing wife economic justice
with respect to the distribution of the martial estate which is subject to the
distribution by the Pennsylvania Court.
This conclusion was made after the Master cited the dissent of Justice O’Connor
Mansell v. Mansell, supra,
in that permitting a military retiree to convert significant
amounts “of gross retirement pay . . . into disability benefits and thereby to avoid his
obligation under state community property laws . . . is to distort beyond recognition and
thwart the main purpose of the statute, which is to recognize the sacrifices made by
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military spouses and to protect their economic security in the face of divorce.” In
Hayward v. Hayward,
868 A.2d 554 (Pa. Super. 2005), the Superior Court of
Mansell
Pennsylvania, after recognizing the harsh effect of and that many former
spouses would be economically harmed by it, noted that numerous other jurisdictions
have addressed the issue in one form or another and some courts have ruled that
Mansell Mansell, sub
is inapplicable in some cases. however, is applicable in the case
judice.
Even though husband’s nontaxable disability compensation in the amount of
$775 per month with a value of $212,449 was all acquired during the course of the
parties’ marriage, it is not subject to equitable distribution.
Under Pennsylvania law, one of the factors to be considered under 23 Pa.C.S.
Section 3502(a)(8) in making an award of equitable distribution of marital property is:
“the value of the property set apart to each party.” Separate property is subsection
Marinello v. Marinello,
(a)(8) property. See 354 Pa. Super. 471 (1986). Clearly, the
recommendation of the Master that wife be awarded seventy percent of husband’s
taxable military pension with a total value of $362,472, for which he receives a monthly
net payment of $1,112.07, was premised in part on a consideration of the value of the
disability benefit that, by law, is set apart to husband. The Master did not recommend
the distribution of a non-marital asset. The separate property factor was only one of the
significant factors that the Master considered, the others being this long marriage in
which the parties, who are only 50 years old, were together for almost twenty-six years
and husband’s significantly higher earning capacity than wife’s.
Under the Master’s recommendation, wife has assets with a value of $296,458,
and husband has overall assets with a value of $349,674. Even after the marital
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pension is distributed, husband has gross monthly income of $5,933.34, $755 of which
is untaxed. Wife has gross monthly income of $2,577.86, all of which is taxed. Given
the parties long marriage, their being generally in good health, their station in life, their
respective needs, wife’s contributions to the marriage as both a wage earner and a
homemaker, their current economic circumstances in which they both have little
opportunity in the significant future for acquisition of capital assets and income, and
husband’s separate property, we are satisfied that the recommendation of the Master
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for the distribution of the marital property is just, equitable and appropriate.
II. WHETHER IT WAS ERROR TO ORDER HUSBAND TO PAY ONE-HALF OF
ALL ACTURIAL SERVCIES INCURRED BY WIFE TO DATE IN THE DIVORCE
ACTION.
Reasonable expenses are awardable under the Divorce Code at 23 Pa.C.S.
Section 3702. The services of the actuary in this case to appraise husband’s pension
was especially needed because of the complications caused by the National Defense
Authorization Act. Husband has substantially more income than wife. They are each
paying their own attorney fees. Under these circumstances it is appropriate that they
share the costs of the pension appraisal.
ORDER OF COURT
AND NOW, this day of February, 2008, concurrent with the entry of a
decree in divorce, the following economic order is entered:
While the Master recommended that wife receive 60 percent of all marital assets
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other than the pension and that she receive 70 percent of the pension, the
adjustment she owes husband as a result of the distribution of other marital
assets actually reduces her interest in his pension to 65 percent.
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1. Faye A. Sheaffer shall receive all those assets listed under her name on
Joint Exhibit No. 1, a copy of which is attached hereto, and Jeffrey L. Sheaffer, Sr., shall
receive all those items listed under his name on Joint Exhibit No. 1, subject to the
following adjustments for the values of those items:
2. Jeffrey L. Sheaffer, Sr. shall receive 40% of the value of all items other
than his military pension, and Faye A. Sheaffer shall receive 60% of all such value.
Those items total $71,211.00; therefore, Faye A. Sheaffer shall receive value of
$42,728.00 and Jeffrey L. Sheaffer, Sr. shall receive value of $28,483.00. However
Faye A. Sheaffer retains in kind assets valued at $61,628.00 and Jeffrey L. Sheaffer,
Sr., retains in kind assets valued at $9,583.00. Therefore, Faye A. Sheaffer’s share of
Jeffrey L. Sheaffer, Sr.’s military pension shall be reduced by $18,900.00. ($61,628.00 -
$42,728.00).
3. Jeffrey L. Sheaffer, Sr.’s military pension shall be divided so that Faye A.
Sheaffer receives 70% and he receives 30%. The pension is valued at $362,472.00,
with Faye A. Sheaffer’s 70% share valued at $253,730.00. However, applying the credit
which Faye A. Sheaffer owes Jeffrey L. Sheaffer, Sr., her interest in the pension is
$234,830.00 or 65% of its value. Because the Defense Finance Accounting Services
(DFAS) will only distribute 50% of the disposable retired pay to Faye A. Sheaffer
directly, Jeffrey L. Sheaffer, Sr. shall pay to her the undistributed 15% by making direct
monthly payments by the tenth day of each month, commencing the month of March,
2008. Further, until DFAS directly pays Faye A. Sheaffer one-half of the disposable
retired pay each month, commencing in March, 2008, Jeffrey L. Sheaffer, Sr. shall pay
to her 65% of his disposable retired pay by the tenth day of each month. Commencing
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March 1, 2008, Jeffrey L. Sheaffer, Sr., shall pay Faye A. Sheaffer directly 65% of his
disposable retirement pay, which payment for 2008 will be $836.19 per month. This
direct payment shall continue until a Domestic Relations Order can be entered for 50%
payment directly from DFAS, and Jeffrey L. Sheaffer, Sr.’s direct payment of 15% of
disposable retirement pay commences. Upon payment by DFAS of the 50% entitlement
to Faye A. Sheaffer, Jeffrey L. Sheaffer, Sr., shall pay directly to her the difference
between the DFAS payment and $836.19 for the year 2008.
4. Faye A. Sheaffer shall receive the cost-of-living adjustment each year on
her 65% share of the pension. Because of the complexity calculating the amounts
owed given the phasing out of the VA waiver pursuant to federal law, Jonathan Cramer
or Harry Leister of Conrad Siegel Actuaries, or their designees, shall prepare a military
Domestic Relations Order to effect the division of the pension. Cramer or Leister shall
compute the amount of Jeffrey L. Sheaffer, Sr.’s direct payment to Faye A. Sheaffer of
that portion of her entitlement to the pension which will not be directly paid to Faye A.
Sheaffer by DFAS. Conrad Siegel Actuaries shall provide, by December 15 of each
year, any change to that amount paid directly by Jeffrey L. Sheaffer, Sr. to Faye A.
Sheaffer on account of the pension distribution, and provide the amount of that payment
to both parties who shall keep Conrad Siegel Actuaries advised of their mailing
addresses.
5. The cost for all the actuarial work to update Jeffrey L. Sheaffer, Sr.’s
payments to Faye A. Sheaffer of 65% of his disposable retained pay, to include the 50%
DFAS contribution to Faye A. Sheaffer and Jeffrey L. Sheaffer, Sr.’s direct payment to
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Faye A. Sheaffer to make up the shortfall of 15%, shall be borne equally between the
parties.
6. Within 90 days of this date, Jeffrey L. Sheaffer, Sr. shall reimburse Faye
A. Sheaffer for his share of any expenses for actuarial services which she has
expended. Within 30 days after the receipt of any statement from Conrad Siegel
Actuaries, Jeffrey L. Sheaffer, Sr. will promptly pay his share of that statement.
7. Upon presentation to Jeffrey L. Sheaffer, Sr. of a statement from Steven
W. Barrett Real Estate and Appraisal Services, he shall, within 10 days, reimburse Faye
A. Sheaffer for one-half the costs of the appraisal of 6601 Carlisle Pike, Mechanicsburg,
Pennsylvania 17050.
By the Court,
Edgar B. Bayley, J.
Joanne Harrison Clough, Esquire
For Plaintiff
Carol J. Lindsay, Esquire
For Defendant
:sal
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