In your family law work, your CFL Designation for Divorce Practitioners gives you the confidence to draft property settlement agreements that will stand up in court.
As cases like Re Marriage of Anderson show, it’s essential to ensure the details are legal. Otherwise, past mistakes can truly come back to haunt both parties.
In this Colorado Court of Appeals case, a divorce judgment required Herbert Anderson to divide part of his Social Security benefits with his ex-wife, Marilyn. Herbert later moved to have this decision reversed because he felt that the district court erred, but the motion was denied, and he appealed on the grounds that the ruling violated federal law.
Backstory
The couple divorced in 1994. As stated in their decree, Herbert would pay Marilyn “a monthly sum of Two Hundred Twenty-Five and no/ 100 Dollars ($225.00) from his Social Security benefits. In the future, this amount will be increased or decreased by an amount equal to fifty percent (50%) of any increase or decrease in [husband’s] Social Security benefits. [Husband] will file to begin receiving Social Security benefits on or before March 1, 1994.”
In 2008, when Herbert appealed the original decision, he questioned whether this division violated the “anti-assignment” clause of the federal Social Security Act, which prevents the distribution of future benefits.
His ex-wife made the following arguments:
- Herbert chose to divide his benefits with her once he received them and they didn’t agree to divide future Social Security benefits.
- Her ex-husband was free to do whatever he wanted with the benefits once he received them.
- The magistrate considered the benefits a “relevant economic circumstance,” and they weren’t part of the overall property distribution.
- “Principles of equitable estoppel” prevent Herbert from challenging the decree during the proceedings because it would be unfair to her.
Appellate Court Decision
The Colorado Court of Appeals found that the decree required Herbert to pay from his future Social Security benefits a certain amount to Marilyn, which violated federal law.
“Such a direct payment from future Social Security benefits is precisely what the Social Security Act prohibits, and we reject wife’s characterization of the decree as reflecting only the magistrate’s consideration of husband’s future benefits as a ‘relevant economic circumstance.’
The ruling also held that the parties can’t agree to break the law through assigning Social Security benefits:
“Although we are sympathetic to wife’s position here, we agree with those cases holding that state law equitable estoppel principles cannot be applied to bar a party from challenging a judgment rendered void by the Supremacy Clause [of the U.S. Constitution]. To apply such principles in that context would itself violate the Supremacy Clause.”
The ruling concluded that the trial court erred and it directed the court to reconsider the original property distribution. Further, the decision noted that “the Social Security Act preempts state courts from transferring benefits as property is that state courts are without power to enforce private agreements dividing future payments of Social Security benefits when those agreements violate the prohibition against transfer or assignment of future benefits.”
These and other aspects of financial settlements in divorce can be tricky. Learn all you need to know to handle them skillfully with a CFL™ Designation. Get our free information packet today!
Sources
CourtListener. (2019). In Re Marriage of Anderson, 252 P.3d 490 – CourtListener.com. [online] Available at: https://www.courtlistener.com/opinion/2449467/in-re-marriage-of-anderson/ [Accessed 3 Apr. 2019].
Legal Dictionary | Law.com. Equitable Estoppel. Available from: <http://dictionary.law.com/Default.aspx?selected=644>. [April 16, 2019].
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