Extending Marriage of Reynolds, Senior Citizens Facing Divorce Cannot Be Forced to Quit Retirement to Fund Their Self-Support
The California Fourth Appellate District, Division Two, which includes Riverside County, just issued a hugely important published decision which deals with some of the retirement issues left open in Marriage of Reynolds (1998) 63 Cal.App.4th 1373, another Riverside County appellate decision that is of great interest to elders and family law professionals. The Reynolds decision has been a core tenet relating to aging support payors and recipients, in terms of their alimony rights and obligations. My former comrade Lee Mohr was the successful attorney for the husband in that case, which reversed a trial court imputation of income to a doctor who had reached retirement age and so quit working. The resulting support award to the former spouse would therefore have forced him to invade his separate property assets in order to pay it. Reynolds has been a gospel assumption ever since - that parties do reach a point where they are entitled, as a matter of law, to quit working notwithstanding their obligations to help support the other party, and so to modify or terminate the prior support orders.
Beyond last year's Marriage of Shimkus (2016) 244 Cal.App.4th 1260 (which approved Reynolds while upholding a firefighter's right to retire at age 55 per California state regulations), it has been almost two decades since an appellate court has revisited the retirement and spousal support conundrum now facing the baby boomer generation.
Marriage of McLain, Appellate Case No. E062884
Meet Marriage of McLain, published on January 7, 2017. McLain involves an appeal from a San Bernardino trial court ruling, which Justice Douglas Miller, formerly an outstanding personal injury and civil litigator out of Indio, affirms in rejecting the Husband's appeal. The trial court judge, who did an excellent job, was Khymberli S.Y. Apaloo.
The parties married in late 2001. They separated in March, 2014, 13 years later. They had no children together. In May, 2014, the husband was 68 years old and wife was 66. Husband worked as a firefighter. Wife had a licensed real estate agent license, but had never used it; instead, she had income as a personal assistant for another R/E broker.
Both parties retired in 2005, although the evidence was that Wife worked part-time for a number of years later. Husband urged Wife to retire, so that they could travel together and so enjoy their senior years (gosh, what a concept), and to spend time with her grandchildren. Wife's primary focus after 2005 was as a homemaker for them both. Neither had health issues. Wife had social security income of $746/month, less $190/month for Medicare. Husband's retirement income, mostly earned prior to marriage, amounted to $10,000/month. Nice. Wish I was a public servant.
After the parties retired in 2005, Husband worked with a contractor to build a home for them both in Big Bear. It was evidently completed in 2011. It was quite comfortable at 3,900 feet and was worth $775,000 when completed. Wife owned another residence which was her separate property (Fawnskin residence). She refinanced that property several times. Each time, she pulled monies out of her separate property, which at least in part was used to finance the Big Bear construction.
Husband had also owned separate property at date of marriage. Wife's name had been added to the title, for refinancing purposes. Some of that money also was used to construct the Big Bear home. Another source of these improvements was the Husband's 401k, which appears to have been his separate property at least in part. The total cost to build Big Bear was about $508,000. The Big Bear home was free and clear.
Following the parties' separation, and keeping in mind that H was earning $10,000/month as a former firefighter, at trial the court ordered H to pay the wife $4,000/month as" judgment" spousal support. It found that the Wife (W) needed spousal support in order to help place her near the marital standard of living, as of the DOS. The trial court refused to impute income to W, and no evidence was presented to justify such an imputation. But more importantly, the court observed that W was retired, and that under Marriage of Reynolds, and its bright line cut-off rule, that income could be imputed to neither of them.
The trial court found that "The parties have a right to retire, and they did that in fact do so." By the time the dissolution was filed, the fact of that retirement and the income that they each had become part of the marital standard of living. Otherwise, Judge Apaloo reasoned, the W would be thrown out of retirement. Moreover, the trial court expressly refused to give a Gavron Warning to the Wife. It awarded her spousal support, and attorney fees.
H appealed, asserting that notwithstanding turning age 65 earlier, W had an obligation to become self-supporting. He alleged she had no right to retire, or to remain retired given the parties' dissolution. That appeal was rejected.
When Dealing With Spouses at Retirement Age, Trial Courts Must Consider the Effect of Subsections (h) and (n) of Family Code Section 4320 - i.e., the "4320 Factors"
No appellate decision has previously, squarely, addressed "the age factor" in issuing judgment spousal support orders based upon FC section 4320, although many cases have circled around it.
Subsection (h) of the section 4320 requires trial courts to consider "the age and health of the parties" and subsection (l) the relative circumstances of the parties. Subsection (l) also gives trial courts discretion to address "any other factors the court determines are just and equitable."
As Justice Douglas notes, a tension between those subparts of 4320 and the goal of California that support spouses become self-supporting can arise, given the relative ages of the parties. Justice Douglas views the question as "can the family court determine that a supported spouse being of retirement ago outweighs the 'self-supporting' factor"?
As I've been saying again and again for some years now, a movement is afoot among all the appellate courts to enforce and interpret statutes according to their "plain" meaning. Justice Douglas concludes that when FC section says that the court is to consider "the age and health of the parties" when ordering spousal support, that is exactly what it must do with aging divorce disputants. "For the age age factor to have meaning, the family court would need to consider whether the parties are young and therefore presumably more likely to work and earn a living wage, or whether the parties are older and perhaps no longer working. In other words, the plain language of the statute reflects age is a favor in determining spousal support. The point of considering age when determining spousal support, in part, is that there comes an age when people commonly stop working."
Hurrah! Another common sense decision that deals with the realities of our real world experiences!
How Do the Countervailing Considerations of Section 4320 Get Weighted?
Justice Douglas then does something that is rare. The Court actually gives some guidance for measuring the relative value of one 4320 factor, over another.
This case has some limitations within the grandma and grandpa divorce context as it relates to couples who are already retired at date of separation, as contrasted with those who separate in their elder years but before reaching retirement age. What happens, for instance, with parties who separate where the supported spouse is 53, or 57, or 62? Clearly in these waning life years relative to the job market, opportunities diminish. For those cases, you would do well to have a vocational or other expert address the living standards, and employment opportunity statistics, for people in those age groups. While many of us have heard that people's most productive years begin at 45 maybe to 50, that is true only for those who are already working in that queue.
The McLain trial court declined to impute income to Wife because (a) there was no evidence she had an income; (b) there was no evidence of jobs available to her; (c) she was retired; and (d) she had a right to remain retired. "The court's decision of Wife being retired reflects the court taking into account 'the station in life that the parties had achieved,' i.e., that they were both retired."
The trial court decision could not be considered an abuse of discretion, and thus overturned, given that it's decision raised the inference that it took into account the goal that the supported part be self-sufficient within a reasonable period of time. "'Their retirement has been part of the marital standard of living since well before the dissolution of marriage was filed, and [Wife] is not now going to be thrown out of retirement. For these same reasons, this Court is will also not be issuing a Gavron warning...."
As Justice Douglas remarks, "The court's reasoning reflects it weighted the goal of the support party becoming self-supporting against the marital standard of living, and reconciled that the goal of self-support would conflict with the maintaining the marital standard of living because the marital standard of living included being retired. The court's reasoning shows it considered the relevant factors."
What About the Goal That the Supported Spouse Becomes Self-Supporting, From the Point of a Gavron Warning On?
It is more common that parties separate in their 50's than in their 60's, in my experience. What happens with lengthy marriages when parties separate in their 50's? Imagine a homemaker who learns their marriage is over at age 54. How much time does she or he have left to create or resurrect a life-style, before they turn 65, that is equal to one-half of the parties' date of separation earnings (i.e., her half of the their gross income funded lifestyle)? The length of the parties' marriage, and the period where one party served as the home-maker, must be given great deference in very long marriages especially as the number of years left to them to recover are squeezed.
Possibly this, in some cases, should be measured by how long it took the supporting spouse to earn the level of income that they achieve by the date of separation?
For instance (and to be distinguished from the McLain facts), take two parties who marry at age 24 and is a homemaker and mother throughout the marital period. Thirty years later, the husband is earning five times his earnings at date of marriage. Those earnings establish the income part of the "marital standard of living" at separation, for the two of them combined. Assume further that he has achieved $240,000/yearly income by age 54. That is the equivalent of $120,000/year, or $10,000/month, for each.
Should the former wife be held to a standard where, now, in the 11 years she has left that she is expected to reach a similar income level production, or perhaps in two years from the point that she is given a Gavron Warning assuming she is then age 63? After all, those income stream benefits are not what likely happened for the husband, who probably hit his peak income years in his 50's and leveled off, exactly at the time that the wife becomes most vulnerable to the difficulties of launching a new career, given the realities of ageism and employment for seniors, not to mention a thoroughly different world and labor market three decades later. That is the dystopic world we now live in.
Because, after all, that is exactly when many men think about swapping a new (often younger) wife or partner for the old. It is also when men tend to think about making a move to protect and assure their own retirement incomes. Good time to trade horses, neh? The mare that is set out to pasture though is to what, find a small spot in a corner to munch whatever hay she gets - while the stallion prances through his remaining life eating apples and carrots?
Author: Thurman W. Arnold