A Divorce Court May Consider a Couple’s Savings in Determining the Appropriate Marital Standard of Living and Spousal Support Obligation
Husband and wife sought a divorce after their 21-year marriage. At the time of the divorce trial, husband was earning $1 million annually and wife was earning $50,000 annually. Husband’s company required retirement at the age of 62 but offered an Early Retirement Benefit (ERB), which would pay him two times his average salary of the last three years of his employment. The divorce court determined that the “Early Retirement benefits (ERB) was husband’s separate property and awarded wife a spousal support order of $12,500 per month.
On appeal the Court explained that the relevant analytical approach is whether the right to the ERB accrued during the marriage and before separation; if so, it was a community asset and not husband’s separate property. The Court determined that the record showed the ERB was payable based on a contract entered into during the parties’ marriage and all 10 years of qualifying employment to receive the benefit occurred during the marriage. Thus, the ERB must be characterized as community property because the contractual right was acquired during the marriage. Consequently, the Court determined wife was entitled to her portion of the ERB benefits.
Additionally, the Court explained that spousal support should be awarded to each party based on the standard of living established during the marriage. Wife’s divorce lawyer argued that the parties’ history of building their savings during their marriage should be considered in determining the marital standard of living. The Court stated, that as a policy matter, by failing to consider savings during the marriage in determining the marital standard of living, it would punish those who were prudent during their marriage and constitute poor public policy. Husband’s divorce lawyer argued that spousal support should be reduced because they lived a frugal lifestyle during the marriage. The Court decided that the parties’ savings could be used in finding the marital standard of living and that wife should not be punished because they had been financially responsible and saved during the course of their marriage.
Lastly, wife’s divorce lawyer contended that the divorce court had abused its discretion by ordering the spousal support award to cease on husband’s 62nd birthday unless wife were to file a motion seeking further spousal support. Wife’s divorce lawyer claimed that the decision was based on speculation and that it was not reasonable to infer that she would be able to support herself by husband’s 62nd birthday. The Court determined the divorce court had not abused its discretion in ordering presumptive termination of the spousal support because it retained jurisdiction over the issue. Thus, wife was determined to have rights to a portion of husband’s retirement benefits and the divorce court could consider the savings history in establishing the marital standard of living.
In re Marriage of Drapeau (2001) 93 Cal.App 4th 1086