February 10, 2012

New Case Law – Pensions in Payout Status are Treated as Personal Property

On December 29, 2011, the Oregon Court of Appeals decided Rushby and Rushby.

In this case, the husband and wife were both former government employees and were both receiving monthly retirement benefit payments from PERS.  Generally retirement accounts are divided along with the rest of the personal property in a divorce case, and the court tries to make sure that the husband and wife each get an equal share of the property.  In this case, however, because both accounts were in payout status the Trial Court treated them as “income streams” for the purpose of calculating spousal support. The wife appealed the Trial Court’s decision, and the Court of Appeals decided that retirement accounts, even those in payout status, are property and should be divided as part of the property division, not treated as income.  As a result, the Court of Appeals ordered that the Trial Court should divide the retirement accounts between the parties and award the wife a portion of the husband’s account to equalize the property division.

The entire opinion can be found here.  http://www.publications.ojd.state.or.us/A144086.pdf