Does a party to a divorce need to disclose an accrued, but unvested pension?

Does a party to a divorce need to disclose an accrued, but unvested pension?

In Connecticut parties to a divorce need to exchange Financial Affidavits. These affidavits are designed to provide a comprehensive picture of income, living expenses, assets, and liabilities. A party to a divorce is entitled to rely on the representations of an opposing-party’s Financial Affidavit.

What happens when a party to a divorce does not disclose an accrued, but unvested pension on his or her Financial Affidavit? If a party can argue that an asset was not appropriately disclosed, they may try to re-open a divorce judgment, as it relates to property distribution.

The Connecticut Supreme Court, in the case of Catherine Reville vs. John Reville (SC 18452) (officially released July 8, 2014) addresses the issue. As stated in this decision:

• A party is legally obligated to disclose the existence and characteristics of a pension regardless of whether it clearly is distributable property (under Connecticut General Statute Section 46b-81).

• A party’s ability to show she was defrauded, is not dependent on her establishing that had she known about the pension, she would have been awarded some portion of it.

The real issue in the Reville case is disclosure, as opposed to the right to a party’s interest in the pension, which is addressed in an earlier case . See Bender v. Bender, 258 Conn. 751
The Supreme Court commented that the existence of the pension “was a highly relevant consideration both for the plaintiff in deciding whether to agree to the proposed settlement agreement, and for the dissolution court in deciding whether to approve that agreement.” “Accordingly, nondisclosure, if proven, could have caused the plaintiff to act to her detriment, and full disclosure could have led to a different result in the dissolution action.”

The Court reiterated that “all retirement and employment benefits potentially receivable by a party to a dissolution action must be fully and frankly disclosed on that party’s financial affidavits, regardless of whether they are definitively established to be distributable marital property.”

Joel A. DeFelice is a partner at Marder & DeFelice Law Offices, LLC, located in Vernon, Connecticut.

Transferring Real Estate in a Divorce

Billy Joel told us that Brenda and Eddie “were the popular steadies and the king and the queen of the prom”. But as the song goes, “[t]hey got a divorce as a matter of course, and they parted the closest of friends.”

How should parties divide jointly owned real estate, especially jointly owned real estate encumbered by a mortgage (usually in both names), in a divorce?

One important consideration is that the party who keeps the home, should be required to make efforts to refinance or assume the existing mortgage, so as to release the other of liability on the mortgage debt.

The timeline for this requirement will vary depending on the circumstances. Dividing real estate in a divorce is just one part of the ‘mosaic’ of a property settlement. For example the party keeping the home, might be given several years to re-finance, so as to give the children stability until they reach a certain age.

What if the party who keeps the home doesn’t refinance within the time permitted (i.e. according to the agreement / judgment)?

The party who was obligated to refinance the home, may be subject to 1) a finding of contempt of court (resulting in sanctions), or 2) the court might order that the home be sold.

However, in Connecticut, the statute that governs “assignment of property” states:

At the time of entering a decree annulling or dissolving a marriage… the Superior Court may assign to either spouse all or any part of the estate of the other spouse. …” (See C.G.S. 46b-81(a)) (Emphasis added.)

This means a Court may not order the home be sold before, or after, the divorce judgment, but only at the time of the divorce judgment. Therefore, some circumstances may justify asking the Court, at the time of entering judgment, to “reserve jurisdiction” over disposition of the home, after the judgment. Many things can be done by agreement of the divorcing parties, that the law otherwise doesn’t allow for.

Speak with an experienced attorney about this issue. Despite Brenda and Eddie “departing the closest of friends”, neither wants to be tied up on a mortgage, for the next thirty years.

Joel A. DeFelice is a partner at Marder & DeFelice Law Offices, LLC, located in Vernon, Connecticut.