In re Marriage of Mueller , 34 N.E.3d 538 ( 2015 )

2015 IL 117876
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
(Docket No. 117876)
In re MARRIAGE OF SHELLEY L. MUELLER, Appellee, and CHRISTOPHER
MUELLER, Appellant.
Opinion filed June 18, 2015.
JUSTICE THEIS delivered the judgment of the court, with opinion.
Chief Justice Garman and Justices Freeman, Thomas, and Kilbride concurred in
the judgment and opinion.
Justice Burke dissented, with opinion, joined by Justice Karmeier.
OPINION
¶1 The central issue in this divorce case is one that we declined to answer in In re
Marriage of Crook, 211 Ill. 2d 437, 452 (2004)—namely, whether a spouse who
participates in a government pension program in lieu of Social Security must be
placed in a position similar to the other spouse who participates in Social Security
and whose benefits under that program are exempt by federal law from equitable
distribution under section 503(d) of the Illinois Marriage and Dissolution of
Marriage Act (Dissolution Act). See 750 ILCS 5/503(d) (West 2012).
¶2 Here, the circuit court of Sangamon County refused to decrease the value of
respondent Christopher Mueller’s municipal police pension by the value of
hypothetical Social Security benefits that he is not entitled to receive as a
nonparticipant in that program. The appellate court affirmed the trial court’s
decision. 2014 IL App (4th) 130918-U. For the reasons that follow, we affirm, as
well.
¶3 BACKGROUND
¶4 Shelley and Christopher Mueller were married in 1992. Shelley works for a
private sector company, and has Social Security tax withheld from her pay. She
expects to receive full Social Security benefits in 2033 at age 67. Christopher works
for the Springfield police department as an officer, and does not have Social
Security tax withheld from his pay. Instead, he contributes to the Springfield Police
Pension Fund, and he can retire with full pension benefits in 2017 at age 50.
¶5 In 2012, Shelley filed a divorce petition. The following year, the trial court held
a hearing on the petition. Christopher offered a report from Sheila Mack, owner of
Equitable Solutions, a self-described “pre-divorce planning” business. Mack’s
report stated that she computed the estimated present value of Christopher’s
pension benefits, but, in doing so, used a “Windfall Elimination Provision” or
WEP. She explained:
“Participants in the Springfield Police Pension Fund do not pay into Social
Security. Because of the ruling by the Illinois Supreme Court regarding Social
Security benefits in divorce [presumably, Crook], the question becomes how to
place Mr. Mueller in a position similar to Mrs. Mueller whose Social Security
benefits are exempt from equitable distribution[.] In other words, what portion
of Mr. Mueller’s monthly benefit would he receive ‘in lieu of’ Social
Security?”
¶6 That portion was derived from figures Mack generated with “Social Security’s
Online Calculator.” She input Christopher’s wages through August 2012, as if they
were “covered by Social Security,” and determined that his monthly Social
Security benefit at age 67 would be $1,778 per month. She then input his wages
“for only those years in which he contributed to Social Security,” and determined
that his monthly benefit at age 67 would be $230 per month. The difference of
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$1,548 per month was what Mack posited as “the dollar amount Mr. Mueller would
receive ‘in lieu of’ Social Security,” or his “WEP offset.” And the difference
between that amount and the amount he would receive from his pension was $2,479
per month, which yielded an estimated present value of $639,720.74. 1
¶7 At the hearing, Mack’s testimony largely echoed the contents of her report. She
stated that Social Security benefits are no longer “divisible” in divorce proceedings,
pursuant to federal law. According to Mack, the “Social Security Administration
has acknowledged that part of the pension for a person who doesn’t contribute to
Social Security is in lieu of Social Security[ ] because they instituted two Social
Security offsets.” Mack did not further describe those offsets, and when
Christopher’s attorney asked her to describe the goal of an offset, Shelley’s
attorney made an objection to Mack’s report because the valuation method
proposed there was contrary to Crook. Christopher’s attorney discussed that case
briefly, and asserted that it left “wide open” the issue of whether that method
comported with federal law.
¶8 The trial court reviewed Crook and sustained the objection. The court noted that
this court, “while acknowledging the unfairness of this process, is pretty intent on
keeping this Social Security benefit out of the pension, and basically the overall
analysis of the marital estate.” Thus, the valuation method proposed by Mack is “an
offset by any other language” and violates federal law as interpreted by Crook.
Although the trial court declined to weigh Mack’s report in its decision to divide
property, it allowed Christopher’s attorney to examine Mack to create an offer of
proof for purposes of appeal.
¶9 Mack outlined how she used the Social Security Administration’s website to
find, based on Christopher’s earnings history, what his Social Security benefit
would be if he had participated in that program. Mack asserted that the present
value of his pension, minus the Social Security benefit that she calculated for him,
was the same figure in her report, $639,720.74. The marital portion of that figure
was $614,323.83, and the nonmarital portion was $25,396.91.
¶ 10 On cross-examination, Shelley’s attorney asked Mack more about how she
arrived at those figures. Mack stated that because Christopher has served as a police
1
Mack’s report also outlined another method for calculating the so-called “in lieu of” portion of
his pension benefit, in which she compared Christopher to “a regular IMRF employee who pays into
Social Security.” That method yielded a present value of $732,361.74, but that amount was never
addressed at the hearing.
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officer for 20 years, he could retire with full pension benefits at age 50. The present
value was based on that scenario. Shelley’s attorney then asked Mack about the
effect of Christopher obtaining a subsequent, postretirement job, at which Social
Security tax would be withheld, until age 67. Mack conceded that he would be
entitled to Social Security benefits, but because he would lack 20 years of what the
Internal Revenue Service calls “substantial earnings,” there would be an offset.
This offset, likely one of the two mentioned by Mack earlier in the hearing, serves
to decrease Social Security benefits for people who have not participated in the
program for a large part of their working lives. According to Mack, Christopher had
only three years of substantial earnings before joining the Springfield police
department, so his Social Security benefit at age 67 would be reduced by 55%, from
$517 per month to $230 per month. Mack could offer no opinion on whether
Shelley would suffer any detriment because Christopher did not pay into Social
Security.
¶ 11 At the close of evidence, the trial court ruled that Christopher could amend his
calculations consistent with its ruling on the objection to Mack’s report.
Christopher filed a closing written argument, where he stated that Mack
recalculated the present value of his pension benefits “without the Social Security
offset” as $991,830. 2 The court adopted that figure, and ultimately awarded
Shelley slightly more than 35% of Christopher’s pension, or $350,000. Christopher
appealed.
¶ 12 A divided panel of the appellate court affirmed the trial court’s decision. 2014
IL App (4th) 130918-U. The appellate court majority discussed Crook, and the
question it left for another day, then discussed In re Marriage of Herald, 322 P.3d
546 (Or. 2014) (en banc), where the Oregon Supreme Court approved a similar
valuation method to the one proposed by Mack. The majority held:
“Based upon the Crook holdings that (1) ‘it is improper for a circuit court to
consider Social Security benefits in equalizing a property distribution upon
dissolution’ [citation] and (2) Social Security benefits ‘may not be divided
directly or used as a basis for an offset during state dissolution proceedings’
[citation], we decline to reverse the trial court’s judgment for failing to apply
2
Shelley also offered her own present value figure, which she arrived at using software called
“FinPlan” and a lower interest rate than Mack. According to Shelley, the present value of
Christopher’s pension was $1,306,805. The trial court rejected that figure and used the one provided
by Mack.
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the Social Security benefit offset to the value of Christopher’s pension.
Although the offset proposed by Christopher would (1) not require the court to
consider the value of Shelley’s Social Security benefits and (2) achieve a more
equitable result, the offset would nonetheless ‘cause[ ] an actual difference in
the asset distribution.’ [Citation.] We read Crook to prohibit such an outcome.”
2014 IL App (4th) 130918-U, ¶ 24 (quoting Crook, 211 Ill. 2d at 449, 451).
Because the trial court did not err by refusing to make the offset in Mack’s
proposed valuation method, the majority stated that the trial court also did not err in
excluding her report and testimony. Id. ¶ 25.
¶ 13 Justice Appleton dissented. He observed that the mandate of the Dissolution
Act is to divide marital property in just proportions, and ignoring a substantial
asset, like a Social Security benefit, that was earned during the marriage runs afoul
of that mandate. Id. ¶ 31 (Appleton, J., dissenting). Justice Appleton would have
reversed the trial court’s decision and remanded, so the court could “reserve[ ] to
the ex-wife her Social Security benefits but grant[ ] a corresponding offset of those
benefits against the ex-husband’s police pension.” Id. ¶ 33.
¶ 14 We allowed Christopher’s petition for leave to appeal. Ill. S. Ct. R. 315(a) (eff.
July 1, 2013).
¶ 15 ANALYSIS
¶ 16 Here, as below, Christopher raises two issues: (1) whether the trial court erred
in excluding Mack’s report and testimony; and (2) whether the trial court erred in
determining that the proposed valuation method violated federal law. Because our
resolution of the second issue is dispositive, we address it first. Our standard of
review is de novo. Crook, 211 Ill. 2d at 442.
¶ 17 The parties’ arguments are not complex. Christopher argues that we should
follow Herald and other out-of-state cases that have approved the valuation method
proposed by Mack. He insists that that method comports with our holding in Crook.
Shelley argues that we should reaffirm our holding in Crook and follow out-of-state
cases that have rejected the valuation method proposed by Mack. While those two
lines of cases inform our analysis, we must begin with a discussion of the
Dissolution Act and the Social Security Act.
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¶ 18 Section 503 of the Dissolution Act concerns “Disposition of property.”
Subsection (d) directs trial courts to “divide the marital property without regard to
marital misconduct in just proportions considering all relevant factors.” 750 ILCS
5/503(d) (West 2012). Subsection (a) defines marital property broadly as “all
property acquired by either spouse subsequent to the marriage” with certain
exceptions. 750 ILCS 5/503(a) (West 2012). And subsection (b) echoes that
definition by creating a presumption that “all property acquired by either spouse
after the marriage and before a judgment of dissolution” is marital property. 750
ILCS 5/503(b)(1) (West 2012). Section 503(b)(2) specifically provides that
pension benefits tied to contributions made during the marriage are marital
property. See 750 ILCS 5/503(b)(2) (West 2012). Social Security benefits,
however, are treated differently pursuant to federal law.
¶ 19 Section 402(b)(1) of the Social Security Act provides that divorced persons are
entitled to specific portions of their former spouses’ benefits. 42 U.S.C. § 402(b)(1)
(2000). Section 407 provides that Social Security benefits are not otherwise
alienable:
“The right of any person to any future payment under this subchapter shall
not be transferable or assignable, at law or in equity, and none of the moneys
paid or payable or rights existing under this subchapter shall be subject to
execution, levy, attachment, garnishment, or other legal process, or to the
operation of any bankruptcy or insolvency law.” 42 U.S.C. § 407(a) (2000).
¶ 20 Section 407(a) imposes a broad bar against using any legal process to reach
Social Security benefits. See Crook, 211 Ill. 2d at 443-44 (quoting Philpott v. Essex
County Welfare Board, 409 U.S. 413, 417 (1973)). Congress created an exception
to that bar for litigation to enforce child and spousal support obligations (see 42
U.S.C. § 659(a) (2000)), but it explicitly omitted an exception for litigation to
enforce obligations arising from the division of property in a divorce (see 42 U.S.C.
§ 659(i)(3)(B)(ii) (2000)).
¶ 21 That is the statutory framework we examined in Crook. In Crook, the husband
participated in Social Security, but the wife did not. Instead, she accepted an early
retirement incentive from a state college and participated in the State University
Retirement System and Illinois Municipal Retirement Fund pension plans. The trial
court awarded the husband half of the wife’s pension benefits, but did not consider
the husband’s Social Security benefits. The wife appealed, and the appellate court
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reversed and remanded, directing the trial court to consider the husband’s Social
Security benefits in reaching an equitable division of property. The husband
appealed to this court, and, on the issue of Social Security, we reversed.
¶ 22 The foundation for our decision was Hisquierdo v. Hisquierdo, 439 U.S. 572
(1979), where the Supreme Court held that retirement benefits under the Railroad
Retirement Act of 1974 (45 U.S.C. § 231 et seq. (2000)) could not be subject to an
attachment order or an offset award during state divorce proceedings. We observed
that Hisquierdo’s preemption analysis applied equally to Social Security benefits.
Crook, 211 Ill. 2d at 444-45 (citing, inter alia, Olson v. Olson, 445 N.W.2d 1, 6-7
(N.D. 1989)). We summarized that “Hisquierdo establishes two important points:
Social Security benefits may not be divided directly or used as a basis for an offset
during state dissolution proceedings.” Crook, 211 Ill. 2d at 449-50. Those points
led us to reject analyses from cases in other states permitting trial courts to consider
anticipated Social Security benefits as a factor in making an equitable distribution
of marital property. Id. at 449-51.
“Instructing a trial court to ‘consider’ Social Security benefits, as the
appellate court did in this case, either causes an actual difference in the asset
distribution or it does not. If it does not, then the ‘consideration’ is essentially
without meaning. If it does, then the monetary value of the Social Security
benefits the spouse would have received is taken away from that spouse and
given to the other spouse to compensate for the anticipated difference. This
works as an offset meant to equalize the property distribution.” Id. at 451.
Accord Wolff v. Wolff, 929 P.2d 916, 921 (Nev. 1996) (“Calling a duck a horse
does not change the fact it is still a duck. ‘Considering’ [one spouse’s] social
security benefits does not change the fact that this is still an offset, and
therefore, error.”).
¶ 23 The valuation method proposed by Mack is not strictly speaking an offset, but it
does consider the existence of Shelley’s anticipated Social Security benefits to
create parallel benefits for Christopher that would affect the division of marital
property. That method violates the core holding of Crook. It is also inappropriate
for two additional reasons—one related to the Dissolution Act and one grounded in
policy.
¶ 24 First, “[p]ension benefits attributable to contributions made during the marriage
are marital property” (Crook, 211 Ill. 2d at 442 (citing 750 ILCS 5/503(b)(2) (West
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2000))), but Social Security benefits are not marital property under the Dissolution
Act. As we noted in Crook, 211 Ill. 2d at 442, participants in the Social Security
program do not have accrued property rights to their benefits. They have
expectancies, or what the Supreme Court has termed “noncontractual interest[s]”
(Flemming v. Nestor, 363 U.S. 603, 609-10 (1960)), in their benefits. Although the
program is funded by contributions by participants over their working lives, they
are never guaranteed to get out what they put into it because Congress has reserved
the ability to alter, amend, or even repeal parts of the Social Security Act. See 42
U.S.C. § 1304 (1994); see also Flemming, 363 U.S. at 609-10 (“[E]ach worker’s
benefits, though flowing from the contributions he made to the national economy
while actively employed, are not dependent on the degree to which he was called
upon to support the system by taxation.”). Unlike pension benefits, Social Security
benefits are not “owned in any proprietary sense.” Manning v. Schultz, 93 A.3d
566, 570 (Vt. 2014); see Skelton v. Skelton, 5 S.W.3d 2, 5 (Ark. 1999) (“Because
the purposes of social security and [a pension-based] retirement plan are
fundamentally different, they are not interchangeable.”); Cox v. Cox, 882 P.2d 909,
920 (Alaska 1994) (“Social security benefits are not deferred compensation for
services rendered but rather a governmental safety net for the retired. The employee
has no contractual right to such benefits.”).
¶ 25 If Social Security benefits are not property “acquired by” a spouse (750 ILCS
5/503(a) (West 2012)), then they are not marital property subject to division by the
trial court. See Wolff, 929 P.2d at 920; Litz v. Litz, 288 S.W.3d 753, 758 (Mo. Ct.
App. 2009); Hayden v. Hayden, 665 A.2d 772, 775 (N.J. Super. Ct. App. Div.
1995). And if Social Security benefits are not marital property, then surely
hypothetical Social Security benefits, like those calculated by Mack, are not marital
property and cannot be used to pare down the value of marital property. See
Reymann v. Reymann, 919 S.W.2d 615, 617 (Tenn. Ct. App. 1995) (“If social
security cannot be considered a marital asset, then the lack of social security should
not be considered in reduction of marital assets.”). To hold otherwise would be to
ignore section 503(d), which instructs trial courts to divide only marital property.
Second, as a matter of policy, any rule permitting trial courts to consider the mere
existence of Social Security benefits without considering their value, and thereby
violating federal law, is nearly impossible to apply. The difficulties stem from the
vagueness of the term “consider” in this context, and reviewing courts have
struggled to provide guidance on how to do so. See, e.g., Litz, 288 S.W.3d at 758
(holding that Social Security benefits should be considered when dividing marital
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property, “but not to such a degree that such consideration would have a material
impact on the division of marital property”); Biondo v. Biondo, 809 N.W.2d 397,
403 (Mich. Ct. App. 2011) (holding that a trial court “may not treat social security
benefits as tantamount to a marital asset,” but may “take into account, in a general
sense” the extent to which those benefits bear on the factors related to property
division); Johnson v. Johnson, 734 N.W.2d 801, 808 (S.D. 2007) (“while a trial
court may not distribute marital property to offset the computed value of Social
Security benefits, it may premise an unequal distribution of property—using, for
example, a 60-40 formula instead of 50-50—on the fact that one party is more
likely to enjoy a secure retirement” (internal quotation marks omitted)). Even the
Oregon Supreme Court in Herald, which the appellate court here called a
“thoughtful decision” (2014 IL App (4th) 130918-U, ¶ 23) attempted to mitigate
the consideration problem with still more considerations. After holding that a trial
court, “within appropriate limits,” may “consider the existence or absence of
anticipated Social Security benefits for either or both spouses,” the Herald court
continued:
“However, because what is just and proper under [the Oregon counterpart to
section 503(d)] must be assessed in light of the prohibition against assignment
or transfer of Social Security benefits in 42 USC section 407(a), three
considerations merit particular emphasis. The first is whether it is probable that
one or both spouses will receive Social Security retirement benefits in the
foreseeable future. The second is whether the anticipated benefits are a
substantial financial consideration when viewed in relation to the retirement
assets and other financial resources that likely will be available to each spouse
after the dissolution of their marriage. And, third and last, we reiterate that
Social Security benefits are not marital assets, and their anticipated existence or
absence therefore should be considered—if at all—only in achieving an overall
just and proper division of the parties’ property.” Herald, 322 P.3d at 557-58.
The utility of such an “if at all” rule seems marginal, particularly in light of the real
risk of crossing a line drawn by Congress.
¶ 26 Further difficulties plague the method here due to the uncertainties inherent in
Social Security benefits. As we have noted, Congress’s retained power to change
the Act, and benefits themselves, making it “awkward for the courts to count
benefits as assets of definable value.” Olson, 445 N.W.2d at 6. That is, placing a
present value on Social Security benefits is contrary to the nature of such benefits.
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Placing a present value on fictional benefits is even worse; it is rank speculation.
Additionally, placing a present value on such benefits overlooks that the amount of
Social Security benefits cannot be calculated until the participant collects them.
White v. White, 664 A.2d 1297, 1300 (N.J. Super. Ct. 1995). Moreover, if the
participant were to die before age 62, there would be no benefits at all. Id.
Decreasing Shelley’s share of Christopher’s pension based on the present value of
his hypothetical Social Security benefits that, even if he had participated in that
program, he may not ever receive is both illogical and inequitable.
¶ 27 A more coherent approach is to adhere to Crook, and Hisquierdo, and hold that
Congress intended to keep Social Security benefits out of divorce cases. Failing to
consider Social Security benefits may paint an unrealistic picture of the parties’
future finances, but “it is not the province of this court *** to interfere with the
federal scheme, no matter how unfair it may appear to be.” Crook, 211 Ill. 2d at
452. The decision of the trial court not to consider Shelley’s Social Security
benefits and reduce Christopher’s pension benefits by hypothetical Social Security
benefits was correct.
¶ 28 CONCLUSION
¶ 29 For the reasons that we have stated, we affirm the decisions of the lower courts
and remand for further proceedings.
¶ 30 Appellate court judgment affirmed;
¶ 31 Circuit court judgment affirmed;
¶ 32 Cause remanded.
¶ 33 JUSTICE BURKE, dissenting:
¶ 34 Christopher makes a straightforward request in this dissolution of marriage
case. Shelley, his former wife, is a participant in Social Security. Federal law
mandates that the Social Security benefits to which Shelley is entitled may not be
divided during the dissolution proceeding but must remain solely with her.
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Christopher, however, is not a participant in Social Security. His principal
retirement benefit, a municipal pension, is considered marital property and is
subject to division.
¶ 35 Given these facts, Christopher asks that the trial court be permitted to divide his
pension in a way that would place him in the same financial position as Shelley.
Specifically, Christopher proposes that a portion of his pension be retained for his
benefit alone, with the remainder then apportioned between the parties. To
establish how much of his pension he should retain, Christopher suggests that the
trial court use the amount of Social Security benefits for which he would be
eligible, if he had participated in that program. Stated otherwise, Christopher’s
request is simply that he be treated similarly to Shelley—no better and no
worse—during the dissolution proceeding.
¶ 36 Christopher’s proposed method for determining how to apportion his pension is
consistent with section 503(d) of the Dissolution Act (750 ILCS 5/503(d) (West
2012)). That provision requires that marital property be divided “in just proportions
considering all relevant factors” (id.), and it is difficult to conclude that an
apportionment of property which places the divorcing spouses on an equal footing
during the dissolution proceeding could be anything other than “just.” The
appellate court below made the same observation, noting that allowing
Christopher’s proposed division of his pension would achieve “a more equitable
result.” 2014 IL App (4th) 130918-U, ¶ 24. See also, e.g., In re Marriage of
Dunlap, 294 Ill. App. 3d 768, 778 (1998) (the touchstone of a just apportionment of
property “is whether [the distribution] is equitable”).
¶ 37 Nevertheless, the majority holds that the method proposed by Christopher for
apportioning his pension may not, under any circumstances, be considered by a
trial court. This is so, the majority concludes, because the proposed apportionment
is preempted by section 407 of the Social Security Act (42 U.S.C. § 407(a) (2000)).
I disagree.
¶ 38 The supremacy clause of the federal constitution provides that the laws of the
United States “shall be the supreme Law of the Land; *** any Thing in the
Constitution or Laws of any State to the Contrary notwithstanding.” U.S. Const.,
art. VI, cl. 2. Under the supremacy clause, federal law will preempt state law in
three circumstances: “(1) express preemption—where Congress has expressly
preempted state action; (2) implied field preemption—where Congress has
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implemented a comprehensive regulatory scheme in an area, thus removing the
entire field from the state realm; or (3) implied conflict preemption—where state
action actually conflicts with federal law.” Carter v. SSC Odin Operating Co., 237
Ill. 2d 30, 39-40 (2010).
¶ 39 There is no contention that federal law expressly prohibits Christopher’s
proposal or that Congress has preempted the field of dividing marital property. The
type of preemption at issue in this case is therefore implied conflict preemption.
The assertion is that Christopher’s proposed division of his pension, if employed by
a trial court, would constitute state action that would impermissibly conflict with
federal law.
¶ 40 As the Supreme Court has stated, the regulation of domestic relations, including
the distribution of marital property during dissolution proceedings, is traditionally
the domain of state law. Hillman v. Maretta, 569 U.S. ___, ___, 133 S. Ct. 1943,
1950 (2013). For this reason, there is a “presumption against pre-emption” in the
area of domestic relations law. Egelhoff v. Egelhoff, 532 U.S. 141, 151 (2001).
Because preemption is disfavored in domestic relations law, it follows that the
burden to establish conflict preemption in this area is high: it must be shown that
the challenged state action does “major damage to clear and substantial federal
interests before the Supremacy Clause will demand that state law will be
overridden.” (Internal quotation marks omitted.) Hillman, 569 U.S. at ___, 133 S.
Ct. at 1950. To determine what federal interest is at stake and whether it would
suffer major damage if the state action were permitted, we look to the language of
the relevant federal statute. Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. ___,
___, 133 S. Ct. 1769, 1778 (2013) (statutory language provides the best evidence of
Congress’s preemptive intent).
¶ 41 Section 407(a) of the Social Security Act provides:
“The right of any person to any future payment under this subchapter shall
not be transferable or assignable, at law or in equity, and none of the moneys
paid or payable or rights existing under this subchapter shall be subject to
execution, levy, attachment, garnishment, or other legal process, or to the
operation of any bankruptcy or insolvency law.” 42 U.S.C. § 407(a) (2000).
¶ 42 Section 407(a) addresses the rights of participants in Social Security to receive
payments under the terms of that program. The section prohibits the transfer or
assignment of Social Security benefits and prohibits the use of “legal process” to
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levy, attach, garnish or execute on those benefits. The section does not identify any
other prohibited actions and does not say anything about how the pension of a
nonparticipant in Social Security should be apportioned in a state dissolution
proceeding. Thus, under the plain language of the statute, the federal interest
established by section 407(a) is to ensure that Social Security benefits are received
by the participant. No other federal interest is at issue.
¶ 43 Christopher’s proposed division of his pension does not threaten Shelley’s
receipt of her Social Security benefits. Under Christopher’s proposal, Shelley
receives exactly what she is entitled to under the Social Security Act. In short,
permitting the trial court to adopt the proposed apportionment would in no way
stand “as an obstacle to the accomplishment and execution of the full purposes and
objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67 (1941).
Accordingly, the proposed apportionment of Christopher’s pension is not
preempted by section 407(a).
¶ 44 It is important to underscore the nature of the majority’s holding to the contrary.
The only reason Christopher is asking that he be allowed to retain a portion of his
pension in so that he can be placed in a similar financial position as Shelley. It is
this action which the majority finds prohibited by federal law. By finding conflict
preemption in this case, the majority has thus concluded that treating divorcing
spouses as equals in a state dissolution proceeding does “major damage to clear and
substantial federal interests.” There is simply no support for this conclusion in the
language of section 407(a).
¶ 45 Although this is a conflict preemption case, the majority does not identify the
federal interest at stake or explain why Christopher’s method for apportioning his
pension would do major damage to that interest. Instead, the majority’s analysis
rests solely on the assertion that allowing the apportionment proposed by
Christopher would violate the “core holding” of In re Marriage of Crook, 211 Ill.
2d 437, 442 (2004). Supra ¶ 23. Again, I disagree.
¶ 46 The “core holding” of Crook was twofold. First, Crook held that Social
Security benefits may not be directly divided in a dissolution proceeding. Second,
relying on Hisquierdo v. Hisquierdo, 439 U.S. 572 (1979), Crook held that a trial
court may not consider the amount of a participating spouse’s Social Security
benefits in order to calculate an offset. That is, the trial court may not take the
monetary value of the Social Security benefits to which the participating spouse is
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entitled and give that amount of money “to the other spouse to compensate for the
anticipated difference.” Crook, 211 Ill. 2d at 451. This “type of ‘consideration,’ ”
we held, was impermissible. Id. Thus, as we succinctly stated, “Social Security
benefits may not be divided directly or used as a basis for an offset during state
dissolution proceedings.” Id. at 449. These two actions are the only actions
prohibited under Crook.
¶ 47 Christopher’s proposed apportionment of his pension does not result in a direct
division of Shelley’s Social Security benefits. Nor does it create an offset, a fact
which the majority itself acknowledges. Supra ¶ 23 (the proposed apportionment
“is not strictly speaking an offset”). Christopher’s proposed division of his pension
is therefore not at odds with the “core holding” of Crook. Indeed, Crook expressly
left open the question of how to treat a pension in a dissolution proceeding when the
other spouse is a participant in Social Security. 211 Ill. 2d at 452; Supra ¶ 1.
¶ 48 The majority also offers two policy reasons why Christopher’s proposed
method for valuing and apportioning his pension should not be permitted. Neither
is persuasive.
¶ 49 First, the majority states that permitting the proposed apportionment would
“ignore section 503(d) [of the Dissolution Act], which instructs trial courts to
divide only marital property.” Supra ¶ 25. With this statement, the majority appears
to have concluded that Christopher’s proposal is improper because, if adopted, the
trial court would be dividing the amount of the hypothetical Social Security
benefits used to establish how much of Christopher’s pension should be retained,
rather than dividing actual marital property. This is clearly incorrect.
¶ 50 If Christopher’s proposal were adopted, the only thing the trial court would
actually divide would be the pension. The hypothetical Social Security benefits
would be used only as a measure to determine how the pension should be divided.
Nothing in section 503(d) prohibits this. To the contrary, section 503(d) requires
that marital property be divided “in just proportions considering all relevant
factors” (750 ILCS 5/503(d) (West 2012)), in order to achieve an equitable result
between the parties. Allowing Christopher to retain a portion of his pension,
thereby placing him in a similar position as Shelley, accomplishes this goal.
¶ 51 The majority also observes that the future is unknown and there is always a
possibility that Social Security benefits may, at some future time, change. From
this, the majority concludes that Christopher’s proposed apportionment, because it
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uses Social Security benefits as a measure for establishing how his pension should
be divided, must be rejected as “rank speculation.” Supra ¶ 26. This, too, is
incorrect. No one can predict or guarantee the future. Pension systems, for
example, can and do fail, drastically altering the financial positions of their
participants. If the rule were that no financial factor may be considered in a
dissolution proceeding if that factor may change in the future, then no pension
could ever be divided. Obviously, this is not the case.
¶ 52 Further, Christopher offered expert testimony explaining how to calculate the
amount of benefits for which Christopher would be eligible if he were a participant
in Social Security. The majority does not contend that these calculations are
mathematically incorrect and similar calculations are made as a matter of course in
financial and retirement planning. The Social Security Administration itself
provides the means for participants to calculate the amount of future benefits to
which they are entitled in order to plan for retirement. See http://www.ssa.gov (last
visited June 11, 2015). On this record, therefore, it is not speculation but fact: using
Christopher’s proposed apportionment would place him in the same position as
Shelley.
¶ 53 The majority holds that, in dissolution proceedings such as this, Illinois trial
courts are precluded from dividing pensions in a way that would clearly achieve “a
more equitable result.” 2014 IL App (4th) 130918-U, ¶ 24. There is no basis in law
or policy for this holding. I must, therefore, respectfully dissent.
¶ 54 JUSTICE KARMEIER joins in this dissent.
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