Tuesday, December 13, 2005

Case Law Development: Decline in Value of Retirement Funds after Divorce Shared by Both Spouses

In a case in which Wife was represented but Husband was not, the divorce decree ordered Husband to pay Wife one-half his retirement account.  No one effectively followed up on the order, (including Wife's attorney in part because "he had never done a QDRO before").  Five months later, when the retirement funds had dropped significantly in value, Wife brought a contempt action against  Husband.  The trial court ordered Husband to pay the value of the retirement funds as of the date of the divorce, but in ruling on the issue of attorney's fees, noted that both parties were equally at fault for the delay in the transfer and thus should split the attorney's fees.

The Alabama Court of Appeals reversed the trial court's decision on the amount to be paid out of the retirement funds.  Holding that "when a divorce judgment awards a spouse a percentage share of a variable asset and the award is silent with respect to market fluctuations in the value of the asset before the time of distribution, the judgment is inherently ambiguous; if the spouses are equally responsible for the delay in distribution, each spouse assumes a proportionate share of any subsequent gains or losses in the asset until such time as the share is distributed, and that is true even if the judgment awards a spouse a percentage of the value of the asset on a specific date." Moreover, the appellate court reversed the trial court's award of attorneys fees because the court did not find husband in contempt.

Buchanan v. Buchanan, 2005 Ala. Civ. App. LEXIS 736 (December 9, 2005)

For analysis of another interesting Alabama case on the division of retirement funds in divorce, visit fellow Alabama Family Law Blogger, Lee Borden's recent post.

http://lawprofessors.typepad.com/family_law/2005/12/case_law_develo_16.html

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