upholding trial court's conclusion that income changes associated with retirement constituted a material change in circumstancesSummary of this case from Dailey v. Dailey
46316 No. 0414-89-4
Decided April 24, 1990
(1) Domestic Relations — Appellate Review — Standard. — On appeal, the court will consider the evidence in the light most favorable to the party who prevailed below and will grant to that party all inferences fairly deducible therefrom.
(2) Domestic Relations — Spousal Support — Standard. — A spouse may not choose purposefully to pursue a low-paying career which operates to the detriment of the other spouse.
(3) Domestic Relations — Spousal Support — Standard. — Whether spousal support should be paid is largely a matter committed to the sound discretion of the trial court, subject to the provisions of Code Sec. 20-107.1; under Code Sec. 20-107.1, the court is required to consider the earning capacity, obligations, needs and financial resources of the parties, including income from all pensions, profit sharing or retirement plans.
Emilia Castillo (Arlene Lyles Pripeton; Daniel Stephen Palmer; Arlene Lyles Pripeton, P.C., on brief), for appellant.
Robert E. Shoun (Beverly J. Bach; Shoun, Smith Bach, on brief), for appellee.
Wife appealed the judgment of the circuit court that granted husband's petition for a reduction in spousal support. She argued that the trial court erred in requiring her to exhaust her own estate before receiving support (Circuit Court of Fairfax County, Jack B. Stevens, Judge).
The Court of Appeals affirmed, holding that, under the terms of the parties' property settlement agreement, upon the husband's retirement, the wife was to receive a sum greater than the amount previously payable as spousal support. The Court also held that the trial court did not err in finding that the husband's retirement constituted a change in circumstances and did not err in considering the income the wife was to receive in the form of pension benefits.
Because the trial judge considered the amount that she will receive from her husband's pension under the equitable distribution award as a source of funds available to her for her support needs, Shirley McGuire claims that the decree wrongfully requires her to exhaust her own estate rather than requiring her husband to provide spousal support. We disagree and affirm because Code Sec. 20-107.1 provides that the trial judge may, in fixing a spousal support award, consider income derived from a pension as an available source of funds to meet current needs.
The parties separated on July 1, 1986, after twenty-seven years of marriage. Their settlement agreement of September 22, 1987, provided that the husband would pay the wife $1250 monthly spousal support, subject to modification upon appropriate motion, and that the wife would receive a monetary award from the husband's federal civil service retirement pay, such award to be computed at the time of the husband's pending retirement according to a formula specified in the agreement. Pursuant to the agreement, the wife and husband would receive approximately a forty-three and fifty-seven percent portion, respectively, of the monthly payment. Survivor benefits were to be deducted from the wife's forty-three percent share. The agreement was ratified, affirmed, and incorporated into the final decree of divorce of December 7, 1987.
(1) On appeal, we construe the evidence in the light most favorable to appellant, granting to appellant all inferences fairly deducible therefrom. Martin v. Department of Social Services, 3 Va. App. 15, 20, 348 S.E.2d 13, 16 (1986).
On December 2, 1988, the husband retired from the Alcohol, Tobacco and Firearms Division of the United States Department of Treasury. The husband's retirement plans were long-standing, and his then age of fifty was the retirement age permitted by federal law for law enforcement officers. In January, 1989, the husband filed a motion to suspend or terminate his spousal support obligation, based upon a substantial change in his financial circumstances — reduction in his former $90,000 annual income due to retirement.
At the date of trial, the husband, age fifty and in good health, had gross annual earnings from employment of $24,000. His net monthly income was $2,950, including his projected share from the federal retirement. His income and expense statement showed his total expenses, present and projected, to be $3,440 per month. This showed a deficit of $490. The wife, who at age fifty-one was in good health and working full time, testified that her monthly net income was $1,188.50 from a gross annual salary of $18,470. Her monthly expenses of $2,383.70, not including unspecified amounts of credit card obligations, were covered by her wages and $1,250 monthly spousal support award.
Mrs. McGuire maintains that her husband failed to show that his change of circumstances was involuntary. She argues that he had the burden of proving that his lack of ability to pay support was not due to his voluntary act or his own neglect. Crosby v. Crosby, 182 Va. 461, 466, 29 S.E.2d 241, 243 (1944). She argues that because his earning capacity has not changed, the court should not have considered what he now earns. Robertson v. Robertson, 215 Va. 425, 427, 211 S.E.2d 41, 44 (1975).
(2) It is true that a spouse may not choose purposefully to pursue a low-paying career which operates to the detriment of the other spouse. Payne v. Payne, 5 Va. App. 359, 364, 363 S.E.2d 428, 431 (1987). However, the evidence in this case fails to show that the husband's retirement necessarily operated to the detriment of his wife.
Before the husband's retirement, the wife was receiving $1,250 a month in spousal support. Because of the husband's retirement, she will receive $1,600 per month from his pension. Therefore, the sums paid to the wife following the husband's retirement are greater than they were before his retirement. The principles set forth in Crosby and Payne are therefore inapplicable to this case. Thus, we hold that the trial judge did not abuse his discretion in finding that the husband's retirement constituted a change of circumstances justifying the petition for reduction of spousal support.
Next, Mrs. McGuire claims that a court may not require a party entitled to spousal support to invade his or her own estate to relieve the former spouse of a legal support obligation. See Klotz v. Klotz, 203 Va. 677, 680, 127 S.E.2d 104, 106 (1962). She asserts that her share of the federal pension was part of her equitable distribution award and, as such, an asset of her estate, not a source of funds from which she is required to look to for support. She relies upon Ray v. Ray, 4 Va. App. 509, 358 S.E.2d 754 (1987), where a panel of this Court held that "[t]he trial court erred when it considered the monetary award derived from the wife's marital property interest as income rather than an asset from which potential income might be derived." Id. at 514, 358 S.E.2d at 757.
(3) Whether spousal support should be paid is largely a matter committed to the sound discretion of the trial court, subject to the provisions of Code Sec. 20-107.1. The first factor listed in Code Sec. 20-107.1 is "[t]he earning capacity, obligations, needs and financial resources of the parties, including but not limited to income from all pension, profit sharing or retirement plans, of whatever nature." (emphasis supplied).
Thus, Code Sec. 20-107.1 required the trial judge to consider the income from the federal pension that Mrs. McGuire, a party, was to receive. Mrs. McGuire argues that the language refers to the party paying the support. Such an interpretation is contrary to the plain meaning of the word parties.
Mrs. McGuire maintains that she is entitled under Ray to set aside the pension money that she receives each month, invest it and only be required to expend the income or interest she receives from that investment (asset) for her personal support. We disagree. The husband's pension is income derived from many years of work that gave rise to a right to that income. In the instance of an IRA, Keogh or similar retirement plan, a person sets aside part of his earnings from which, upon retirement, the retiree will be entitled to take the entire sum or periodic payments. With regard to the husband's pension in this case, a lump sum payment is not possible. The "asset" is the right to receive income on a monthly basis. There is no sum of money built up, as in the case of an IRA, that a retiree is entitled to receive. Theoretically, the wife in Ray could have exhausted her estate and had no income to live on if she was forced to invade her separate estate for support. Here, there is no asset to invade and the wife can never exhaust her estate, insofar as the right to the pension payment is concerned. Mrs. McGuire will receive the monthly payment so long as she lives. We believe that the plain language of Code Sec. 20-107.1 requires that monthly federal pension payments be considered as akin to monthly income from an asset and not an exhaustible asset as was the case in Ray.
Therefore, we hold that the trial court did not abuse its discretion in fixing the spousal support award when it considered the monthly pension payments to Mrs. McGuire.
Accordingly, the judgment appealed from is affirmed.
Duff, J., and Keenan, J., concurred.