Benefit Rights and Community Property: Is Marriage of Brown Still Good Law?

James M. Crawford, Jr.

Introduction

For over 40 years, the leading case on dividing retirement and other forms of deferred compensation in divorce has been In re Marriage of Brown, 15 Cal. 3d 838 (1976). The purpose of this article is to explore whether In re Marriage of Green, 56 Cal. 4th 1130 (2013) has altered Brown’s basic principles. Examining Green in light of the subsequent case of Cal Fire Local 2881 v. California Public Employees’ Retirement System, 6 Cal.5th 965 (2019), I argue that Brown remains the controlling authority in this area, and that the difficulty encountered by the Green court in stating and applying its principles was due to a failure to distinguish between benefit rights that are earned as deferred compensation for services and those acquired by purchasing service credit, both in terms of when the rights accrue as "property," and in determining the extent to which that property is community property.

This distinction is critical to resolving any benefit case involving the purchase or award of credit for service during which no benefit rights are accrued, including, for example, service for a prior employer (e.g., the military service at issue in Green), pre-plan service for the same employer, and even deemed or "fictive" service. This issue can arise in retirement plans—both private and governmental—which are allowed by the Internal Revenue Code to utilize a limited amount of such service in determining the amount of benefits to be paid.¹ The issue can also arise in other types of benefit plans that are not subject to the qualified plan rules, such as severance benefit or stock option plans.