Offset for Social Security Benefits

Offset for Social Security Benefits

March 23, 2016


John and Annette get married on March 12, 1994. During their marriage, both worked as attorneys-John worked in private practice and contributed to Social Security. Annette was a Los Angeles County District Attorney-she contributed to Los Angeles County Employees Retirement Plan (LACERA). Annette was barred by federal law (42 USC 415(a)(7)) from contributing to Social Security. Further, she was barred from receiving social security benefits under the Windfall Elimination Provision of the Social Security Act because she did not contribute to social security but only contributed to LACERA. She could not receive Social Security Benefits either as an individual or as John’s spouse. (In Re Marriage of Peterson (1/11/16) 243 Cal.App.4th 923)

The couple separated in 2010 after a 16-year marriage. The parties agreed that John’s social security benefits were separate property and Annette’s LACERA benefits were community property. Annette argues to the court that it is not equitable for John to get his entire social security benefit and 1/2 of the community property interest in her LACERA benefits. She asked the trial court to fashion an order that gave her more of the LACERA benefit to offset the inequitable result of the division of the retirement benefits. She offered various remedies to offset the fact that John was getting all of his social security and 1/2 of the LACERA benefit and she only got 1/2 of the LACERA benefit. The trial court said: NO!. The trial court concluded that John’s social security benefits could not be offset by federal law and held that his benefits were his separate property. Further, the trial court divided her LACERA benefits pursuant to California community property law (Family Code, Section 2550).

Annette appeals to the Second District.

The court of appeal reasoned that federal law preempts California law on the issue of social security and precludes social security benefits from being characterized as community property and/or divide upon divorce. The right to receive social security benefits can not be transferred or assigned, nor may the benefits be subject to attachment, execution, garnishment or other legal process. The court noted a similar result in a case involving Railroad Retirement Act Benefits.

What now?

The inequity in this case is clear. The court of appeal refused to break federal precedent but stated that the Legislature is free to fashion a law that would remedy this unfair situation. However, how effective would such a state law be in light of the federal preemption. Members of Congress have introduced versions of a Social Security Fairness Act to no avail. It appears that unless the parties in a divorce agree, the inequity will continue.

Our attorneys at the Edgar & Dow exclusively practice family law with offices located in RiversideTemeculaAnaheim, and Palm Desert.


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