IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY

PENNSYLVANIA

 

CIVIL ACTION – FAMILY DIVISION

 

 

SHAWN M. HOUSER, f/k/a             :           NO. 2009-2-0265

SHAWN M. BENNETT,                                :

Plaintiff                                   :

:

v.                                                         :

:

CHRISTOPHER A. BENNETT,                   :

Defendant                              :

 

APPEARANCES:

 

Jason J. Schibinger, Esquire                  For Shawn M. Houser

Buzgon Davis Law Offices

 

Colleen S. Gallo, Esquire                         For Christopher A. Bennett

Reilly, Wolfson, Sheffey,

Schrum, & Lundberg LLP

 

Opinion, Charles, J., February XXX, 2012

 

This is a divorce dispute. Before us for resolution are the Exceptions and Cross-Exceptions to the Recommendations of the Special Master’s (SM) Report. Both parties challenge the SM’s decisions regarding equitable distribution of their marital property.

I.        PROCEDURAL BACKGROUND

 

Plaintiff Shawn M. Bennett (hereafter “WIFE”) filed a Complaint in Divorce on April 17, 2009 and HUSBAND was served with the Complaint on April 20, 2009.  On May 4, 2009, WIFE filed a Petition for Exclusive Possession of the marital home.  On August 13, 2009, the parties filed a Stipulation via which HUSBAND agreed to vacate the marital home by August 28, 2009.  The Stipulation specifically provided that it “shall be without prejudice to the award of equitable distribution.”  (Stipulation, Exhibit “2”)  Under the Stipulation, HUSBAND also agreed to take sole responsibility for various expenses, including payments on his vehicle loan and automobile insurance. He also agreed to reimburse WIFE for payments on credit cards in his name, and for expenses associated with their daughter Madelynne’s gymnastic activities.  (Stipulation, Exhibit “2”)

On April 22, 2010, WIFE filed a Petition raising a claim for equitable distribution of the marital estate.  On April 22, 2010, she also filed a Petition for Appointment of a Special Master and Ann H. Kline, Esquire was appointed by Order of Court on that same date.  A hearing before the SM was held on May 10, 2011.  The SM’S Report and Recommendations were filed on October 4, 2011. On October 13, 2011, WIFE filed Exceptions to the SM’S Report and HUSBAND filed Counter-Exceptions on October 21, 2011.  The Exceptions and Counter-Exceptions were listed for Argument, submitted on the Briefs filed by the parties, and are presently before us for resolution.

II.       FACTUAL BACKGROUND

 

The parties were married on May 16, 1998.  (N.T. 10)  This was WIFE’S second marriage and the first marriage for HUSBAND.  (N.T. 10, 84)  The parties are the parents of one child, Madelynne Grace Bennett, born August 3, 2000.  (N.T. 12)  At the time of the hearing, the parties had agreed to a joint custody arrangement for Madelynne, with each having her on alternating weeks.  (N.T. 12, 119)  WIFE also had two sons from her previous marriage, Nathan, aged twenty-two, and Zachary, aged 18.  (N.T. 12 – 13, 60)  Both of her sons lived with the parties during the marriage.  (N.T. 12 – 13)  Zachary now attends college.

At the time the Complaint was filed, both WIFE and HUSBAND were still residing in the marital home at 953 Weaber Avenue in Palmyra along with Madelynne, Nathan and Zachary.  (N.T. 12 – 13)   In response to WIFE’S filing the Petition for Exclusive Possession, HUSBAND eventually moved out of the marital home on August 28, 2009 pursuant to the parties’ Stipulation.

At the time of the hearing, WIFE was thirty-nine years old (N.T. 10) and HUSBAND was forty-one years old. (N.T. 84)  When the parties married in 1998, WIFE already had a bachelor’s degree in chemistry from Lebanon Valley College.  (N.T. 17)  During the marriage she attended graduate school, and in 2006 she obtained her master’s degree in chemistry from Penn State. (N.T. 18)  During the time she was pursuing her graduate degree, she continued to work full-time. (N.T. 18)  She received reimbursement for the tuition for her master’s program from her employer, the Hershey Company.  (N.T. 18)  HUSBAND was a high school graduate and had earned a total of fifty college credits from HACC, the Community College of Philadelphia and Temple University.  (N.T. 84)  He recalled that he had last attended college in or about 1993.  (N.T. 84)

Prior to the marriage, WIFE owned a vehicle and a fully-furnished home at 915 South Franklin Street in Palmyra which she had purchased in 1997 after she was divorced from her former husband.  (N.T. 13)  When the parties married, HUSBAND moved into that home (N.T. 65, 94)  and his name was subsequently added to the deed when the mortgage was refinanced.  (N.T. 14)  The parties sold the Franklin Street home in 2003 and received $7,036.30 from the sale.  (N.T. 14 – 15)  The funds were deposited into their joint back account and were later used to purchase the current marital home on Weaber Avenue.  (N.T. 15)  Prior to the marriage, WIFE also had a checking account with a balance of approximately $2,046.71 with York Federal.  (N.T. 39 – 40, Exhibit “29”)

The parties purchased the Weaber Avenue home in 2003 for $333,793.00.  (N.T. 15, Exhibit “5”)  A loan was taken from WIFE’S 401k at that time to help with financing for the purchase.  (N.T. 73)  At the time of the hearing, there were two mortgages on the home.  (N.T. 23)  The first mortgage, with CCO Mortgage Company, had a principal balance of approximately $253,494.24, with a monthly payment of $2,298.38.  (N.T. 24 – 26, Exhibit “13”)  The second, with CitiMortgage, Inc. had a balance of approximately $76,914.49, with a monthly payment of $580.88.  (N.T. 25 – 26, Exhibit “14”)  WIFE made both mortgage payments since the filing of the Complaint in Divorce. (N.T. 23, 25)   The marital home was appraised at $400,000.00  (N.T. 28, Exhibit “18”)[1]  and the fair rental value of the home, excluding utilities, was estimated to be $1,900.00 per month.  (N.T. 96 – 97)  At the hearing, HUSBAND requested the SM to award him a fair rental credit based on WIFE’S exclusive occupancy of the marital home.

After HUSBAND moved out of the marital home, WIFE continued to live there with Madelynne, Nathan and Zachary.  (N.T. 13)  In addition, her boyfriend, Scott Fedor, moved in and contributed a minimal amount to food and utility expenses.  (N.T. 58)  After moving from the home, HUSBAND moved into an apartment with a friend with whom he shares expenses.  (N.T. 120)  Madelynne also stays at the apartment during the periods of FATHER’S custody. (N.T. 120)

Both parties were employed at the Hershey Company.  WIFE had begun working there in 1996 and at the time of the hearing was a senior manager in chocolate development.  (N.T. 18, 67)  She had an annual salary of $128,000.00 plus the potential for an annual bonus based on company and personal performance.  (N.T. 67)  She had received bonuses in 2010 and 2009 but did not expect to receive one in 2011.  (N.T. 67)  HUSBAND had been employed at the Hershey Company since 1999.  (N.T. 87) He is an associate research specialist with an annual salary of $49,000.00.   (N.T. 87)  When questioned by WIFE’S counsel, HUSBAND stated that he was not sure whether he had the opportunity to receive annual bonuses. (N.T. 87)  Both parties receive medical, dental, vacation and retirement benefits through the employer.  (N.T. 20, 87 – 88, Exhibit “8”)  WIFE’s insurance plan covers the three children.  (N.T. 20)

WIFE was in good health at the time of the hearing.  The parties stipulated that HUSBAND had surgery involving his brain in January 2007.  (N.T. 93)  After that surgery, he was off work for approximately eight weeks.  (N.T. 90)  He suffered a seizure in March or April 2011 and again was off work for two weeks afterwards.  (N.T. 86)  At the time of the hearing, he had been required to surrender his driving privileges until he had been seizure-free for a six-month period.  (N.T. 86, 123)  HUSBAND was taking medication but was continuing with diagnostic tests to determine the cause of the seizure.  (N.T. 85 – 86) He had returned to work full-time (N.T. 86) but had several work restrictions:  he was instructed to avoid steps, he could not operate certain equipment and he could not work unsupervised until he had been seizure-free for a period of six months.  (N.T. 123)  HUSBAND’s employer had made all accommodations necessary to comply with these restrictions.  (N.T. 134)  He testified that there was a possibility that he would be on medication which might prevent him from driving for two to three more years.  (N.T. 123)  At that point, he had been able to make arrangements for transportation to and from work.  (N.T. 120)

During the marriage, the parties had various credit cards which they used to cover various expenses.  One of these was a Chase credit card which was in HUSBAND’S name.  (N.T. 49, Exhibit “38”)  At the SM hearing, WIFE offered a statement on this account dated March 16, 2009, which showed a balance due of $11,510.37.  (Exhibit “”38”)  She testified that she had made some payments of $500.00 to $600.00 per month on this account but that she did not know the present balance.  (N.T. 49)  HUSBAND offered a statement on the Chase account dated July 11, 2009 which indicated a balance of $10,074.21 (Exhibit “69”) and an account summary dated April 13, 2011 which indicated a balance of $7,741.13.  (N.T. “70”)  He testified that he had continued to pay off the balance after separation pursuant to the Stipulation, but that he had also made additional charges on the account since that time.  (N.T. 108 -109)

The parties had also had a Lowe’s credit card which was in HUSBAND’S name.  (N.T. 111)  WIFE made the payments on this card until HUSBAND moved out of the marital home at which time he took over the payments pursuant to the parties’ Stipulation.  (N.T. 62)  A June 17, 2009 account summary indicated a balance of $10,118.46 on this account.  (Exhibit “71”)  A statement with a due date of April 12, 2011 indicated a balance of $10,284.23.  (Exhibit “72”) HUSBAND testified that he had also continued to make charges on this account.  (N.T. 112)  The last payment he had made on the account was six months prior to the hearing before the SM and the account had been closed.  (N.T. 114)

During the marriage, the parties owned various vehicles which were used by the parties and WIFE’S sons.  These included a Nissan Armada, acquired during the marriage, and retained by HUSBAND after separation.  (N.T. 105)  Pursuant to the Stipulation, HUSBAND took over the loan payments for this vehicle after he moved out of the marital home in August 2009.  (N.T. 105)   He then refinanced the loan and had the Armada placed in his own name.  (N.T. 105 – 106) He indicated that prior to that time, the payments had come out of the parties’ joint account.  (N.T. 107)  WIFE testified that the payments had been automatically withdrawn from her paycheck and made through the Hersey Federal Credit Union until HUSBAND took over the payments.  (N.T. 37)

During the marriage, the parties had a joint checking account into which both would deposit their paychecks. WIFE would then pay the family’s expenses out of this account.  (N.T.  78)  HUSBAND testified that he believed he had continued to deposit his paychecks into the parties’ joint bank account and that those funds were still being used for household expenses during the interim between the filing of the Complaint and the date he moved out of the marital residence.  (N.T. 94 – 95)  In contrast, WIFE testified that she was paying all of the household expenses out of a separate account she had set up in March/April 2009 with her own funds and that HUSBAND was not contributing anything toward the household during the period after the filing of the Complaint.  (N.T. 70 – 71, 78)

Both parties had retirement plans set up through their employer.  Each had a 401k and a separate Hershey Retirement Plan account.[2] At the hearing, WIFE introduced a letter from her accountant which described four scenarios for potential income tax consequences which would occur at her retirement. She requested the SM to deduct these tax consequences from the value of her retirement accounts.  (Exhibit “44”)  The possibilities ranged from $5,369.00 in the event of election of a lifetime guaranteed annuity with a five percent (5 %) distribution rate (in addition to Social Security benefits), to $67,592.00 if both retirement accounts are fully liquidated (with no additional income).  WIFE testified that she had not made any decisions as to what retirement option she would ultimately choose.  (N.T. 74 – 75)  Based on WIFE’S age, the SM chose the scenario with the lowest tax consequence ($5,369.00) and deducted half of this amount ($2,684.50) from the value of each account.  The SM found that WIFE had made post-separation contributions of $$5,052.45 and that the employer had made post-separation contributions of $5,441.44 to WIFE’S 401k account and determined a pre-tax value for the 401k of $102,243.71.

After separation, on November 20, 2009, Defendant testified that he had taken out a loan in the amount of $11,820.00 against his 401k retirement account.  (N.T. 103 – 105)  At the time of the   hearing, the account had a current value of $89,112.25 and the loan had an outstanding balance of $9,044.77.  The SM reduced the value of the retirement account by this balance, $9,044.77, in valuing this asset for purposes of equitable distribution for a figure of $80,067.48, and then deducted $4,792.45 for HUSBAND’S post-separation contributions and $3,266.06 in employer contributions from that amount to arrive at the assigned value of $72,008.97.

III.      SCOPE OF REVIEW

 

The master’s report and recommendations are advisory only; the trial court is required to make an independent review of the report and recommendations to determine whether they are appropriate.  Kohl v. Kohl, 564 A.2d 222 (Pa. Super. 1989).  Although not bound by the Report of a SM, the Court is to give great consideration to the SM’s findings and recommendations.  Morschauser v. Morschauser, 516 A.2d 10 (Pa. Super. 1986).  In determining issues of credibility, the SM’s findings are to be given the fullest consideration and weight. Schuback v. Schuback, 603 A.2d 194 (Pa. Super. 1992).  Findings of credibility are not to be disturbed absent an abuse of discretion.  Doherty v. Doherty, 859 A.2d 811 (Pa. Super. 2004).   A master’s findings are given such deference, particularly on the question of credibility of witnesses, because the master has had the opportunity to observe and assess the behavior and demeanor of the parties. Moran v. Moran, 839 A.2d 1091, 1094 (Pa. Super. 2003).

IV.     DISCUSSION

 

          A.      AWARD OF FAIR RENTAL CREDIT

 

[I]t is within the discretion of the trial court to grant rental value as a part of equitable distribution. The award of rental value is within the sound discretion of the trial court. The basis of the award of rental value is that the party out of possession of jointly owned property (generally the party that has moved out of the formal marital residence) is entitled to compensation for her/his interest in the property. … Generally, “parties have an equal one-half interest in the marital property,” and thus “the dispossessed party will be entitled to a credit for one-half of the fair rental value of the marital home.” … This Court has discussed the analysis for deciding whether to award rental credit:

 

First, the general rule is that the dispossessed party is entitled to a credit for the fair rental value of jointly held martial property against a party in possession of that property, provided there are no equitable defenses to the credit. Second, the rental credit is based upon, and therefore limited by, the extent of the dispossessed party’s interest in the property…. Third, the rental value is limited to the period of time during which a party is dispossessed and the other party is in actual or constructive possession of the property. Fourth, the party in possession is entitled to a credit against the rental value for payments made to maintain the property on behalf of the dispossessed spouse. Generally, in regard to the former marital residence, payments made on behalf of the dispossessed spouse will be one-half of the expenses including debt service on the property. This is so because equity places a presumption upon the dispossessed spouse of responsibility for expenses to the extent of her/his ownership interest which is generally one-half. Finally, we note that whether the rental credit is due and the amount thereof is within the sound discretion of the court of common pleas.

 

Lee v. Lee, 978 A.2d 380, (Pa. Super. 2009).

A party who is excluded from possession of the marital residence during separation may be entitled to a fair rental credit unless there are equitable defenses.  Gaydos v. Gaydos, 693 A.2d 1368 (Pa. Super. 1997).  When a spouse voluntarily leaves the marital residence without justification, an award of fair rental credit should be denied as such actions constitute an equitable defense to such a claim.  Loehr v. Loehr, LCCCP No. 2007-20912, Opinion dated January 29, 2010 (upheld by Pennsylvania Superior Court in Memorandum Opinion dated October 14, 2010). In such a case, the party removing himself from the marital residence cannot be considered “dispossessed.”  Rhen v. Rhen, LCCCP No. 2007-20502, Opinion dated July 14, 2010.

A request for relief must have competent support in the record.  Salisbury Tp. V. Vito, 285 A.2d 529 (Pa. 1971).  Unproven allegations of a pleading or other document may not provide a basis for relief.  See, St. Thomas Tp. Board of Supervisors v. Wycko, 758 A.2d 755 (Pa. Commw. 2000).

The SM determined that HUSBAND was entitled to a fair rental credit because WIFE enjoyed sole possession of the marital home from August 2009, when HUSBAND vacated the home, to May 2011. The SM recommended a rental value credit of $20,900.00[3] , based upon her finding that no equitable defense was proven at the hearing by WIFE.   WIFE challenges this award, claiming that HUSBAND left the marital home voluntarily.  She argues that HUSBAND’s agreement to vacate the residence serves as a de facto admission of the allegations found in her Petition for Exclusive Possession. She also argues that rental credits are not appropriate given that three children, including HUSBAND’s daughter, were in the marital residence.

In her Report, the SM noted that HUSBAND had moved out of the marital residence in response to WIFE’S Petition for Exclusive Possession and that no hearing had been held on the Petition due to the parties entering the Stipulation prior to the hearing date.  Thus, “[t]he allegations set forth in Plaintiff’s Petition were never proven nor were they admitted.  As such, they will not be considered as testimony. … No equitable defenses have been proven, therefore Defendant is entitled to a credit calculated from August, 2009 to May, 2011 or $20,900.”  (SM Report and Recommendation, at Subsection (D))  In addition, the SM recognized the Stipulation’s provision that it would not have any effect on the equitable distribution of property.

WIFE cites both the Loehr and the Rhen cases.  However, the facts of both of these cases are easily distinguishable from those of the instant case.  In Loehr, the wife, who had moved out of the home, was denied her request for a fair rental credit. The husband had never been awarded exclusive possession of the marital residence and had testified that he had not wanted the wife to leave.  In addition, the wife had moved out voluntarily, and instructed her husband to sell the house, leaving him to pay two mortgages on the home without making any contributions.  Husband’s payment of the mortgages exceeded wife’s entitlement to fair rental credit and the credit was disallowed.

A similar situation was presented in Rhen.  In that case, the husband had filed a Petition for Exclusive Possession and the SM awarded fair rental credit for the marital home to the wife.  However, the court determined that the SM had erred in doing so as it found that the wife had not actually been dispossessed of the home, but chose to leave without any justification, thereby establishing HUSBAND’S equitable defense to WIFE’S request for the credit.  The SM had held that the husband’s filing of a Petition for Exclusive Possession had transformed WIFE into the dispossessed spouse.  The Court disagreed, noting that the wife had moved out of the marital home with no prior indication of her intentions to her husband, having already made arrangements to move out-of-state and to work from there.

The circumstances of this matter are markedly different from those of the Loehr and Rhen cases.  In those cases, a fair rental credit was sought by the spouse who filed for divorce and removed himself from the marital home, either prior to or without the other’s filing of a petition for exclusive possession.  Here, it was WIFE, the spouse remaining in the home, who initiated the divorce proceedings and sought to have the Court order HUSBAND to leave the home.  HUSBAND did not depart until after WIFE sought exclusive possession and he actually stayed in the home for three months after that Petition was filed.  He agreed to the Stipulation only one day prior to the scheduled hearing date on the Petition.  Neither Loehr nor Rhen compel us to award rental credits to WIFE.

We likewise find no basis in the record which would establish an equitable defense.  Husband was fully justified in entering the Stipulation and agreeing to leave when that was what WIFE was so adamantly seeking.  We fail to see how WIFE can now claim that he had no justification for leaving when it was she, herself, who wanted him to leave the home and requested the Court to direct him to do so.  We agree with HUSBAND that this consisted of a constructive eviction for which he should not be penalized anything further.

Furthermore, we cannot consider or utilize WIFE’S allegations in her Petition for Exclusive Possession in reaching our decision at this juncture.  As noted by the SM, the allegations of that Petition were never proven and were not admitted in the Stipulation entered by the parties.  The Stipulation specifically provided that its terms would have no effect on the equitable distribution of marital property.  Had WIFE desired to pursue the same allegations in an effort to dispute HUSBAND’S claim for this credit, she could certainly have presented testimony to this effect at the hearing before the SM.  However, the record as it stands contains no evidence of conduct which would warrant a denial of his claim.

We must also reject WIFE’S remaining arguments on this issue.  Only one of the children living in the home, Madelynne, was the child of both HUSBAND and WIFE and she lived there only half of the time.  Nathan and Zachary were both WIFE’S children from her prior marriage, and both had reached the age of majority and were attending college after separation. (N.T. 60) We further note that WIFE’S was awarded a credit for one-half of her payments for the mortgages and household repairs.

We concur with the SM’s decision to award HUSBAND rental credits. None of WIFE’s arguments are persuasive. Accordingly, WIFE’s exception on the rental credit issue will be denied.

 

          B.      CREDIT FOR MORTGAGE/CAR LOAN PAYMENTS

 

The Divorce Code, 23 Pa.C.S.A. §3101 et seq. provides the following definition of the term “separate and apart:”

§3103.  Definitions

 

“Separate and apart.”  Cessation of cohabitation, whether living in the same residence or not.  In the event a complaint in divorce is filed and served, it shall be presumed that the parties commenced to live separate and apart not later than the date that the complaint was served.

 

23 Pa.C.S.A. §3103.  This statutory presumption (which recognizes the parties’ separation date as the date on which the divorce complaint was served, for purposes of determining whether property is marital and subject to equitable distribution) is a procedural device that not only permits an inference of the presumed fact, but also shifts to the opposing party the burden of producing evidence to disprove the presumed fact.  McCoy v. McCoy, 888 A.2d 906 (Pa. Super. 2005).  In order to rebut this presumption, a party must provide evidence that at least one of the parties intended to dissolve the marriage at some alternate time and that this intent was communicated to the other party.  Id.

A special master has the discretion to award or deny credits based on the facts of each case.   A credit may be denied when it is necessary to do so based upon the parties’ circumstances.  Simeone v. Simeone, 214 B.R. 537 (E.D.Pa. 1997), citing Scheeman v. Scheeman, 615 A.2d 1369, 1377-1378 (Pa. Super. 1992).

The SM awarded WIFE credits for payments she made on the two mortgages and for the loan payments for HUSBAND’s Nissan Armada for only the period beginning August 28, 2009 when HUSBAND moved out of the residence.  WIFE claims that this was error on the part of the SM, contending that the parties’ separation began on April 20, 2009, the date when HUSBAND was served with the Complaint, and that she should receive credits for the payments made from that date forward.

In her Report, the SM found that “[t]he parties separated on August 28, 2009.”  (Report of SM, Conclusion of Law No. 5)  We agree with WIFE that this was error.  We glean no evidence from the record sufficient to overcome the statutory presumption provided by Section 3303. Therefore, the date of the parties’ separation was actually April 20, 2009, when HUSBAND was served with the Complaint.  This conclusion, however, does not compel the result urged by WIFE.

HUSBAND points out that the SM based her decision, not on the date of separation, but on both parties’ continued contributions to household expenses during the time period between service of the Complaint and HUSBAND’S departure on April 28, 2009. We agree.

WIFE testified that HUSBAND did not contribute any funds to the household expenses after that date and that all expenses were satisfied out of her own funds which were paid through the separate account she had established for herself in March or April 2009.[4]  She further points to the fact that the loan payments for the Nissan Armada continued to be automatically deducted from her paycheck during this period.[5]   HUSBAND testified that he believed that he deposited his paychecks into the parties’ joint account thereby contributing to the payment of the mortgages, car payments and other household expenses and this testimony was noted by the SM in her Report.  (SM  Report, Finding of Fact No. 7)

Our review of the SM’S Report leads us to the conclusion that she did not base her decision on the date of separation, but rather on evidence  that the parties continued to commingle their finances after the date the Complaint was served but prior to HUSBAND moving out in August.  It appears that she found credible and accepted HUSBAND’S testimony that he continued to provide his paycheck for household expenses during that time.  The SM was in the best position to adjudge the credibility of the witnesses and we will not disturb her finding based on our review of the record.

          C.      TAX IMPLICATIONS OF RETIREMENT ACCOUNT

 

§ 3502. Equitable division of marital property

 

(a) General rule.–Upon the request of either party in an action for divorce or annulment, the court shall equitably divide, distribute or assign, in kind or otherwise, the marital property between the parties without regard to marital misconduct in such percentages and in such manner as the court deems just after considering all relevant factors. The court may consider each marital asset or group of assets independently and apply a different percentage to each marital asset or group of assets. Factors which are relevant to the equitable division of marital property include the following:

 

 

(10.1) The Federal, State and local tax ramifications associated with each asset to be divided, distributed or assigned, which ramifications need not be immediate and certain.

 

23 Pa.C.S.A. §3502(a)(10.0).

WIFE claims that the SM erred in considering the possible tax consequences regarding WIFE’S retirement accounts.  At the hearing, WIFE submitted a report from a Certified Public Accountant which outlined the tax implications of four different retirement distribution scenarios. (Exhibit “44”) The SM chose the scenario with the least tax consequences, which was $5,369.00, and applied this to her calculation in placing a value on this asset.[6]  This scenario involved a lump-sum rollover of the balances of both accounts into an IRA with a five percent (5%) distribution from the total account and included consideration of her receiving $2,508.00 monthly Social Security benefits at the age of 67. (Exhibit “44”)  WIFE claims that the SM erred in assuming that WIFE would choose this option and contends that the SM should have instead utilized the scheme with the highest tax consequence of $67,592.00 and applied that percentage (by her estimate, 25 %) to the valuation of both parties’ retirement accounts.  That scenario involved a lump-sum distribution from both accounts and contemplated that WIFE would be receiving no other income. (Scenario 1 of Exhibit “44”) She claims that a higher percentage is more representative of what they will actually be paid upon retirement.

We disagree with this argument.  At the hearing, WIFE presented this document but failed to testify or offer any discussion whatsoever as to which option she would be most likely to select when she actually retires.  In fact, she testified that she did not have any idea which she would ultimately choose. (N.T. 74 – 75)  Without any indication that she had a preference for any particular scenario or that any particular option would be more appropriate for her, it was perfectly reasonable for the SM to determine that a retiree would select a scenario with the least amount of tax implications. This scenario was also a logical choice on the part of the SM, as it was also likely that WIFE would choose to work until the age of 67 when she was eligible to receive a decent amount in Social Security and other benefits. (Scenario “4” of Exhibit “44”)  As such, the SM did not err in using that scenario in reaching a present value for the retirement package.  The potential tax implications were all speculative and we find no error in the SM’S acceptance of the one with the least restrictions.  We will therefore affirm this determination.

 

          D.      POST-SEPARATION CONTRIBUTIONS TO RETIREMENT

          ACCOUNTS                                                                           

 

Marital property is defined in the Divorce Code as follows:

 

(a) General rule.–As used in this chapter, “marital property” means all property acquired by either party during the marriage and the increase in value of any nonmarital property acquired pursuant to paragraphs (1) and (3) as measured and determined under subsection (a.1). However, marital property does not include:

 

(1) Property acquired prior to marriage or property acquired in exchange for property acquired prior to the marriage.

 

23 Pa.C.S.A.   §3501(a)(1). “[T]he amount of   pension funds accrued during marriage is marital property and subject to   equitable distribution. …     Correspondingly, pension benefits accruing prior to date of marriage   and after date of final separation are not subject to equitable   distribution.” Hayward v. Hayward, 808 A.2d 232, 237 (Pa. Super. 2002)   (citations omitted).  Accordingly, the   distribution of portions of a party’s pension that accrued prior to the   marriage or after separation, is a violation of Pennsylvania law. Id.

The SM deducted contributions from both WIFE and her employer to her 401k account after that date of separation to determine the amount which was subject to equitable distribution.  (Exhibit “48”)  WIFE complains that the SM erred by including the value of contributions made by her employer during the period between the date of the service of the Complaint, April 20, 2009, and August 28, 2009, as those amounts should have also been deducted.

The SM did deduct post-separation contributions from the value of WIFE’S accounts and we agree that any contributions made after service of the Complaint on April 20, 2009 should have been deducted from the value subject to distribution.  Because official separation occurred on April 20, 2009, any property acquired thereafter by either party was non-marital in nature.  Thus, any contributions to WIFE’S retirement accounts, whether made by WIFE or her employer, after April 20, 2009 were non-marital funds and should not have been included in the value determined by the SM.   Our calculation of the amounts to be deducted from the date of separation, April 20, 2009 is as follows:

                   (1)     WIFE’s 401-k Account

 

Current value                                               $ 132,906.55

Less value prior to marriage                             11,528.65

Less outstanding loan balance[7]                        8,640.30

Less employer contributions post-

April 20, 2009                                          6,298.16

 

Less WIFE’S post-separation contributions

from April 20, 2009                                          6,194.71

 

Value of asset                                            $  100,244.73

Less tax consequences discussed in

Subsection (C) of this Opinion                           2,684.50

 

Value available for equitable

distribution                                               $     97,560.23

With regard to WIFE’S HRA account, WIFE complains that the SM erred in deducting only the amount of employer contributions for 2010 as set forth in Exhibit “48” and that all contributions after April 20, 2009 should have been deducted.  We agree.  We calculate the amount representing non-marital contributions, including those accruing after separation in the year 2009, as follows:

 

                   (2)     WIFE’s HRA Account[8]

 

Current value                                              $  92,505.42

Less employer credits for 2010                        9,113.76

Less increase in value April 20 –

December 3, 2009                                            2,506.97

 

Value                                                           $ 80,884.69

 

Less tax consequences of

Subsection (C)                                                 2,684.50

 

Value subject to distribution                       $ 78,200.19

 

E.      HUSBAND’S POST-SEPARATION DEDUCTIONS FROM HIS RETIREMENT ACCOUNT                                                           

 

Section 3503 of the Divorce Code also provides as a factor to be considered in the distribution of marital property: “[t]he contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as homemaker.”  23 Pa.C.S.A. §3502(7).  When a party withdraws funds from an account which is a marital asset, those funds should be added back in ascertaining the value of the account for distribution purposes.  See, Diament v. Diament, 816 A.2d 256 (Pa. Super. 2005).

WIFE claims that the SM erred in failing to add back the remaining balance of the loan HUSBAND took from his 401k account ($9,044.77) in determining the value of this asset for equitable distribution.  HUSBAND testified that he took this loan for living expenses and attorneys’ fees.  (N.T.   103 – 105)  There is no testimony that this loan was taken in order to repay any marital debts and HUSBAND does not dispute that WIFE was paying all marital debts after he left the residence in August 2009.  WIFE claims that by taking this loan, HUSBAND depleted the amount available for equitable distribution.  We agree and direct that the balance of the loan should be added back to the balance of the account to determine its value for distribution purposes.

HUSBAND further complains that he did not receive a deduction for the future tax consequences associated with his retirement package as did WIFE and argues that the SM’S failure to add the outstanding loan balance back into the account value is somehow a compensation for that failure.  (As noted above, WIFE also argued that HUSBAND’S retirement benefits should be discounted by twenty-five percent, as she requested for her own retirement valuation.) We also reject this argument.  HUSBAND presented no evidence of the tax obligations he will incur upon utilization of his retirement benefits.  Although such tax consequences are uncertain and such a consideration does require some degree of speculation on the part of the SM, the SM is still entitled to some guidance in making such a determination.  She was not required to simply make up her own version without anything upon which to base her opinion.

Hence, we calculate the value of HUSBAND’S 401k account as follows:

Current value                                                        $  89,112.25

Plus outstanding loan balance                            9,044.77

 

Total                                                                     $  98,157.02

Less HUSBAND’S contributions                               4,792.45

Less employer’s contributions                           3,266.06

Value for distribution                                            $   90,098.51

 

F.         BALANCES OF CHASE CREDIT CARD AND LOWE’S CREDIT CARD

Both parties agree that the SM erred in determining the balances of the Chase and Lowe’s credit cards which were retained by HUSBAND.  The SM assigned the following as marital debts belonging to HUSBAND:  (1) a $10,521.82 balance on the Lowe’s credit card (Exhibits “71” and “72”), and (2) a $9,021.82 balance on the Chase credit card.  (Exhibits “”69” and “70”)  The SM indicated that these figures were obtained from statements which were dated at or about the time of the parties’ separation.

The Lowe’s statement (Exhibit “71”) from the date closest to separation (June 16, 2009) indicated a balance of $10,118.46.  HUSBAND admitted that he missed a number of payments, incurred late fees and allowed the balance to rise to $10,284.23 (Exhibit “72”).  HUSBAND concedes that the Lowe’s card had a balance of $10,118.46 around the time of separation which is the correct balance for purposes of equitable distribution.  Thus, this figure will be used in our calculations regarding division of the marital estate.  The marital debt assumed by HUSBAND will be reduced by $394.42.

The last account statement received for the Chase card just prior to the filing of the Complaint was dated March 20, 2009 and showed a balance of $11,510.00. (Exhibit “68.”  The account statement dated July 16, 2009 indicated that the balance had been brought down to $10,521.82.  WIFE testified that she made payments of $1,500.00 on the account after the filing of the Complaint and the SM gave her a credit for these payments.  Thus, $10,010.00 was the correct balance of the debt on the Chase card.

G.        IDENTIFICATION OF REFRIGERATOR AWARDED TO HUSBAND

 

WIFE complains that the SM failed to adequately identify a refrigerator which was awarded to HUSBAND as part of the scheme of distribution as there were two refrigerators remaining in the marital home.  She requests clarification that the refrigerator is one located in the garage which was given to HUSBAND by his grandparents.  (Exhibit “6”)  HUSBAND agrees that this is the refrigerator contemplated by the SM in her Recommendation.  We therefore direct that HUSBAND be awarded the refrigerator in the garage.

 

          H.      PERCENTAGE OF DISTRIBUTION OF MARITAL ESTATE

 

The Divorce Code sets forth a number of different factors to be considered by the courts in determining a scheme of equitable distribution of marital assets.  Section 3502 (a) provides, in part, as follows:

§ 3502. Equitable division of marital property

(a) General rule.–Upon the request of either party in an action for divorce or annulment, the court shall equitably divide, distribute or assign, in kind or otherwise, the marital property between the parties without regard to marital misconduct in such percentages and in such manner as the court deems just after considering all relevant factors. The court may consider each marital asset or group of assets independently and apply a different percentage to each marital asset or group of assets. Factors which are relevant to the equitable division of marital property include the following:

 

(1) The length of the marriage.

 

(2) Any prior marriage of either party.

 

(3) The age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties.

 

(4) The contribution by one party to the education, training or increased earning power of the other party.

 

(5) The opportunity of each party for future acquisitions of capital assets and income.

 

(6) The sources of income of both parties, including, but not limited to, medical, retirement, insurance or other benefits.

 

(7) The contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as homemaker.

 

(8) The value of the property set apart to each party.

 

(9) The standard of living of the parties established during the marriage.

 

(10) The economic circumstances of each party at the time the division of property is to become effective.

 

(10.1) The Federal, State and local tax ramifications associated with each asset to be divided, distributed or assigned, which ramifications need not be immediate and certain.

 

(10.2) The expense of sale, transfer or liquidation associated with a particular asset, which expense need not be immediate and certain.

 

(11) Whether the party will be serving as the custodian of any dependent minor children.

 

23 Pa.C.S.A. §3502(a)(1)-(11).

 

The SM awarded fifty-two percent (52%) of the marital estate to HUSBAND and forty-eight percent (48%) to WIFE.  In arriving at this determination, she considered and discussed the eleven factors enumerated in Section 3502(a), noting that most of the considerations were neutral and did not weigh in favor of either party.[9]  The SM did find that considerations under factor (3) did support an award of a greater share to HUSBAND, noting that “[t]his factor favors a division of assets in Defendant’s favor due to the disparity in incomes.”  (SM Report and Recommendation, Para. (D)(3)).

WIFE complains that the SM erred in focusing on the respective incomes of the parties and contends that this division was unfair to her.  HUSBAND also filed a Counter-Exception challenging the 52/48 split and counters that, instead, the SM should have awarded him sixty percent (60 %) of the marital estate and WIFE should have received forty percent (40 %).  HUSBAND argues that he should have received the substantially larger share based on the above factors.

WIFE argues that HUSBAND presented no evidence to suggest that he was unable to continue in his present full-time position.  She also argues that he already has some college credits and that if he wishes to increase his earning potential, he will be able to pursue a college degree and receive reimbursement from his employer.  She posits that his $49,000.00 annual salary, his potential for bonuses[10] and his receipt of child support provide him with income which is nearly comparable to her own.[11]  In addition, she argues that HUSBAND is only responsible for four debts, and is actually paying only three of them, and that his monthly expenses amount to far less than those of WIFE.  She contends that the division is erroneous as the disparity in incomes is not great, and that she has been and will continue to pay the bulk of the marital debt.  She points to the fact that she had a premarital bank account with a balance of approximately $2,000.00 which the parties used during the marriage and that the proceeds from the sale of her premarital real estate were used to purchase the marital home.   She claims that her monthly expenses far exceeded those of HUSBAND and she was left with little cash each month after she paid off the marital debt.

In support of his argument, HUSBAND points to the health problems he suffered both during the marriage and after separation and notes that these conditions rendered him unable to work at various times:  after his 2007 brain surgery he was off work for several weeks and he was placed on family leave after experiencing a seizure on April 14, 2011.  He further notes that he was placed on work and driving restrictions after suffering the seizure, that his standard of living has declined drastically, that he must rely on others for housing and struggles to meet his living expenses and financial obligations.  He states that he was forced to take the loan against his 401k account in order to pay his credit card bill and his legal expenses.  He maintains that WIFE still enjoys the comfortable standard of living shared by the parties during the marriage and that she continues to reside in the marital home and can afford various luxury items, that her health is good and she earns over $145,000.00 per year.  He argues that her income and ability to accumulate assets is likely to increase, while his own potential remains stagnant.

We disagree with both parties’ positions and will affirm the SM’s decision regarding the division of the marital estate. The SM did consider the parties’ respective incomes, household circumstances and expenses and these facts do support an award of a greater share of the marital estate to HUSBAND.  We believe a 52/48 split is appropriate.   In discussing her Recommendation, the SM fully considered HUSBAND’S health problems, noting that “Defendant testified to an incident in March/April, 2011 when he had a seizure.  He has not experienced any since that time, has not been diagnosed with any disorder, but has been put on medications.  As a result of the seizure, he has lost his driver’s license for a period of 6 months.”  (SM Report, Para. (D)(3)).  She also noted “Defendant is a high school graduate and has 50 college credits.  He has not sought to earn his college degree.  His employer has a tuition reimbursement program.”  (SM Report, Para. (D)(3)).

Although HUSBAND has had some physical problems in recent years, it appears that those setbacks have so far been overcome and he was able to return to work on a full-time basis.  He did not testify as to any problems he was experiencing in doing so or that he was having any trouble keeping up with his work.[12]  His employer had made all accommodations for his work restrictions and those restrictions and the loss of his operator’s privileges were not scheduled to continue beyond the six-month period.  He had suffered no seizures after the first one and had been placed on medication.  He continued to be seen by a neurologist but there had been no diagnosis of any specific problem.

We do agree with the SM that the disparity in incomes between the parties is significant. WIFE’S annual gross income, even without bonuses, is $79,000.00 higher than HUSBAND’S.   The SM noted that both parties are able to meet their reasonable living expenses.  During the marriage, they enjoyed a relatively comfortable standard of living.  This standard of living came at considerable expense.  The costs associated with the higher standard of living are reflected in WIFE’S expense schedule.[13]  (Exhibit “45”)  She is certainly in a much better position to maintain this lifestyle and to afford these costs through her earnings.

HUSBAND, on the other hand, even with his comfortable salary, will not be in as favorable a position as WIFE to afford the type of luxury housing and items that the parties enjoyed during the marriage.  HUSBAND is currently living in a friend’s apartment and Madelynne stays there with him during his every-other-week periods of custody.  However, it is reasonable to assume that he will need to find his own housing in the near future.  It is unlikely that he will desire to continue to have a roommate or that his roommate will be able to accommodate both HUSBAND and Madelynne on a permanent basis.  As Madelynne advances in age and has her own interests and hobbies, it will be necessary for HUSBAND to provide her with her own home and her own bedroom.  A salary of $128,000.00 provides one with the means to buy a completely different type of house in a completely different location than a salary of $49,000.00.

In response to WIFE’S argument regarding HUSBAND’S failure to pursue higher education by taking advantage of his employer’s tuition reimbursement program, we note that the SM did take this fact into consideration in arriving at her recommendation.  Considering the circumstances of HUSBAND’S health problems and temporary work restrictions which have occurred over the past several years, we do not feel that this should factor to his detriment in determining a division of the marital estate.

We have reviewed the record in light of the Divorce Code factors. After sifting through everything, we conclude that HUSBAND should receive slightly more in equitable distribution than should WIFE.  We will therefore affirm the SM’s decision to award HUSBAND 52% of marital assets.

V.      CONCLUSION

 

Based on the foregoing discussion, and in consideration of the findings of the Report of the SM, we find the following with regard to the value and distribution of the marital estate”

WIFE has in her possession, or will be awarded, the following assets:

1.  953 Weaber Avenue                                        $ 41,591.27

2.  2007 Audi, net                                                     1,440.26

3.  2001 VW Passat                                                              700.00

4.  VW Jetta                                                                        5,097.87

5.  401k                                                                             97,560.23

6.  Hershey Retirement Account                                        78,200.19

7.  Discover Credit Card                                                –    7,096.54

8.  Citi Card #5026                                                        –   12,272.10

9.  Citi Card #3804                                                        –   12,503.76

10. Chase Credit Card                                                   –     1,500.00

TOTAL NET ESTATE                                                     $ 191,217.42

 

Defendant has in his possession, or will be awarded, the following assets:

1.  Passat insurance proceeds                                      $       460.00

2.  2006 Nissan Armada, net                                                3,546.15

3.  401k                                                                            90,098.51

4.  Hershey Retirement Account                                          22,169.23

5.  Hershey Federal Credit Union                                            70.06

6.  Lowe’s Credit Card                                                   –    10,118.46

7.  Chase Credit Card                                                    –    10,010.00

8.  Refrigerator in garage of marital residence                   —–

TOTAL NET ESTATE                                                     $  96,215.49  

 

The Net Marital Estate is $287,432.91. Based upon the recommended division of assets, WIFE is entitled to a net estate of $137,967.79.   HUSBAND is entitled to a net estate of $149,465.11.  Thus, prior to the application of awarded credits, WIFE would owe to HUSBAND the sum of $53,249.62.

In accord with the SM’S Recommendation, the parties will receive the credits set forth in the Report:

WIFE will receive credits in the amount of $38,140.44.

HUSBAND will receive credits (including fair rental credit for the marital home) of $24,493.10.

WIFE’S credits exceed those of HUSBAND by $13,647.34.  Therefore, WIFE will pay to HUSBAND the sum of $39,602.28 ($53,249.62 – $13,647.34).