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November 22, 1983


Appeal from an order of the circuit court for Wood county: Dennis D. Conway, Judge.

Gartzke, P.j., Dykman, J. and Gordon Myse, Reserve Judge.

The opinion of the court was delivered by: Gartzke

Edmund Pelot appeals from an order reducing maintenance payable to Maxine Pelot. *fn1 We hold that the trial court improperly treated Edmund's pension as income. We therefore reverse and remand for further proceedings.

When the divorce was granted in 1979, the trial court ordered Edmund to pay $450 alimony and $200 support per month, and divided the marital estate, about $43,047 to Edmund and $43,156 to Maxine. As part of the property division, the court assigned to Edmund $2,260 in bank accounts and life insurance cash values, a $20,600 lien on the home, and his interest in his union pension fund, valued at $9,680. Maxine received a car and furniture valued at $3,200, a life insurance policy having a $556 cash value, and the home valued at $60,000, subject to Edmund's $20,600 lien payable in five years with six percent interest. We do not know how the property values were fixed. The trial record is not before us.

Edmund has moved to modify the support and alimony provisions. At the motion hearing he testified he had been recently laid off and then retired. Before the layoff, he grossed about $2,514 in wages per month. His present monthly income is $480 from social security and $473 from his pension, payable for life. His employer's contributions to the pension fund totaled $15,191. He contributed nothing to it. He has $25,000 in a money market certificate on which 15% is payable, which he cannot withdraw until early 1984. According to his financial disclosure statement, he has $826 in monthly expenses, excluding support and maintenance payments.

Maxine testified that her gross monthly wages as a clerk are $759.53. Because Edmund has retired, she receives $300 in monthly social security benefits for their child. Combined monthly expenses for her and the child are $1,125.52.

The trial court found the circumstances of the parties have changed substantially and concluded that Edmund should no longer be required to pay support. That Conclusion is uncontested.

The trial court concluded that, considering Edmund's income had been halved and Maxine's income had been doubled since the divorce, $250 per month is a fair and proper amount for him to pay as maintenance. The court took into account Edmund's social security and pension benefits and $300 monthly interest income from the money market fund. It found that the value of Edmund's interest in the pension plan had increased from about $9,680 in 1979 to about $15,000.

Our review of an order modifying maintenance is limited to whether the trial court abused its discretion. Vander Perren v. Vander Perren, 105 Wis. 2d 219, 226-27, 313 N.W.2d 813, 817 (1982).

Edmund argues the trial court improperly treated the pension plan awarded to him in the property division as income. We agree and conclude that on remand, the trial court should exclude from Edmund's income his monthly retirement benefits until those benefits total $9,680, the value of the fund when it was assigned to him in the divorce.

When a divorce is granted, the present value of a pension fund should usually be included in the marital estate for purposes of property division. Pinkowski v. Pinkowski, 67 Wis. 2d 176, 179-180, 226 N.W.2d 518, 520 (1975), and Kronforst v. Kronforst, 21 Wis. 2d 54, 63-64, 123 N.W.2d 528, 534 (1963). A property interest in a pension plan usually cannot be divided but its value should be taken into account. Schafer v. Schafer, 3 Wis. 2d 166, 170-71, 87 N.W.2d 803, 805-806 (1958). That value is its present value when the divorce is granted. Bloomer v. Bloomer, 84 Wis. 2d 124, 132, 267 N.W.2d 235, 239 (1978). If the present value is included in the estate, then the pension payments themselves are not counted as income for purposes of fixing maintenance when the divorce is granted. Pinkowski, 67 Wis. 2d at 183, 226 N.W.2d at 521; Kronforst, supra.

The extent to which pension payments may be considered income in post-divorce proceedings is an open question. In Schafer v. Schafer, 9 Wis. 2d 502, 505, 101 N.W.2d 780, 782 (1960), the trial court included the husband's $6,263.04 retirement fund in the property division. The husband had not retired. The Schafer court said it concurred with the trial court's "proviso" that after he had received more than $6,263.04 in benefits, the husband's interest in the fund be considered when determining alimony. Id. That issue was not before the Schafer court. Its dictum has not been cited in a reported decision. We do not rely upon it.

Later decisions noted the post-divorce pension issue but postponed its resolution. In Pinkowski the trial court excluded the value of a retirement fund from the marital estate in an effort to save the pension as an income source for future alimony. The Pinkowski court held that the present value of the plan must be included in the estate. Quoting dictum in Cary v. Cary, 47 Wis. 2d 689, 694, 177 N.W.2d 924, 927 (1970), the Pinkowski court said the changed circumstances attending retirement were "best considered at the time of the event." 67 Wis. 2d 176, 185, 226 N.W.2d at 522. The Kronforst court intimated the same result. It held that alimony could not be awarded in the original divorce because the husband's income was insufficient after excluding retirement payments, but directed the trial court to retain jurisdiction to award alimony, should the parties' circumstances change. *fn2 21 Wis. 2d at 64-5, 123 N.W.2d at 534.

Pinkowski and Kronforst do not explain why retirement benefits must be excluded from income when originally fixing alimony (now maintenance) if a retirement fund is included in the property division. The Kronforst court said only that it viewed the matter no differently than if the present value of the plan "had constituted cash in a bank deposit standing in defendant's name. Such an asset cannot be included as a principal asset in making division of ...

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