Can Wife Get Husbands Pension After Bankruptcy ?
In Bush v. Taylor, 912 F.2d 989 (8th Cir. 1990), the Eighth Circuit Court of Appeals considered the nature of a former wife's interest in her former husband's pension.
The parties' divorce decree had awarded each spouse "as his or her 'sole and separate property' one-half of the pension benefits to which the husband was entitled pursuant to his government employment." Id. at 990.
Husband received the monthly pension check, and "it was his responsibility to pay over to his former wife, on a timely basis, her half of each check." Id.
The court in Bush held that the wife's share of the pension was her sole and separate property which the husband received as a constructive trustee. See 912 F.2d at 992-993.
Because the money was wife's property, even while in husband's possession, it was not a debt of husband's subject to discharge in bankruptcy.
See id.; see also Sadowski v. Sadowski, 144 B.R. 566, 567-68 (Bankr. M.D. Geo. 1992) (holding wife's share of husband's military retirement was her sole and separate property and not a debt of husband's subject to discharge where property settlement agreement merely provided that wife was entitled to a share of his retirement without stating that share would be her sole and separate property);
McGraw v. McGraw, 176 B.R. 149, 151-52 (Bankr. S.D. Ohio 1994) (acknowledging argument that valid domestic relations order which predates bankruptcy filing constitutes judicial determination of existence of constructive trust);
Connor v. Connor, 610 So. 2d 488, 491 (Fla. Dist. Ct. App. 1992) (holding that husband's monthly obligation to pay wife his pension benefit until second mortgage was paid created a constructive trust, making wife the equitable owner of the monthly pension payment until the mortgage was paid, and that husband's bankruptcy could not "divest . . . wife of her separate property interest in the future payments to be received").
Alternatively, "wife's interest in the post-petition pension payments was not dischargeable because 'payments that are not yet due and payable do not represent a debt under the Bankruptcy Code.'" Bush v. Taylor, 912 F.2d at 993.
"Not until after the specific date each month when a payment is due but unpaid does that portion of a husband's obligation to his former wife become a debt.
Accordingly, the wife's share of the post-petition pension payments are not pre-petition debts dischargeable in bankruptcy." Id.; see Teichman v. Teichman, 774 F.2d 1395, 1397-98 (9th Cir. 1985) (holding that because husband was "under no obligation to pay his former wife until the Air Force pays him. . a debt does not arise under the Bankruptcy Code until each payment is due"); Connor, 610 So. 2d at 491 (noting that husband's monthly obligation to pay wife his pension benefit until second mortgage was paid was not a debt until it became due because "receipt of it by husband was a condition precedent to accrual of the obligation to pay wife").
But see Justus v. Justus, 581 N.E.2d 1265, 1269-70 (Ind. Ct. App. 1991) (noting split of authority over whether obligations not due and payable at time of filing of bankruptcy petition are dischargeable and holding that wife's claim under antenuptial agreement to finite periodic payments was a debt under bankruptcy code's broad definition).