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October 14, 2011

Determining the distribution of a divorced pubic employee’s retirement allowance


Determining the distribution of a divorced pubic employee’s retirement allowance
Bodolato v Bodolato, Supreme Court, Judge Mills [subsequent appeal withdrawn, 305 A.D.2d 1124]

An individual's public pension benefit is a "marital asset" under New York State Law. Accordingly, it sometimes becomes necessary to determine the value of the pension and, or, the annuity available to a public employee in the course of a divorce action.

In Bodolato v Bodolato both parties conceded that each was entitled to one-half of the value of New York City police officer Bodolato's pension benefits and deferred annuity. But establishing the value of Bodolato's pension benefits and annuity proved to be another matter.

Mrs. Bodolato contended that she was entitled to one-half of the value of Bodolato's New York City Police Department pension and deferred annuity based on its value as of the date she commenced her action for divorce. Her spouse, in contrast, argued that the value of his pension and annuity should be determined on the basis of the pension's and annuity's "market or present value" at the time of the trial -- now several years later -- in order "to avoid [Mrs. Bodolato getting] a windfall."

In support of her claim, Mrs. Bodolato cited Majauskas v Majauskas 61 NY2d 481. Officer Bodolato, on the other hand, argued that the court's ruling in Burgio v Burgio, 278 AD2d 767, set out proper standard to be applied in this situation.

Justice Mills observed that there was a significant difference between the situation in Burgio and the situation in the Bodolato action for divorce. In Burgio the plaintiff wanted a lump sum payment of pension funds that had not yet vested. Here, in contrast, Bodolato had retired from the NYPD and thus, said the court, his pension and annuity benefits have been determined.

Mrs. Bodolato had commenced her divorce action before her husband had actually retired from the Police Department. Accordingly, Justice Mills ruled that the formula set by the Court of Appeals in Majauskas controlled and thus the value of the pension and the annuity to which Mrs. Bodolato was entitled should be determined:

1. As of the date of the commencement of the divorce action by Mrs. Bodolato; and

2. In accordance with the following "Majauskas formula."

The "percentage [of Bodolato's retirement and annuity allowance] to be derived by dividing the number of months the parties were married before the commencement of the action [divided] by the total number of months of credit [Bodolato] will have earned toward his pension as of the date of [his] retirement."

If nothing else, the Bodolato decision demonstrates the complex issues that the parties may experience in attempting to establish the value of an individual's retirement benefit in order to determine the "marital distribution" of the benefit in a divorce proceeding. If the marital distribution determination involves an individual entitled to a "vested retirement allowance" -- i.e., the individual has not actually retired but is entitled to "pension and annuity benefits" upon retirement -- there may be even more complex issues to address and resolve.

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New York Public Personnel Law Blog Editor Harvey Randall served as Principal Attorney, New York State Department of Civil Service; Director of Personnel, SUNY Central Administration; Director of Research, Governor’s Office of Employee Relations; and Staff Judge Advocate General, New York Guard. Consistent with the Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations, the material posted to this blog is presented with the understanding that neither the publisher nor NYPPL and, or, its staff and contributors are providing legal advice to the reader and in the event legal or other expert assistance is needed, the reader is urged to seek such advice from a knowledgeable professional.
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