Opinion
No. 4-237 / 03-1384
May 26, 2004.
Appeal from the Iowa District Court for Johnson County, Amanda Potterfield, Judge.
John Nesbitt appeals from the district court's decree dissolving the parties' marriage. AFFIRMED AS MODIFIED.
Gregg Geerdes, Iowa City, for appellant.
Sharon Mellon of Mellon Spies, Iowa City, for appellee.
Considered by Huitink, P.J., and Vogel and Mahan, JJ.
John Nesbitt appeals from the district court's decree dissolving the parties' marriage. He contends the district court erred when it: (1) failed to equitably value and divide the survivorship annuity payments that he claims Dolores will receive; and (2) failed to equitably divide proceeds obtained from the sale of the marital residence and value marital property of the parties. We affirm as modified.
I. Background Facts and Proceedings.
John and Dolores Nesbitt were married in 1961. At the time of trial John was seventy years old, and Dolores was sixty-eight years old. They were both retired and had been married for forty-two years. John and Dolores have two adult children, John and Victoria.
John earned a master's degree in 1961 and obtained his doctorate of education in 1968. Dolores earned a master's degree. In 1972 the family settled in Iowa City where John took a position teaching at the University of Iowa. Dolores worked on a Ph.D. in higher education and obtained her degree in 1979. John retired from his position as a professor at the University of Iowa in 1991, at the age of fifty-eight. Dolores worked full time at the University of Iowa College of Medicine from 1979 to 1999. She retired at the age of sixty-four.
John accumulated a significant retirement account through the Teachers Insurance and Annuities Association and College Retirement Equities Fund (TIAA-CREF). John and Dolores decided to purchase an annuity that would provide replacement income for them during John's retirement. The annuity was purchased for $366,337.43, which was paid out of TIAA-CREF funds in John's account that had accumulated during the marriage. Additionally, the couple made a contribution of $132 per month from 1991 until their separation in June of 2001. Since their separation, John has continued to make the monthly payments.
An irrevocable survivorship feature is included in this annuity. The intended benefits of the annuity belong to the surviving spouse. The monthly survivorship payments are to be determined by the market and TIAA-CREF.
John filed a petition for dissolution on August 14, 2001. A decree of dissolution of marriage was entered on July 28, 2003. The court divided the parties' assets to award both John and Dolores $150,908.50. In the decree, Dolores was required to reimburse John in the amount of $3000 for the sale of their house. John argues the district court inequitably divided the survivorship payments and marital property. He appeals.
II. Standard of Review.
Dissolution of marriage decrees are reviewed in equity. In re Marriage of Knickerbocker, 601 N.W.2d 48, 50 (Iowa 1999). Our scope of review in this equitable action is de novo. Iowa R. App. P. 6.4. In such cases, we examine the entire record and adjudicate anew rights on the issues properly presented. In re Marriage of Beecher, 582 N.W.2d 510, 512-513 (Iowa 1998). In equity cases, especially when considering the credibility of witnesses, the court gives weight to the fact findings of the district court, but is not bound by them. Iowa R. App. P. 6.14(6)( g).
III. Property Division.
John contends the property division was unfair in that the district court declined to place a present value on the co-annuity portion of the annuitized accounts. He claims the district court failed to equitably value and divide the survivorship annuity benefits. John argues the equitable solution would be to calculate the present value of Dolores's expected survivorship benefits and then provide him with cash or a property award based on those calculations. In its decree the district court stated:
Each party shall retain their one-half of the annuity income for as long as both are living. If Dolores predeceases John, he shall receive the entire annuity income. If John predeceases Dolores, she shall receive the entire annuity income.
. . . .
The unique characteristics of the annuity make it unlike the pensions that have been valued by Iowa courts in dissolution of marriage cases. It was purchased by both parties during the marriage, and one-half of the income replacement feature already belongs to Dolores by virtue of the irrevocable designations. The survivorship feature belongs to whichever spouse survives the other, with the monthly payment to be determined by the market and TIAA-CREF. If there is a present value to Dolores, there is also one for John, both dependent on the accuracy of the assumptions in the mortality tables, and of the economic predictions.
. . . .
Dolores has to survive John to receive any survivor benefits at all; the amount she may receive is fully dependent on her date of death and on the fluctuations of market performance. To assign a value to it, and include it in the division of assets, would reward John and penalize Dolores for a marital decision to purchase an income replacement mechanism, rather than to preserve all of their pensions assets for retirement.
Even if this irrevocable annuity were a pension asset to be valued, the Court finds that the income stream now available to Dolores and John, and that will be available to the surviving spouse following the death of the other, is its only fair measure. Any other valuation method requires the adoption of speculative assumptions that require the Court to consider the alternative possibilities that either Dolores or John will survive the other, and for how long, what the market conditions might be at that time, and what the appropriate discount rate might be in the uncertainties of the economy on whatever date the first spouse dies.
John agrees he cannot say with precision when the parties will die. He also concedes that TIAA-CREF has stated much information is unavailable and any projections are hypothetical. In his testimony, a consultant for TIAA-CREF stated, "I think it is extremely hypothetical, based upon those unknown variables . . . health, life expectancy in families genetically, and also in terms of investment returns especially with CREF accounts." We agree with the district court that John's theory for division of the survivorship benefit is too speculative. District courts, when considering marriage dissolution cases, face numerous problems dividing future benefits under pension plans. In re Marriage of Benson, 545 N.W.2d 252, 253 (Iowa 1996). Our supreme court has recognized these problems are increasing both in frequency and difficulty. Id. We agree with Dolores that John is attempting to take the division of pension plans to a new level. John is asking us to divide the survivorship benefit based upon extremely hypothetical factors. We decline to do so. The apportionment of future benefits is best left to when those benefits are paid. In re Marriage of Woodward, 426 N.W.2d 668, 671 (Iowa Ct. App. 1988); see also Janssen v. Janssen, 331 N.W.2d 752, 756 (Minn. 1983). We affirm the district court on this issue.
John further claims the property division was inequitable because the district court failed to equitably divide the proceeds from the marital home and other marital property. The partners in a marriage are entitled to a just and equitable share of the property accumulated through their joint efforts. In re Marriage of Bonnette, 584 N.W.2d 713, 714 (Iowa Ct. App. 1998). Equitable distribution does not necessarily mean an equal division of property, nor does it mean a percentage division of the property. Id. In making this assessment, we consider the factors set forth in Iowa Code section 598.21. The determining factor is what is fair and equitable in each circumstance. In re Marriage of Russell, 473 N.W.2d 244, 246 (Iowa Ct. App. 1991). The distribution should be made in consideration of the criteria codified in section 598.21(1). Based on our review of the dissolution decree, we find the district court's property distribution to be equitable.
John notes, and Dolores agrees, the district court made an arithmetical error in the dissolution decree. The court ordered Dolores to pay John $3000 as reimbursement for the landscaping, cleaning and other expenses related to the sale of the marital home. In turn, the district court inadvertently added this $3000 to John's total assets. The parties agree Dolores owes John $1500 to equalize the property division and $3000 for expenses related to the sale of the house. Dolores must transfer a total of $4500 to John from her proceeds.
Costs on appeal shall be divided equally between the parties.