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Snyder v. TUCSON POLICE PSPRS BD.
Citations: 8 P.3d 1153; 198 Ariz. 239Docket: 2 CA-CV 98-0126
Court: Court of Appeals of Arizona; October 19, 1999; Arizona; State Appellate Court
Michael and Caren Thomas divorced in 1994, with Caren awarded 21.61% of Michael's pension from the Arizona Public Safety Personnel Retirement System (PSPRS). Caren received monthly payments until her death in December 1995. Following her death, her estate's personal representative sought to have Caren's share of the PSPRS benefits paid to her estate, but the Board rejected this request based on Michael's objection. The personal representative and devisees pursued judicial review, leading to a consolidated action involving a separate declaratory judgment filed by the Fund Manager of the PSPRS. The key legal issue on appeal is whether Caren's PSPRS benefits are inheritable, as neither the dissolution decree nor PSPRS statutes explicitly address this. Appellees argue that Caren's share became her separate property upon the divorce, citing the precedent set in Koelsch v. Koelsch, which established that retirement benefits earned during marriage are community property, and upon dissolution, each spouse gains a vested separate property interest in their awarded benefits. The court in Koelsch outlined methods for awarding a nonemployee spouse their share, including lump-sum payments or monthly payments directly from the retirement agency. The appellees assert that Caren's share of the benefits became her separate property at the dissolution decree's entry, supporting their claim for inheritability. Caren's share of Michael's PSPRS benefits, awarded as a percentage rather than a lump sum, is inheritable, contradicting the appellants' argument. The court's ruling in Koelsch establishes that once a non-employee spouse is granted a portion of retirement benefits during dissolution, it becomes their separate property, unaffected by the distribution method. Although Caren's payments cease upon Michael's death under A.R.S. 38-846, the court clarified that her share is fixed and determinable, ensuring she receives survivor benefits equal to her assigned share, thus making it inheritable under A.R.S. 14-2101 or 14-2602 upon her death. The appellants' claim that A.R.S. 38-850(C)'s anti-assignment provision prohibits Caren from bequeathing her share to her parents is also rejected. This provision protects benefits from creditors but does not apply to ownership transfers post-dissolution. Caren's will effectively transferred her interest in Michael's PSPRS benefits to her parents, granting them ownership. Ultimately, the court affirms the trial court's summary judgment in favor of the appellees, while not addressing the specifics of how many monthly payments the parents may be entitled to, as that issue was not raised in lower courts or on appeal.