SERTIC VS. SERTIC (RETIREMENT DIVISION)

Key holdings

Practitioner summary

Per Curiam. The Court held a district court may distribute the community interest in a pension at the time of trial only if: (1) the present value of the community share can be determined with reasonable certainty; (2) there are sufficient existing funds (or sufficient separate property) to distribute the other spouse's interest; and (3) both parties agree that the distribution will be final regardless of future developments. Because the district court erred in determining present value and the record did not establish agreement to finality, the Court reversed and remanded. On remand, if the requirements are not met, the court may order distribution of the community share as received upon the pension holder's first eligibility to retire; if she does not retire when eligible, she must pay what the other spouse would have received had she retired. Applying the time rule and 'wait and see' approach of Gemma v. Gemma, 105 Nev. 458, 778 P.2d 429 (1989), and Fondi v. Fondi, 106 Nev. 856, 802 P.2d 1264 (1990), the Court held the community share must be measured against the pension ultimately received - here, under the Civil Service Retirement System, the highest average salary over any three consecutive years of the employee's career - and the district court erred by using the highest three years of salary earned only during the marriage. On the child dependency exemption, the Court held that notwithstanding the 1984 amendment to I.R.C. section 152 (which directs the exemption to the custodial parent subject to a waiver exception), a district court retains broad discretion to allocate the exemption and to require the custodial parent to execute the appropriate IRS waiver; the Court distinguished Jensen v. Jensen, 104 Nev. 95, 753 P.2d 342 (1988), and affirmed the alternating allocation.

In plain language

Mona and Mark Sertic divorced after about eleven years of marriage. One dispute was over Mona's federal pension. Instead of waiting until Mona could retire, the trial court cashed out Mark's community share of her pension at the time of trial. The Nevada Supreme Court held that dividing a pension at trial is permitted only if three conditions are met: (1) the court can determine the present value of the community share with reasonable certainty; (2) there are enough existing funds (or other separate property) to pay the other spouse's share; and (3) both spouses agree the distribution will be final, no matter what happens later. Because the trial court miscalculated present value and it was unclear whether both parties agreed to a final distribution, the Court reversed. On remand, if those conditions are not met, the court may instead give Mark his share as Mona receives it when she first becomes eligible to retire; and if Mona chooses not to retire when eligible, she must pay Mark what he would have received. The Court also held the trial court used the wrong salary figure. Under the 'wait and see' approach from Gemma and Fondi, the pension must be valued using the highest three consecutive years of salary over Mona's whole career, not just during the marriage. Finally, the Court affirmed the trial court's decision to alternate the child's tax dependency exemption between the parents, requiring the custodial parent to sign the necessary IRS waiver.