Jagnow, C. v. Jagnow, S.

J-A07002-21

2021 PA Super 133

CARL W. JAGNOW : IN THE SUPERIOR COURT OF

: PENNSYLVANIA

:

v. :

:

:

SHARON A. JAGNOW :

:

Appellant : No. 1055 MDA 2020

Appeal from the Order Entered July 21, 2020

In the Court of Common Pleas of Lebanon County Civil Division at No(s):

2016-20038

BEFORE: BOWES, J., DUBOW, J., and STEVENS, P.J.E.*

OPINION BY BOWES, J.: FILED JUNE 29, 2021

Sharon A. Jagnow (“Wife”) appeals from the order that provided for the

equitable distribution of the marital property of Wife and Carl W. Jagnow

(“Husband”) and decreed the parties divorced. We affirm.

The trial court offered the following summary of the history of this case.

[Husband] and [Wife] were married on October 22, 1983

and separated on January 15, 2016. No children were born of the

marriage. Husband was born in January 1948 and is seventy-one

years old. Wife was born in April 1954 and is sixty-five years old.

Both parties have a degree in education and were employed

as teachers prior to marriage. Husband retired from the Northern

Lebanon School District in 2003 due to physical and mental health

issues. Husband was fifty-five years old at the time of retirement

earning approximately $55,000 annually. As a result of his

retirement, Husband commenced benefits under his Public School

Employment Retirement System (hereinafter PSERS) pension.

The parties agreed that Husband would elect a single life annuity

upon his retirement to provide him greater monthly benefit during

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* Former Justice specially assigned to the Superior Court.

J-A07002-21

his lifetime, understanding that Wife would not be entitled to any

survivor benefits upon his death. Accordingly, Husband began

receiving a monthly benefit of $2,901.81 upon his retirement in

2003. Also, in June of 2007, Husband began receiving $392 per

month from his Trans America IRA. Additionally, he began

receiving $1,693.50 from Social Security at age 62.

Wife continued to teach at the Northern Lebanon High

School until 2013. Like Husband, she decided to retire at an

earlier age due to developing health issues. Upon retirement, she

began receiving a monthly benefit through her PSERS pension.

The parties had again agreed that Wife would select a single life

annuity upon retirement, knowing that Husband would not be

eligible for any ongoing benefits should Wife predecease him.

Wife’s monthly gross benefit as a result of her PSERS pension was

$3,738.68. Wife began receiving Social Security benefits in the

amount of $1,572 in 2016 when she reached sixty-two years of

age. In addition to the retirement benefits, the parties’ assets

include a marital residence, vehicles, various bank accounts and

personal property items.

On January 15, 2016, Husband filed a Complaint in Divorce

raising claims of divorce and equitable distribution. On January

18, 2019, Wife filed a motion for the appointment of a special

master in divorce (hereafter Divorce Master). A Divorce Master

was appointed on January 23, 2019.

A pre-trial conference was held on March 6, 2019. A hearing

was held on April 17, 2019. The parties stipulated, prior to the

hearing, that they would divide all marital property, with the

exception of the parties’ PSERS pensions, on a 50-50 basis.1

Thereafter, the Divorce Master issued his report and

recommendation on August 21, 2019. The recommendation

provided that the PSERS pensions would also be split fifty-fifty.

______

1 Omitting the pensions, Husband would be awarded the

marital assets totaling $229,382.91. Wife would be

awarded the marital assets totaling $281,106.55. Because

Wife’s marital assets were in excess of Husband’s in the

amount of $51,723.64, Wife was required to pay Husband

one-half of the difference.

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Following the Divorce Master’s recommendation, the parties

asked Jonathan Cramer of Conrad Siegel Inc. to prepare a

qualified domestic relations order[ (“QDRO”)] to effectuate the

Divorce Master’s decision regarding the pensions. When Mr.

Cramer prepared a QDRO, he indicated that Wife’s share should

be paid to Husband’s estate should Husband die first. Wife

objected to this language. The parties resubmitted the issue to

the Divorce Master, who vacated his initial report and solicited

additional arguments from both sides. Eventually, on February

26, 2020, the Divorce Master rendered a supplemental decision in

which he adopted Mr. Cramer’s paradigm that Husband’s share of

Wife’s pension should be paid upon his death to his estate.

Trial Court Opinion, 7/21/20, at 2-4 (citations and unnecessary capitalization

and repetition of values in numerical form omitted).

Wife filed exceptions, challenging the continuation of payments should

Husband predecease her. The trial court disagreed and entered a final decree

which, inter alia, provided that the QDRO include the following language: “If

the Alternate Payee dies before the Member, the Alternate Payee’s share of

the Member’s annuity payable to PSERS shall be paid to the Alternate Payee’s

estate for the Member’s lifetime.” Final Decree, 7/21/20, at 4.

Wife filed a timely notice of appeal, and both Wife and the trial court

complied with Pa.R.A.P. 1925. Wife presents the following question for our

resolution:

Did the trial court err as a matter of law and/or abuse its discretion

in its July 21, 2020 order by requiring that the amount of $811.77

payable to Appellee/Husband from Appellant/Wife continue and be

included on a [QDRO] requiring this amount to be paid to

Appellee/Husband’s estate if he should predecease

Appellant/Wife?

Wife’s brief at 7 (unnecessary capitalization omitted).

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We consider Wife’s issue mindful of the following standard of review:

Our standard of review when assessing the propriety of an order

effectuating the equitable distribution of marital property is

whether the trial court abused its discretion by a misapplication of

the law or failure to follow proper legal procedure. We do not

lightly find an abuse of discretion, which requires a showing of

clear and convincing evidence. This Court will not find an abuse

of discretion unless the law has been overridden or misapplied or

the judgment exercised was manifestly unreasonable, or the

result of partiality, prejudice, bias, or ill will, as shown by the

evidence in the certified record. In determining the propriety of

an equitable distribution award, courts must consider the

distribution scheme as a whole. We measure the circumstances

of the case against the objective of effectuating economic justice

between the parties and achieving a just determination of their

property rights.

Carney v. Carney, 167 A.3d 127, 131 (Pa.Super. 2017) (cleaned up).

Equitable distribution “is an incident of divorce, not marriage.” Wilson

v. Wilson, 828 A.2d 376, 378 (Pa.Super. 2003). “[T]he settlement of

economic and property claims is merely a part of the trial court’s broader

power to terminate the marriage.” Id. The objective of equitable distribution

is “effectuating economic justice between the parties and achieving a just

determination of their property rights.” Carney, supra at 131.

The rights of the spouses to the distribution of marital property vests

upon entry of the divorce decree, which “constitutes a final determination of

the rights between the parties.” Kadel v. McMonigle, 624 A.2d 1059, 1063

(Pa.Super. 1993). Thereafter, both parties “have complete freedom of

disposition” of their separate property. 23 Pa.C.S § 3504.

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It is well-settled that “[e]ach spouse has a reasonable expectation of

enjoying the monies received from an employee retirement fund. In order to

effectuate economic justice between the parties, equity demands that both

parties share in this asset acquired during the marriage.” Conner v. Conner,

217 A.3d 301, 311 (Pa.Super. 2019) (cleaned up). Thus, pension funds

accrued during marriage, including state employees’ pension funds, constitute

marital property that is subject to equitable distribution. See, e.g., Hess v.

Hess, 212 A.3d 520, 524-25 (Pa.Super. 2019) (reviewing equitable

distribution of State Employee Retirement System pension). A court has two

options in so doing:

The first method, “immediate offset,” awards a percentage of the

marital portion of the value of the pension to the party earning it,

and offsets the marital value of this pension with other marital

assets at equitable distribution. This method is preferred where

the estate has sufficient assets to offset the pension, because it

does not require the court to retain jurisdiction indefinitely. The

second method, “deferred distribution,” generally requires the

court to retain jurisdiction until the pension is collected, at which

point the pension is divided according to the court’s order. This

method is more practical where the parties lack sufficient assets

to offset the marital value of the pension.

Conner, supra at 312 (citations omitted). A QDRO effectuates the

distribution in that it “creates or recognizes the rights of an alternate payee

to receive all or a portion of the benefits payable to a participant under [the]

pension plan.” Getty v. Getty, 221 A.3d 192, 195 n.4 (Pa.Super. 2019).

In the case sub judice, Wife does not dispute that her pension is a

marital asset subject to equitable distribution or challenge the propriety of a

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QDRO effectuating a 50-50 split of the pension upon its distribution. Wife

contends only that the trial court should not have ordered that the payments

continue to be made to Husband’s estate in the event that he predeceases

her. Citing a dearth of case law concerning “how deferred distribution should

be handled when a party predecease[s] the other,”1 Wife suggests that the

fact that the parties chose higher-paying single life annuities, rather than

opting to secure continued payments for the surviving spouse, manifested the

parties’ intent that “the surviving spouse would not be entitled to any

additional benefits from the deceased spouse’s pension.” Wife’s brief at 12-

13.

The trial court addressed Wife’s argument with the following:

If we were to permit Wife to retain her entire pension should

Husband die, such a result could frustrate the general proposition

that equitable distribution is vested at the time of divorce. In the

opinion of this court, that could create an unfair result. We cannot

ignore the fact that pension benefits are received in lieu of higher

compensation, which would have otherwise enhanced the ability

to acquire marital assets. See Cornbleth v. Cornbleth, 580 A.2d

369 (Pa.Super. 1990). Effectively, the parties deferred income

they could have received until a later date. Had the parties not

chosen to defer income via a pension, the assets that would have

been acquired with the extra funds would have been divided at

the time of divorce and both parties would have been at liberty to

create a last will and testament that distributed those assets to

people/entities of their own choosing. Adopting Wife’s argument

____________________________________________

1 Wife does cite non-precedential decisions filed by this Court in 2013 and

2017. However, pursuant to Superior Court I.O.P. 65.37(B), with certain

exceptions not applicable here, such decisions issued prior to May 2, 2019,

“shall not be relied upon or cited by a Court or a party in any other action or

proceeding[.]” Hence, we neither identify nor consider those decisions.

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would frustrate Husband’s ability to leave the entirely of his estate

to people/entities of his own choosing.

Trial Court Opinion, 7/21/20, at 10-11 (unnecessary capitalization omitted).2

Wife counters as follows:

Husband and Wife clearly contemplated during the course

of the marriage that neither would receive an ongoing benefit from

the other’s pension upon their death. To reward Husband by

allowing his estate to receive a benefit should he predecease Wife

is contrary to the parties’ intentions and would unjustly award

Husband. As such, it was an abuse of discretion by the [t]rial

[c]ourt to imply a retirement selection for survivor benefits had

not already been made. Hence, Husband’s estate should not

continue to receive payment should he predecease Wife.

Wife’s brief at 13-14.

Wife has failed to convince us that “the law has been overridden or

misapplied or the judgment exercised was manifestly unreasonable, or the

result of partiality, prejudice, bias, or ill will[.]” Carney, supra at 131

(internal quotation marks omitted). Wife’s contract-based argument is

pertinent not to equitable distribution, but to litigation of pre- or post-nuptial

agreements governing the disposition of marital assets. See, e.g.,

____________________________________________

2 The trial court further noted that Wife did not “raise the issue that a portion

of her pension should revert to her” until after the initial proceeding before

the master had concluded and the QDRO was prepared. Trial Court Opinion,

7/21/20, at 11. Had she stated her position earlier, “the Divorce Master could

very well have determined that Wife should liquidate her IRA, her Guardian

fund or a portion of her equity in the marital home in order to compensate

Husband under an ‘immediate offset’ distribution.” Id. (unnecessary

capitalization omitted). Although, as Wife observes, both parties agreed to a

deferred distribution, see Wife’s brief at 13, Husband might have advocated

differently had the issue surfaced earlier in the litigation.

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Stackhouse v. Zaretsky, 900 A.2d 383, 386 (Pa.Super. 2006) (indicating

that the intent of the parties governs interpretation and application of

agreements as to the disposition of the parties’ assets made in contemplation

of divorce). Wife points to nothing in the certified record to establish that the

parties’ decisions during the course of the intact marriage to select single life

annuities for their pension payments constituted a post-nuptial agreement

entered in contemplation of divorce.

Wife is correct that, if the parties had remained married, Husband’s

estate would not have been entitled to any portion of her pension had he

predeceased her. See Wife’s brief at 11-13. However, had Husband and Wife

remained married, their pension incomes would have continued to be used for

enjoyment and the acquisition of marital assets so long as they both lived.

Further, surviving spouses in an intact marriage are entitled to receive some,

if not all, of the decedent spouse’s estate. See 20 Pa.C.S. §§ 2102 (spousal

share of intestate decedent’s estate), 2201-11 (elective share). The parties’

divorce changed everything. See 23 Pa.C.S. § 3504 (“[W]henever a decree

of divorce or annulment is entered by a court of competent jurisdiction, both

parties whose marriage is terminated or affected shall have complete freedom

of disposition as to their separate real and personal property and may

mortgage, sell, grant, convey or otherwise encumber or dispose of their

separate property, whether the property was acquired before, during or after

coverture[.]”).

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Wife has offered no authority to establish that Husband’s share of her

pension should be treated differently than any other marital property subject

to equitable distribution upon divorce. As such, we discern no error of law or

abuse of discretion in the trial court’s ruling that Husband is entitled to pass

his interest in Wife’s pension benefits on through inheritance or bequest just

as he would be if he had received his interest through immediate offset rather

than deferred distribution. Accordingly, we affirm the trial court’s July 21,

2020 order directing equitable distribution of the marital estate and decreeing

the parties divorced.

Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 06/29/2021

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