If a spouse gets a government pension instead of Social Security, can the pension be protected in a divorce settlement to offset the other spouse's Social Security? No, the Illinois Supreme Court held.

In In re Mueller, 2015 IL 117876, the Illinois Supreme Court ruled that a divorcing spouse's future Social Security benefits cannot be used to offset the amount of marital assets she gets, even if the other spouse participates in a government pension plan instead of Social Security.

In Mueller, divorcing spouses disagreed as to how their marital property would be divided. The husband participated in a government pension program while the wife paid into Social Security. The husband proposed that any valuation of his pension be offset by what his theoretical Social Security benefit would be.

The trial court relied on In re Marriage of Crook, 211 Ill. 2d 437 (2004) and rejected the husband's proposed plan. A divided appellate panel affirmed the trial court's ruling.

The court's ruling in Crook held that "it is improper for a circuit court to consider Social Security benefits in equalizing a property distribution upon dissolution." Crook, 211 Ill. 2d at 451. It also held that Social Security benefits "may not be divided directly or used as the basis for an offset during state dissolution proceedings." Id. at 449. However, Crook specifically did not address a situation where one spouse contributed to a governmental pension and the other to Social Security.

An expectancy, not a property right

The Mueller court began its analysis with a discussion of the Illinois Marriage and Dissolution of Marriage Act (IMDMA) and the Social Security Act. Section 503(b)(2) of the IMDMA "specifically provides that pension benefits tied to contributions made during the marriage are marital property." In re Mueller, 2015 IL 117876, ¶ 18. However, section 407(a) of the Social Security Act "imposes a broad bar against using any legal process to reach Social Security benefits." Id. at ¶ 20.

Discussing Crook, the Mueller court pointed out that instructing a court to "consider" Social Security benefits in a distribution takes the "monetary value of the Social Security benefits the spouse would have received" away from the one spouse and gives them to the other "to compensate for the anticipated difference." Id. at ¶ 22. The court found that although the husband's valuation method was "not strictly speaking an offset…it [did] consider the existence of [the] anticipated Social Security benefits," creating parallel benefits that "would affect the division of marital property." Id. at ¶ 23.

The court further observed that Social Security benefits are not actually acquired by individuals. Instead, "participants in the Social Security program do not have accrued property rights to their benefits. They have expectancies…in their benefits." Id. at ¶ 24. Since those benefits are not "property 'acquired by' a spouse, then they are not marital property subject to division by the trial court." Id. at ¶ 25.

It further reasoned that hypothetical benefits, like those proposed by the husband, are also not marital property. The court also held that, as a matter of policy, it is "nearly impossible to apply" a rule that allows courts to consider the existence, but not the value of Social Security benefits. Defining "consider" is difficult; many solutions attempt to "mitigate the consideration problem with still more considerations." Id.

Another policy issue that the court considered was that "Congress's retained power to change the [Social Security] Act, and benefits themselves," makes it difficult to assign a true value to those benefits. Id. at ¶ 26. In closing, the majority stated that "it is not the province of this court to interfere with the federal scheme, no matter how unfair it may appear to be." Id. at ¶ 27.

The dissent: the equitable nature of the IMDMA

Justice Burke drafted the court's dissenting opinion, which Justice Karmeier joined. The dissent focused on the equitable nature of the IMDMA. The Act "requires that marital property be divided 'in just proportions considering all relevant factors,' and it is difficult to conclude that an apportionment of property which places the divorcing spouses on an equal footing during the dissolution proceeding could be anything other than 'just.'" Id. at ¶ 36. Therefore, the dissent argued, accepting the husband's valuation scheme would have produced the most equitable result for both parties.