Good things, they say, come to those who wait. For one Richland County woman who waited to apply for Social Security benefits, the good news is that she won’t have those benefits imputed to her as income in order to calculate how much alimony she should receive from her ex-husband.
The South Carolina Supreme Court overturned a ruling from the state’s Court of Appeals and said in a ruling earlier this month that family courts may—but are not required to—impute income based on a party’s eligibility to receive Social Security benefits.
Shirley and Robert Crossland divorced in 2007. By the time of their 2010 divorce hearing, he was 76 and she was 62. By then Shirley was eligible to receive Social Security retirement benefits, but had not applied to receive them because she’d been told that she would receive significantly larger payments if she waited until age 65 to begin collecting.
Robert argued that the benefits Shirley was eligible for should been imputed to her as income. The family court declined to do that, but the Court of Appeals reversed the ruling and modified the alimony award. On final appeal, the Supreme Court reinstated the family court’s ruling and said that judges are entitled to discretion over whether to consider such benefits as imputed income.
The Supreme Court did, however, decline Shirley’s request to create a rule that income should never be imputed on the basis of eligibility for government benefits, saying that a bright-line rule was not only unnecessary, but also inadvisable. Based on the circumstances of the case, the justices said, the family court had not committed any reversible error because there was no evidence of any bad faith on Shirley’s part and she articulated a rational reason for delaying her application for social security benefits.
“In sum, family courts may, in some cases, but are not required in every instance, to impute income based on a party’s eligibility to receive social security benefits as a matter of law,” Acting Justice James Moore wrote for the court.
The court said that because there was insufficient evidence as to the amount of benefits Shirley reasonably anticipated receiving after age 65, the family court also didn’t err in refusing to consider her future, reasonably anticipated receipt of those benefits in its initial alimony award.
That extra 10 percent
The Supreme Court also overruled another part of the Court of Appeals’ decision. The family court awarded Shirley 40 percent of the marital estate, which the Court of Appeals reduced to 30 percent on appeal. The Supreme Court reinstated the 60/40 split, finding that the Court of Appeals erred in modifying the family court’s division of assets, because its decision impermissibly relied only on the parties’ direct financial contributions to the marital estate, to the exclusion of other relevant statutory factors.
Although Robert made almost all of the financial contributions to the marriage, the family court found that Shirley contributed equally to the marital estate by complying with the “very harshly frugal rules set by the Husband,” and that “the fault of the ultimate dissolution of this marriage rests with the Husband.”
“Although greater direct financial contributions may properly be considered in apportioning a marital estate, that factor is but one of many factors to be considered and does not alone overshadow all of the other relevant factors examined by the family court,” Moore wrote. “Although this Court is free to make its own findings of fact and conclusions of law, we are not required to disregard the family court’s factual findings, which in this case favor Wife—not Husband.”
‘Helpful guidance’ for attorneys
The shift between the two appellate courts was stark. The Court of Appeals had ruled unanimously in favor of Robert; the Supreme Court ruled unanimously in favor of Shirley. Attorney Brian Dumas of Columbia, who represented Shirley, said that the task appeared daunting after the appeals court’s ruling, but said that Shirley would have experienced a substantial reduction in lifestyle if it had not been successfully appealed.
“The Court of Appeals’ decision gave me a lot of concern because, as a trial attorney, it meant I’d have to have my client apply for every benefit for which they might be entitled, or else it might be held against them in terms of a court award. It just left us in a horribly untenable position.”
Dumas said that even without a bright-line rule, the Supreme Court’s decision gives attorneys very helpful guidance that clients can avoid having potential benefits imputed to them as income if they can demonstrate a rational reason, unrelated to litigation, for declining those benefits.
Melvin Bannister, also of Columbia, represented the husband. Bannister said he was disappointed with the court’s ruling.
“The court did not mention in the decision the case law that says that income can be imputed when they’re unemployed or underemployed, and my theory was that if you can receive income and decide not to, it should be imputed,” Bannister said.
The 14-page decision is Crossland v. Crossland (Lawyers Weekly No. 010-065-14). The full text of the opinion is available online at sclawyersweekly.com.
Follow David Donovan on Twitter @SCLWDonovan