Valuation Date of Retirement Account in a Utah Divorce

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In my last post, I wrote about the Petrzelka case. Petrzelka v. Goodwin, 2020 UT App 34. In this fascinating court of appeals case, not only did the court deny the husband’s request for alimony, but dealt him another serious defeat by upholding the trial court’s decision to value the retirement account at the time of separation, rather than the date of the trial or Decree. This is a surprising result indeed, and the first case I now of where valuing a retirement account at separation was allowed.

Again, you must keep in mind that the divorce at issue in this case was somewhat non-standard, as the divorce happened later in life and there was about an 18 year difference between the two spouses. Also, both spouses had marketable skills and careers to rely on. However, one would normally think this would not be sufficient to deviate from the rule that retirement accounts are valued at the time of divorce, not at the time of separation. There was a three year gap between separation and divorce. Three years of retirement growth could make a significant difference in the ultimate division of the account, and would be serious decrease in what the husband believed he was entitled to receive.

“While a court should generally value the marital estate at the time of the divorce decree or trial, a court has broad discretion to value the parties’ marital assets at a different time, such as that of separation, if it determines that the circumstances so warrant.” The court of appeals found the court’s reasoning to be sufficient. While wife stopped personally contributing to her retirement account during separation, the account continued to grow. As to husband, after separation, husband continued to overspend and live beyond his means, and started dissipating his retirement accounts, rather than maintaining those. Therefore, the court reasoned, it would be inequitable to use a later date than the date of separation.

Although the court valued the account at the date of separation, the marital portion of the retirement account was still divided. Husband received a “considerable sum” from wife’s retirement account, which he did not contribute to or cause in any way to increase, and that such funds can be used for his support and for the payment of his debts.” Although it is not mentioned in the opinion, I am assuming husband received one-half of the marital portion of the account. Yes, a spouse who contributes nothing toward a retirement account can still receive half of the marital portion of the account. Sad, but true.

The lesson here is what you do after separation with an asset, including a retirement account, can make a significant difference in the outcome of the case. If you have a divorce where you want to preserve as much of your retirement as you can, or your spouse is not willing to agree to divide a retirement account in half, we have extensive experience litigating these cases and getting excellent results for our clients. Consults are free, so feel free to call us to set up an appointment to discuss your divorce retirement account issues.

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