Chapter 3 - § 3.2 • DEFERRED DISTRIBUTION METHOD AND RESERVE JURISDICTION METHOD

• Jurisdiction: Colorado

§ 3.2 • DEFERRED DISTRIBUTION METHOD AND RESERVE JURISDICTION METHOD

Under the deferred distribution and reserve jurisdiction methods — the latter of which is sometimes referred to as the "wait and see" method — the non-employee spouse does not receive any benefits until the benefits are actually paid to the employee spouse or the employee spouse becomes eligible to receive the benefits.

The deferred distribution method requires the court to predetermine the non-employee spouse's percentage of the pension stream that the non-employee spouse will be eligible to receive, once the pension is both vested and matured. The same principle has been applied to trusts in instances where a beneficiary's interest is to become possessory upon the death of a current beneficiary or a future event.

If a divorce court reserves jurisdiction, the non-employee spouse's percentage share is calculated later, at the time when the pension has vested and matured.⁶ In the case of a trust, the event triggering the court's reserved jurisdiction could be the death of a preceding lifetime beneficiary or other event causing the trust interest to be possessory.⁷

At least one appellate court has held that a trial court cannot use the reserve jurisdiction method or retain jurisdiction to enforce a deferred distribution order with respect to a trust. In Smith v. Smith,⁸ the Connecticut Supreme Court reviewed a trial court's order that it would retain jurisdiction to divide the trust if a subsequent determination was made that the husband had an interest in the trust. The husband simply disclosed that he was a remainder beneficiary of a family trust, but provided no other information regarding the interest. The supreme court held that the Connecticut enabling statute did not permit the trial court to retain continuing jurisdiction to divide interests in trusts that...