Section 16.15 Marital and Nonmarital Interests

• Library: Family Law Deskbook and 2014 Supp

2. (§16.15) Marital and Nonmarital Interests

If the participant/spouse was employed and participated in the deferred compensation arrangement before the marriage of the parties, there is probably a component of the nonforfeitable interest that is nonmarital under Missouri law and is more accurately considered to be a “premarital” interest. For example, a participant in a defined contribution profit-sharing plan could determine the participant’s account balance at or around the date of the parties’ marriage. This would yield a “premarital” component. See Baker v. Baker, 804 S.W.2d 763 (Mo. App. E.D. 1990). But it is arguable that, by using the account balance at or around the date of the marriage for purposes of determining the extent of the nonmarital component, this method does not account for the growth in that specific portion of the account during marriage until the valuation date or date of the trial, etc. Without this accounting, the premarital component will have accrued investment gains and losses, interest, dividends, etc., which have not been considered as attributable to the “premarital” component of the participant’s account. But the difficulty in determining the postmarital growth in the premarital portion of the account is that the premarital funds and postmarital contributions and earnings on them will have been physically “commingled” within the meaning of § 452.330.4, RSMo 2000. The during-marriage growth on a premarital defined contribution plan interest, and whether that growth should be considered marital or nonmarital property, continues to be an issue that is not clearly answered by Missouri courts.

With respect to a “premarital” interest in a defined benefit plan, the Eastern District of the Missouri Court of Appeals created a chronologically based formula whereby the “premarital” interest is carved out. Lynch v. Lynch, 665 S.W.2d 20 (Mo. App. E.D. 1983). The formula, sometimes called the “coverture formula,” was erroneously expressed in the text of the Lynch opinion. The coverture formula, which is widely recognized, may be more accurately expressed as follows:

½ x participant’s monthly months of employment during marriage

retirement benefits x total months of employment at earlier

when and if received of date of retirement or commencement of benefits to alternate payee

The formula announced in Lynch, 665 S.W.2d 20, is now considered the “standard approach to division of pension benefits” in Missouri. Ward v. Ward, 34 S.W.3d 288...