Appeals court orders second remand of divorce dispute

A ex-husband will again take his challenge of the final judgment in his divorce case back to the trial court after the Indiana Court of Appeals ordered a second remand to address the division of marital property.

The case of Jeffrey Thomas Maxwell v. Shirley Sue Maxwell, 20A-DR-869,  involves divorce proceedings between Jeffrey, who was in the military, and Shirley Maxwell. Jeffrey also worked in accounting and finance at Eli Lilly for 15 years, and he retired from the military in 2012.

Jeffrey filed for divorce in November 2016, and the following year his department at Lilly was transferred to Ireland, resulting in him losing his job. At that point, Jeffrey had a 401K and a pension with Lilly, as well as a military pension.

In November 2017, the Hancock Circuit Court split the marital property 60-40 in favor of Shirley, which included her receiving 60% of Jeffrey’s military pension and $44,500 out of his 401K. For his part, Jeffrey received his 40% of his military pension, all of his pension from Lilly and the remainder of his 401K.

After Jeffrey appealed for the first time, the Indiana Court of Appeals in 2018 remanded for an equal division of the marital property or an explanation of the reason for a deviation from an equal division, as well as “for an order requiring Husband to pay fifty percent of his disposable retired pay of the military pension.” On remand, the trial court in March 2020 again ordered a 60-40 split, awarding Jeffrey both of his pensions, subject to payments to Shirley. Also, Jeffrey was ordered to pay Shirley a $68,953 equalization payment.

Jeffrey appealed again, first arguing the trial court failed to follow the COA’s original decision in dividing his military pension.

In its order on that issue, the trial court wrote in Paragraph 50, “As previously Ordered in … Judgement [sic] entered November 16, 2017, and as modified in paragraph (e) below, [Wife] shall have set off to her as her sole and separate property the following: … (e) 50% of the gross monthly payment from [Husband’s] US Army pension … .” Later in Paragraph 54, the court wrote that “[Husband] should pay to [Wife] fifty percent … of his ‘net disposable retired pay’ … from the United States Government for his U.S. Army Pension … .”

“It appears the trial court intended for the phrase ‘and as modified in paragraph (e) below’ in its Paragraph 50 to state ‘and as modified in paragraph 54 below,’” Judge Elaine Brown wrote Tuesday. “We remand for clarification.”

Jeffrey also argued on appeal that the trial court failed to consider the tax consequences of his pensions, resulting in Shirley receiving “a vastly larger amount than the intended 60-40 division.”

The COA agreed, holding that “(w)hile Husband is ordered to transfer significant portions of the values of his pensions to Wife … Husband is the party who will receive the pension distributions and will be responsible for taxes on the full amounts of his annual pension benefits. Assigning this tax burden to Husband alone … has the result of significantly altering the trial court’s intended 60/40 apportionment.”

The case was thus also remanded on that issue “for the trial court to consider the tax consequences of its disposition and to redetermine the amount of the equalization payment.”

In a partial dissent, Judge Nancy Vaidik challenged the majority’s holding on the tax issue, writing that “(b)ecause there were no immediate tax consequences from the court’s disposition of the pensions and the amount of future taxes is too speculative, I would affirm the trial court on this issue.” She cited to Harlan v. Harlan, 544 N.E.2d 553 (Ind. Ct. App. 1989), reh’g denied.

Vaidik concurred with the majority — which also included Judge Rudolph Pyle — in all other respects.

Finally, Jeffrey challenged the order that the equalization payment should be paid at $500 per month with an 8% interest rate. He claimed he would only be paying $50 a month toward the principal balance, which “circumvents the statutory mandate to divide marital property in a ‘just and reasonable manner.’”

But, Brown noted, “Husband is free to pay off the judgment more quickly and thereby incur less in interest.”