Opinion
FSTFA156024314
01-08-2019
Regina HANEY-PHILLIPS v. Paul M. PHILLIPS
UNPUBLISHED OPINION
OPINION
Adelman, J.T.R.
This dissolution of marriage action was originally resolved by the parties and proceeded to judgment as an uncontested matter on December 18, 2015 (# 206.55). Unfortunately, the parties later learned that their agreement as to the division of the defendant’s pension was unworkable as written and a motion to open the judgment was filed by the plaintiff on December 6, 2016 (# 230.00). That motion was granted by the court on February 21, 2017, and opened the judgment "for all purposes" (# 230.01.) The parties stipulated on the record at the start of the instant proceeding that all assets were to be valued as of the date of the original judgment— December 18, 2015— and as to all of the distributions that had been made postjudgment based on the original Separation Agreement (Agreement) (# 199.00).
The motion was inappropriately titled Motion for Order and/or to Open Judgment, Postjudgment. Due to the incorrect title, the fee for opening a judgment was not charged until immediately prior to the present trial. The motion, however, was treated by the court, (Colin, J.), as a motion to open the judgment.
The court heard this matter over a five-day period commencing on October 31, 2018, and concluding on November 27, 2018. Both parties testified and the court also heard from two expert witnesses regarding the present value of the defendant’s pension. Additionally, the court heard two additional expert witnesses on the value of the plaintiff’s business interests. Both parties offered numerous documents and other items as potential exhibits for the court to consider. The plaintiff offered thirty-nine items of which thirty-five were made full exhibits; the defendant offered twenty-five items of which all twenty-five were accepted as full exhibits. Due to the very broad language opening the judgment, the court, with the agreement of the parties, entered an immediate order after hearing only the jurisdictional testimony dissolving the marriage of the parties retroactively to December 18, 2015.
Background Information
The plaintiff and the defendant met in Amsterdam in 1996. Both were living and working in The Netherlands. The plaintiff, an American citizen, was a partner in a software business based in Amsterdam which she had started in 1993. The defendant, an Australian citizen, was working in advertising in that city. They were married on August 15, 1998, in Amsterdam. The couple decided to relocate to Connecticut shortly after the birth of their son in the fall of 1999. They wanted to raise the child in an English speaking country. Connecticut was a more logical choice for the young family as opposed to Australia, due to the fact that the plaintiff’s ongoing business remained a Dutch based operation.
With the move to Connecticut in 2002, the couple agreed on a career change for the defendant. He ended his work in advertising and marketing and entered a teacher certification program. His courses for his master’s degree and the certification program were covered by a scholarship and the family was supported by the plaintiff and saved funds from Holland until the defendant obtained a teaching position. The defendant began his teaching career at New Canaan High School with the academic year of 2005-2006, and is still employed at that school. The couple sold their home in Holland and bought a house in Norwalk, Connecticut in 2003.
Difficulties in the marriage grew out of disagreements over parenting their son according to the plaintiff and were based on the plaintiff’s mother coming to live with the family according to the defendant. The plaintiff alleged that the defendant was demeaning in his parenting and not supportive of their son. At one point, she actually moved temporarily to Amsterdam with the boy to remove him from the stress at home. The defendant agreed, at least initially, with this move. When the plaintiff and son returned to the United States, the conflict between them and the defendant had escalated significantly. It is quite difficult to determine if either parent was more at fault than the other for this development. The defendant’s belief that his mother-in-law’s presence in their home caused the marriage to fail was presented with little evidence other than his stated opinion.
Their son is now nineteen and attending school at the University of Southern Maine. Currently, his college-related expenses are being covered by savings developed during the marriage. The plaintiff is currently self-employed by Visual Integreties, LLC, which is a pass-through distributor of the software owned by her Dutch corporation, Square One BV. That corporation, which was started in 1995, is owned by the plaintiff and her partner, and has two employees. The American distribution company is essentially a break even operation. According to the plaintiff’s testimony and the exhibits offered into evidence, approximately fifteen percent of the income is used to operate Visual Integreties and the remaining eighty-five percent is sent to Square One BV.
In addition to those two businesses, Square One Solutions was started in 1997 as an offshoot of Square One BV to handle technical support for the software that was being sold. Seventy-five percent of Square One Solutions is owned by Square One BV and twenty-five percent by her partner’s brother-in-law. The plaintiff now handles her part of the business from the United States and travels to Holland as needed.
"BV" is the Dutch indication of an incorporated business similar to the use of "Inc." in the United States.
The Pension Issue
As part of the Agreement and the original judgment, the defendant was to give the plaintiff one-half of his State of Connecticut Teachers’ Retirement System (pension) as of the date of the original dissolution (exhibit # 7, § 6.15) and the plaintiff was to transfer to the defendant one-half of the value of her deferred income assets (exhibit # 7, § 6.14). Unfortunately, the language of the Agreement referred to the pension as being a "qualified" plan under the Federal Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (ERISA). Under ERISA, federal, state and municipal pension plans are exempt so the language in the Agreement could not be effectuated. It was for this reason, that the court opened the judgment based on mutual mistake (# 230.01).
Both parties called expert witnesses to testify as to the present value of the defendant’s pension interest. The plaintiff called Barry Kaplan as her witness. Mr. Kaplan valued the present value of the pension interest at $ 212, 768 (exhibit # 10). That valuation was based on the monthly benefit that would be paid as of December 18, 2015 to the defendant when he reaches the age of sixty assuming that he did not continue to work at the school or contribute anything further to the pension plan. The monthly benefit determined by Kaplan was based on the information he was provided by the Connecticut Teachers’ Retirement Board, the plan administrator, as to the defendant’s years of service, hire date and date of birth. Kaplan found that monthly benefit to be $ 974.91. From that point, he calculated the cost of an annuity plan to provide a monthly payment of $ 974.91 to the defendant for his life expectancy, with an assumption for future growth.
Under the terms of the pension plan, age sixty was the earliest age at which a member could collect the benefit. By assuming no further contributions, the basic benefit is set as of the date of the dissolution— or in this case the stipulation of the parties— but without twenty years of service, an early retirement penalty is assessed. As of December 2015, the defendant had about ten years of service.
The defendant, on his financial affidavit, valued his pension interest at $ 60, 051.23 (# 286.00). That amount is limited to his contributions to the plan plus accrued interest and represents what he would receive if he left teaching and withdrew from the plan. It does not represent the future value of benefits he would be expected to receive at retirement under the plan. In addition to that amount, the defendant also called his own expert witness to opine as to the present value of the benefit. He called Dan Shweiger (Shweiger) of LAR Pensions, LLC. Shweiger calculated that if the defendant retired as of December 18, 2015, he would have been entitled to a monthly benefit of $ 824.93 after taking into consideration that the defendant would have been only fifty-four years of age and six years short of the earliest full retirement age (exhibits 12 and TTT). Shweiger then calculated what the plan would have to pay to the defendant as a lump sum as required by the Internal Revenue Service (IRS) for qualified pension plans under ERISA. He testified at length about the stringent rules the IRS has for calculating lump sum payouts of qualified plans, but the pension at issue is not a qualified plan and lump sum payouts are not permitted by the rules of the defendant’s plan. Although this calculation might be helpful, it does not lend itself directly to the pension in question. Accordingly, the court finds that the plaintiff’s expert’s analysis is a more accurate determination of the value of the asset for the purposes of dividing the marital estate.
The value of his contributions plus interest as of the December 2015 Annual Statement to members was $ 49, 881.28 (exhibit # EEE).
The other major issue regarding the defendant’s pension is an outcome of the fact that it is not a qualified plan under ERISA. ERISA qualified plans offer important protections for the plan member and the nonmember spouse. Such plans can actually be divided by the plan administrator so that two separate accounts are created, one for the plan member and one for the nonmember spouse. Each would have the same rights under the plan, but they would be separate and distinct from one another. In a word, each party would be riding in their "own canoe" going down the river. In the Teachers’ Plan there is no actual division into two separate accounts. The nonmember spouse is locked into the member’s plan elections and actions. In such a plan, the two parties, although now divorced, are still riding in the "same canoe." Due to the differences between a qualified and non-qualified plan, if the court was to divide this asset as part of the overall division of the marital estate, certain protections would have to be built into the court’s orders to protect the integrity of the division of the assets. The court’s orders would have to direct the plan member to make certain elections such as which payment option to select and whether or not there will be a designation regarding survivor’s rights to the benefit.
The Teacher’s Plan allows the member to select from three payment options: Life Option— Plan N, Period Certain Option— Plan C, or Co-participant Option— Plan D (exhibit # 14). Under Plan N, the full benefit would be paid monthly so long as the member is alive. Upon the death of the member, no further payments of any kind are paid to the nonmember spouse also referred to as the alternate payee. This option pays the highest amount per month. Plan C pays a specific benefit for a specified number of years ranging from five years to twenty-five years. Under this plan, the monthly benefit is paid to either the member or the alternate payee upon the death of the member for the number of years selected. Under the final option, Plan D, the member selects a survivor benefit ranging from one-third of the monthly benefit to the full benefit and it is paid for the lifetime of the alternate payee after the death of the member. Obviously, the monthly benefit is adjusted actuarially to account for the payment option selected.
The other consideration to be determined is what happens if the member’s spouse dies prior to collecting the pension benefit. Under a qualified plan, the nonmember spouse having a separate account would not be impacted in any way, but with a non-qualified plan the accrued contribution amounts plus interest would be paid to the member’s designated survivor. Most non-qualified plans pay that benefit to the member’s surviving spouse if any, but the Teacher’s plan allows the member to actually make a designation of a person other than the current spouse. Such a designation must be made by the member specifically and the court order on its own is not typically sufficient to assure the payment is made as ordered (exhibit DDD). Due to these problems, and in consideration of the value of the rest of the marital estate to be equitably divided, it would be best if the court were able to avoid having to divide a non-qualified plan if it could do that in an equitable manner.
The Plaintiff’s Inheritance
The plaintiff’s mother died just a few weeks before the uncontested hearing and the creation of the Agreement. There is no reference to her mother’s estate in the Agreement and at the time of the uncontested hearing, neither party had any information regarding whether or not there was an estate and if there was, what the value of that estate might be. There was, however, an estate and the plaintiff eventually received a total disbursement consisting of one-third of the net estate or $ 85, 881.69. At the trial, the defendant had requested that the inheritance be considered by the court as part of the marital estate for equitable division pursuant to General Statutes § 46b-81.
The plaintiff’s mother passed away on November 20, 2015 in Houston, Texas at the age of eighty-four. The executrix of the estate received the death certificate on December 23, 2015. According to the statement provided by the executrix (exhibit # 16) there was no probate proceedings as all of the deceased’s assets were financial accounts with named beneficiaries except for one joint account with the executrix. All the assets were divided among the three surviving children in equal amounts between February 2016, and February 2017.
General Statutes § 46b-81, entitled "Assignment of property and transfer of title," provides:
(a) At the time of entering a decree annulling or dissolving a marriage or for legal separation pursuant to a complaint under section 46b-45, the Superior Court may assign to either spouse all or any part of the estate of the other spouse. The court may pass title to real property to either party or to a third person or may order the sale of such real property, without any act by either spouse, when in the judgment of the court it is the proper mode to carry the decree into effect.
(b) A conveyance made pursuant to the decree shall vest title in the purchaser, and shall bind all persons entitled to life estates and remainder interests in the same manner as a sale ordered by the court pursuant to the provisions of section 52-500. When the decree is recorded on the land records in the town where the real property is situated, it shall effect the transfer of the title of such real property as if it were a deed of the party or parties.
(c) In fixing the nature and value of the property, if any, to be assigned, the court, after considering all the evidence presented by each party, shall consider the length of the marriage, the causes for the annulment, dissolution of the marriage or legal separation, the age, health, station, occupation, amount and sources of income, earning capacity, vocational skills, education, employability, estate, liabilities and needs of each of the parties and the opportunity of each for future acquisition of capital assets and income. The court shall also consider the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates.
As can be seen from the language of the statute, the court has the equitable power to divide "all or any part of the estate of the other spouse." The fact that the plaintiff’s mother died prior to the date of the Agreement and the original dissolution makes her estate part of the marital estate as under Connecticut law an heir’s right to an inheritance vests as of the date of death and not when the funds are actually received. Krause v. Krause, 174 Conn. 361, 365, 387 A.2d 548 (1978). Just because an asset, however, is considered to be within the marital estate, does not require the court to divide that asset. The court has great discretion in how it divides the marital estate. "[T]he assignment of property in a marital dissolution rests in the sound discretion of the court." Ridgeway v. Ridgeway, 180 Conn. 533, 544, 429 A.2d 801 (1980). In considering the various criteria set forth in the statute, the court is not required to afford the same weight to each factor. Calo-Turner v. Turner, 83 Conn.App. 53, 62, 847 A.2d 1085 (2004). Furthermore, the court is not required to afford the equal weight to each of the various criteria. Id. Nor must the court make express findings as to each factor. Caffe v. Caffe, 240 Conn. 79, 82-83, 689 A.2d 468 (1997). It is sufficient that the court’s factual findings indicate that the above factors were considered and that the evidence supports the equity of the division. See, e.g., Casey v. Casey, 82 Conn.App. 378, 385, 844 A.2d 250 (2004).
In considering the various criteria, the defendant argues that he should receive a portion of the estate because he rendered great service to the plaintiff’s mother and the three heirs by housing the mother and keeping her out of a nursing home for many years. He also argues that he was supportive and kind to his mother-in-law during the several years that she lived with the family. The defendant’s other argument, almost an alternative position, is that the presence of his mother-in-law in their home was a major cause of the marital breakdown.
The plaintiff disagrees with the defendant as to the cause of the breakdown of the marriage and the court will comment on that issue below, but the defendant’s argument is not one the court finds persuasive. The timing of the distribution and nature of it as a distribution long after the marriage had failed— by the opinion of both parties— figures heavily in the court’s determination. The distribution of the other assets leaves the defendant with an ample ability to support himself and acquire future assets. This asset is too personal to the plaintiff especially given the defendant’s belief that her mother was the reason for their marriage to fail.
Finally, the parties had agreed and stipulated that all assets would be valued and distributed as of the date of the original dissolution order— December 18, 2015. Although the plaintiff had a vested interest in her mother’s estate as of her mother’s death which preceded that date, there was no established value of that estate interest as of the stipulated date. At that time, the value of the estate was undetermined and speculative.
The Recalculation of the Child Support Order
The defendant is requesting among his claims for relief that the court recalculate the child support order based on his allegation that the plaintiff manipulated her income at the time of the final hearing to make it appear lower than it actually was. If correct, the defendant argues, he should be entitled to a credit or refund of the claimed excess support he paid while the couple’s son was still a minor.
The defendant’s position is based on the fact that shortly after the original dissolution of marriage judgment was rendered, the plaintiff received additional compensation from her company by being paid a bonus three days after the date of dissolution and receiving her Dutch mandated vacation pay in December, when her partner received his vacation pay much earlier in the year. He also alleged that the plaintiff purposefully diminished her 2015 income by not taking a dividend payment in 2015, but taking two dividends in 2014. The plaintiff explained her dividend payments to the court’s satisfaction. For tax filing purposes, she was credited with a dividend income in 2014, but the funds were not actually received in that year. Between the years 2010 and 2014, according to her unrefuted testimony, she and her business partner had eight dividends declared but took only five payments. To avoid a double taxation problem, they each took a loan. Her total dividend earnings during that period was $ 535, 000 and in her testimony she accounted for how those funds were used for the benefit of the family going towards work on the marital home, funding vacations, and contributions to retirement and investment accounts in which the defendant has shared based on the original distribution of marital assets.
Her financial affidavit for the December 2015 uncontested hearing reported a weekly gross income of $ 1, 295 or approximately $ 67, 000 per year. She noted the possibility of a bonus payment on that financial affidavit, but nothing had been received as of the date of the hearing. The plaintiff also testified that she did receive approximately $ 4, 800 from the company before the end of 2015. So the plaintiff’s full income at the end of 2015 was $ 100, 000 and not $ 67, 000. Because her income as of December 18, 2015 was the lower amount, the question raised by the defendant is whether the plaintiff was manipulating her income to obtain a higher child support payment. Additionally, the defendant notes that the plaintiff was paid her vacation pay at the end of 2015 and not before the beginning of the summer. According to her unrefuted testimony, Dutch law requires employers to provide employees approximately 8 percent of their salary as vacation money. She had never taken the payment as required and the accountants advised her that she must take it before the close of the year to be in compliance with the local laws. Her partner received his in May 2015, because he was being paid by the payroll service company and they did it automatically to be in compliance with Dutch law. The plaintiff’s income was not handled through the payroll service— she was then living back in Connecticut— and it was up to her to take the funds on her own which she never did. Once the accountants noticed the discrepancy, they directed her to take the additional 8 percent vacation pay and she did so following their professional advice.
While the court has found the plaintiff’s testimony to be credible during the trial, it is certainly not uncommon for business owners to attempt to manipulate income to their advantage during a divorce proceeding. In this case, the court does not find that to be a likely answer. First, the plaintiff had a business partner so she was not totally free to manipulate payments without the cooperation of that partner. Second, this matter had been pending for a long time both before the Agreement and after the original judgment. The defendant has offered no evidence of manipulation; only speculation as to assumed behavior. Certainly, discovery techniques could have been used to obtain evidence of the actions alleged. A deposition of the plaintiff’s partner might have been useful in that regard, but no such evidence was presented. Finally, there was no evidence presented to the court as to what any credit owed to the defendant might be. No evidence of what the child support order might have been if the $ 100, 000 income had been used in the calculation as opposed to the $ 67, 000 income. "[A] court needs proper financial information to enter orders that are not based on speculation and conjecture." Antonucci v. Antonucci, 164 Conn.App. 95, 101 n.2, 138 A.3d 297 (2016). This footnote cites Mensah v. Mensah, 145 Conn.App. 644, 75 A.3d 92 (2013) in which a decision was overturned because the trial court found it had insufficient evidence to make orders and then made orders.
Valuation of the Plaintiff’s Business Interests
As part of the Agreement, the parties agreed that the 50 percent value of the plaintiff’s business interests was $ 147, 000 (plaintiff’s exhibit # 7, § 6.12). There is no dispute that the plaintiff paid that sum to the defendant. The defendant is now requesting in his proposed orders that the true 50 percent value of the business interests be established at $ 302, 800 (# 297.00, p. 19).
Both parties hired competent experts to opine on the value of the plaintiff’s business interests. The plaintiff called Erik-Jan Hennis who testified from Amsterdam via video and the defendant called Patricia M. Poli to testify. Hennis is a principal in the Dutch firm of MTH, an accounting firm that has been providing accounting services to the plaintiff’s corporation for many years. Hennis testified that he holds a doctorate in business economics, is a certified public accountant (CPA), and has been a registered valuator since 2009. The court found Mr. Hennis to be an expert witness in business valuation without objection by the defendant. Poli was also approved as an expert witness without objection. She, like Hennis, had multiple credentials. Poli is a CPA, is certified in financial forensics, and is a certified valuation analyst. She is also a long-time member of the faculty of the Dolan School of Business at Fairfield University.
The two valuations had some similarities, but also some significant differences. Both treated the Square One Solutions BV (Solutions) as a subsidiary on Square One BV (Square One) which owns a 75 percent interest in the former. Poli, however, also valued Visual Integrity Technology, LLC (Visual). That entity is owned solely by the plaintiff and she is the only employee of the company. It is the North American distributor of Square One software.
The other major difference between the valuations is the methodology employed by the experts. Poli used three methodologies as is common among valuators operating in the United States. She reviewed the market approach, the asset based approach, and the income approach. After assessing all three, she weighted the results to obtain what she believed to be the fair market value (FMV) of the businesses. The standard for establishing the FMV of a business is set forth by Revenue Ruling 59-60. That value is the price at which a willing buyer and a willing seller will agree when both parties have the same information and neither is under any compulsion to buy and or sell.
Rev. Rul . 59-60, 1959-1 CB 237— IRC § 2031 provides in pertinent part that "[s]ection 20.2031-1(b) of the Estate Tax Regulations (section 81.10 of the Estate Tax Regulations 105) and section 25.2512-1 of the Gift Tax Regulations (section 86.19 of Gift Tax Regulations 108) define fair market value, in effect, as the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts." Rev. Rul. 59-60, § 2.02.
Hennis testified that in The Netherlands the common law requires that the valuation of business be based on cash flow forecasts. That determination is considered, in The Netherlands, to be a more accurate method than the American methodology because it has fewer assumptions and follows how an actual business person would make investment decisions for a company. Another significant difference between the two valuations is the treatment of the tax consequences of a sale. In this country, we do not take any tax issues into determination of FMV, because there is no tax payment at the time of the transfer of ownership, but in The Netherlands the government withholds the capital gains tax at the rate of 25 percent. Therefore, the tax is a significant issue to be considered. Even under the defendant’s methodology, if one must assume a willing seller as well as a willing buyer than the seller’s tax liability being withheld must necessarily be a factor for such a seller to consider.
The plaintiff’s valuation was done in January 2018, using all sources as of December 31, 2015, but the defendant’s valuation was done as of December 31, 2013, some two years prior to the valuation date of December 18, 2015. Additionally, the defendant’s expert, unlike the plaintiff’s expert, did not speak directly to either the plaintiff or her partner to learn first hand about the companies. She relied totally on the financial documents and a review of the plaintiff’s deposition. In her testimony, she admitted that she did not have any information about some of the challenges the companies anticipated facing in 2016 and 2017 from increased competition from free software and the need for investment in new programs and products to remain competitive that was part of the analysis done by the plaintiff’s expert.
For all of these reasons, the court finds that the expert valuation offered by Hennis in his January 2018 report (plaintiff’s exhibit # 38) to be more persuasive than that of Poli in her report (plaintiff’s exhibit # 39). Accordingly, the value of the plaintiff’s interest in Square One including Solutions is $ 267, 000 and, if the defendant were to be awarded one-half of that value he would receive $ 133, 500 or $ 13, 500 less than he was given by the plaintiff according to the original judgment in 2015.
This decision on the part of the court should in no way be taken as a criticism of Ms. Poli’s work or testimony. She simply did not have all the materials and sources to perform her work and lacked knowledge of how a Dutch company would be valued in The Netherlands.
Regarding Visual, that business was not valued by Hennis, but it was valued by Poli (defendant’s exhibit G). Visual being an American company, it was entirely proper for it to be valued according to revenue ruling 59-60. Although without a competing report, the court has little to use other than the defendant’s work. The expert Poli herself, however, indicated a reduced level of assurance as to her estimate of the value. In her "Scope Limitation" section of her report she wrote "[t]he scope of this valuation engagement report was limited ... I was unable to speak directly with the owner of the business ... If more information were available to me matters may have come to my attention that could have a material impact on the opinion of value contained in the report. Accordingly, the court’s level of assurance on the estimate of value is reduced" (defendant’s exhibit G, p. 6). Nevertheless, Poli stated that the value of Visual as of December 31, 2014— a year before the dissolution— was $ 149, 400. Using that value, the defendant would receive his one-half share or $ 74, 400.
In her testimony on cross examination by the plaintiff, Poli admitted that she did not know if the gross receipts shown on the plaintiff’s schedule C of her 2015 tax return included the plaintiff’s $ 60, 000 management fee or not. Additionally, she did not have a profit and loss statement for Visual for 2014. Asked about the impact of Visual being the sole distributor of Square One’s software in North America and the unique relationship between that company and the Dutch companies owned by the plaintiff and her partner, Poli responded that was part of the marketability adjustment. That response did not seem to be sufficient given the completely symbiotic relationship that exists between the Dutch company and the American distributor. The plaintiff testified that Visual has no value; it is a break even operation that provides her with a 15 percent margin for expenses and an income. The court finds that the only benefit to the plaintiff of Visual is her annual income of approximately $ 60, 000 and that the company has no or minimal value and should not be distributed as an asset.
Postmajority Educational Support Orders
and
Plaintiff’s Motion for Educational Support, Pendente Lite (# 272.00)
As indicated above, the only child of this marriage is now of age and is attending college in Maine. The parties both agree that they should provide support to their son during his education and that there is an account that had been funded over the years to help with that financial obligation. Where they differ is that the plaintiff testified that the son might be taking courses beyond what is contemplated by the statute and she wants contribution for all of the child’s undergraduate work. She also would like the defendant to provide a stipend in the amount of $ 600 per semester to be used to cover the cost of books, transportation, and meals. It is anticipated that the educational account will not be sufficient to cover all of the college-related costs.
General Statutes § 46b-56c.
The son is attending The University of Southern Maine and currently receives a Merit Award of $ 875 per semester. There is one Connecticut Higher Education Trust (CHET) account. According to the plaintiff’s exhibit # 9, the current balance in that account is $ 21, 864. He lives with the plaintiff so there is no room or boarding cost, but he does commute back and forth to the college and spends an average of $ 8 for lunch daily. She also testified that their son may be able to start law school during his senior year at the university. The defendant testified that he will meet his obligations under the statute, but has some questions as to whether the plans regarding some law school classes during the senior year would qualify under the provisions of General Statutes § 46b-56c which is limited to undergraduate course work only. The court has heard no evidence regarding that specific program and cannot comment on whether it fits within the provisions of the statute. Such would be a determination to be made at some future date.
General Statutes § 46b-56c(a) provides: "For purposes of this section, an educational support order is an order entered by a court requiring a parent to provide support for a child or children to attend for up to a total of four full academic years an institution of higher education or a private occupational school for the purpose of attaining a bachelor’s or other undergraduate degree, or other appropriate vocational instruction. An educational support order may be entered with respect to any child who has not attained twenty-three years of age and shall terminate not later than the date on which the child attains twenty-three years of age." (Emphasis added.)
Regarding the covered expenses of the statute as are set forth in subsection (f), clearly food expenses are included as are books along with tuition and fees so long as they do not exceed the amount charged for an in-state University of Connecticut student. Transportation costs are not included in the statutory list of covered expenses. The court sees no reason why the two parties would not share equally any covered costs once, and if, the CHET account is exhausted. The defendant does have an obligation to contribute one-half of the cost of books and lunches going back to the date of the pendente lite motion to the extent that the CHET account is not available for such costs.
General Statutes § 46b-56c(f) provides: "The educational support order may include support for any necessary educational expense, including room, board, dues, tuition, fees, registration and application costs, but such expenses shall not be more than the amount charged by The University of Connecticut for a full-time in-state student at the time the child for whom educational support is being ordered matriculates, except this limit may be exceeded by agreement of the parents. An educational support order may also include the cost of books and medical insurance for such child."
Health Insurance for the College Student Child
The defendant currently carries the health insurance for the college student child of the marriage on his employer provided insurance plan. He has proposed continuing to cover said child, but is requesting that the plaintiff contribute one-half of the premium for said coverage. The court received no evidence as to the cost of the insurance coverage for the child, but according to the defendant’s current financial affidavit the weekly cost for the coverage for him and the child is just under $ 70 per week. Health insurance is an allowable expense under the provisions of the post-majority educational support statute as is indicated in footnote 10 above so payment of the child’s premium should be paid as part of that support as long as it does not exceed the limits of the statute’s coverage.
Division of Social Security Benefits
Under federal law, Social Security benefits are not part of the marital estate for purposes of equitable division, but the benefit is sometimes thought to be considered as part of the court’s overall financial review of the parties. The plaintiff has accumulated benefits under the Social Security Act, but the defendant as a public school teacher has not. Both parties also testified that they would have some form of a social security benefit from their employment in The Netherlands, but neither had any information as what such a benefit might be. There is also a possibility that the defendant might be entitled to some similar benefit from his employment when he lived in Australia. Again, no information as to what such a benefit might be has been presented to the court.
For example, in Auerbach v. Auerbach, Superior Court, judicial district of Stamford-Norwalk, Docket No. FA-12-4022931-S (July 9, 2014, Heller, J.), the court stated that "[t]he defendant is fully vested in the City of Norwalk Firemen’s Benefit Fund (the City of Norwalk pension), the firemen’s pension plan ... During the dissolution trial, the defendant indicated that he intended to retire in July 2014. Upon retirement, the defendant will receive a monthly pension benefit of $ 6, 019, totaling $ 72, 228 annually. The defendant is also eligible for Social Security benefits, although the projected benefit of $ 878 a month will be reduced to take into account the defendant’s pension benefits." The court, however, also noted that "[t]he plaintiff is not eligible for her own Social Security benefits because she is a teacher. She may receive half of the defendant’s Social Security benefits, also subject to adjustment in view of their pensions." Id., n.8.
The defendant’s teaching salary is exempt from the Social Security Act as he participates in the teacher’s pension plan, but income from other sources including non-teaching income paid to him by the school system would be subject to the Act. As of the valuation date of December 18, 2015, the defendant had not accumulated the necessary 40 credits to qualify for retirement benefits (defendant’s exhibit GGG).
The defendant has put into evidence the plaintiff’s social security statement (exhibit XX). That statement is dated July 14, 2017, and contains information for 2016 which would be beyond the valuation date of December 18, 2015, as stipulated by the parties. The benefit indicated is also based on the plaintiff’s earnings for the years 1978 through 1994 which was a premarital period. She had no Social Security earnings for the years she resided in The Netherlands (1995-2002). Therefore, the marital portion of her benefit, if there is one, would only consist of earnings from 2003 through 2015 and the court has absolutely no information as what such a limited benefit might be. Without such information, the court has no meaningful manner in which to assess the value of the asset. "[A] court needs proper financial information to enter orders that are not based on speculation and conjecture." Antonucci v. Antonucci, supra, 164 Conn.App. 101 n.2.
The plaintiff’s total taxed earnings for Social Security from 1978 through 2015 totaled $ 1, 013, 818 and the taxed premarital income ($ 483, 970) made up approximately 48 percent of that total. Would simply taking 52 percent of the 2015 monthly benefit be an accurate manner in which to determine the correct marital benefit? The court, however, also lacks an estimated monthly benefit as of the end of 2015— the exhibit provides the benefit as of December 2016— so even that simplistic approach is not possible.
The court has listened carefully to the witnesses and assessed their credibility. "It is the sole province of the trial court to weigh and interpret the evidence before it and to pass on the credibility of the witnesses .... It has the advantage of viewing and assessing the demeanor, attitude and credibility of the witnesses and is therefore better equipped than we to assess the circumstances surrounding the dissolution action." (Emphasis in original; internal quotation marks omitted.) Zahringer v. Zahringer, 124 Conn.App. 672, 679-80, 6 A.3d 141 (2010). The court has reviewed all the exhibits and given them the appropriate weight. The court has applied all applicable law as explained and interpreted by our appellate courts. The court unseals all financial affidavits and takes judicial notice of all pleadings in the court’s file. Accordingly, the court makes the following findings of fact:
A. The marriage of the parties was dissolved retroactively to December 18, 2015 by order of the court at the beginning of the trial absent any objection from either party after the court heard evidence to satisfy the jurisdictional criteria;
B. The failure of the marriage cannot be attributed more to one party than the other;
C. The only child of the marriage is now of age;
D. Said child is a college student and the parties have made provisions to assist that child’s education financially and have indeed made financial contributions to that education;
E. Based on the past actions of the parties, the court finds that the parties did and do intend to assist their son in post-majority educational pursuits;
F. The cost of the child’s health insurance is a valid expense under the provisions of General Statutes § 46b-56c;
G. The plaintiff has a 50 percent interest in a Dutch corporation known as Square One, BV and that corporation has a 75 percent ownership interest in another Dutch corporation known as Square One Solutions, BV;
H. By agreement and stipulation of the parties, all assets are to be valued as of the date of the original dissolution of marriage which was December 18, 2015;
I. The value of the plaintiff’s interest in said companies is $ 267, 000;
J. The plaintiff is the sole owner of Visual Integrity Technologies, LLC;
K. The only benefit the plaintiff receives as owner of Visual Integrity Technologies, LLC, is a management fee that is no more than $ 60, 000 gross annually;
L. There is no intrinsic value to that business other than a stream of income for the plaintiff;
M. Under the terms of the original Agreement and Orders of the court, the plaintiff paid to the defendant the sum of $ 147, 000 as his one-half of her interest in her businesses;
N. Said payment was $ 13, 500 more than the court’s current determination of the value of his 50 percent interest ($ 147, 000 minus 50 percent of $ 267, 000 or $ 133, 500);
O. The plaintiff received an inheritance from her mother’s estate in the amount of $ 85, 882. Said inheritance was received after the date of the original dissolution;
P. The plaintiff is entitled to receive retirement benefits under the Social Security Act, but the marital portion of said benefit is unknown to the court;
Q. The defendant was not entitled to receive retirement benefits under the Social Security Act as of the December 18, 2015 valuation date due to the fact that he had not accumulated the minimum 40 credits as of that date;
R. Both parties may be entitled to receive retirement benefits under the Dutch equivalent of our Social Security Act, but the potential benefit is unknown to the court;
S. The defendant may be entitled to receive retirement benefits under the Australian equivalent of our Social Security Act, but the potential benefit is unknown to the court;
T. The plaintiff has a 401(k) asset which had a value as of December 31, 2015 of $ 182, 259.21 (plaintiff’s exhibit # 18);
U. The defendant is a teacher in the New Canaan school system and has a gross annual income of approximately $ 91, 000;
V. The defendant has a vested interest in a pension with the Connecticut Teacher’s Retirement System with a present value as of December 18, 2015 of $ 212, 768; and
W. The court lacks sufficient information to determine whether or not the child support agreed to by the parties and ordered by the court in 2015 was the correct sum and the court lacks sufficient information to determine what, if any, portion of the plaintiff’s future Social Security benefit might be considered a marital asset.
In consideration of the factual findings enumerated above, the court hereby
ORDERS:
I. The marriage of the parties is dissolved retroactively to December 18, 2015;
II No alimony is awarded to either party;
III. The court shall retain jurisdiction regarding postmajority educational support orders;
IV. Plaintiff’s motion for a pendente lite educational support order (# 272.00) is granted retroactively to the date of filing on February 13, 2018 as follows:
A. Any funds expended individually by either party to support a qualified expense under the statute for their son’s college education to date shall be refunded to said party from the CHET account;
B. A qualified expense shall not include transportation expenses, but shall include medical insurance, food, books, and fees in addition to tuition and other related expenses as detailed in General Statutes § 46b-56c(f);
C. The parties shall exchange a detailed list of any such expenses within thirty days of the date of the judgment and plaintiff shall reimburse such expenses promptly;
D. In the event of a dispute regarding an expense, the court has retained jurisdiction.
V. If and when the CHET account is exhausted, the parties shall each contribute one-half of all such qualified expenses up to the limits set by the statute;
VI. The plaintiff shall have the right to claim the child of the parties for all tax filing purposes for so long as he is eligible for such treatment;
VII. All distributions of the marital estate previously made by the parties pursuant to the original agreement and orders of the court shall remain unchanged and shall satisfy, in part, the current distribution of the marital assets;
VIII. The plaintiff shall retain, free and clear of any claims by the defendant, her 401(k) plan known as the Sharebuilder 401k which had a balance as of December 18, 2015 of $ 182, 259.21 and all gains/losses attributed to that asset to date;
IX. The defendant shall retain, free and clear of any claims by the plaintiff, his Connecticut Teacher’s Retirement System with a present value as of December 18, 2015 of $ 212, 768 and all gains/losses attributed to that asset to date;
X. Each party shall retain, free and clear of any claim by the other party, any and all personal property now in that party’s possession including but not limited to household furnishings, motor vehicles, bank, and investment accounts, etc.; and
XI. Each party shall be liable for all of their own liabilities and debts including any and all legal fees and costs associated with this matter.