Tag: DROP

DROP Decision

DROP Decision

Archer v. Dunton, 9th Dist. Summit C.A. No. 29091, 2019-Ohio-1971 (Decided May 22, 2019). 

Issue: What is a trial court to do when a 1993 divorce decree states that “the Wife is entitled to one-half of the Husband’s pension through the Police and Fire Pension Fund for the State of Ohio as of the date of the divorce”  and the plan participant enters the Deferred Retirement Option Plan (DROP) in 2003? Keep in mind that the DROP program did not exist at the time of the divorce and was not mentioned in the separation agreement.

Decision: The Ninth District court of appeals reversed the trial court which had held that the funds in the DROP account were not marital property. Instead, the court of appeals awarded the non-participant a share of the DROP account. However, the non-participant’s share of the DROP account was limited to half of the benefit accrued as of the date of the divorce in 1993 (frozen coverture) and not a traditional coverture share (“proportionate share”) of the pension at retirement as explained in Hoyt v. Hoyt, 53 Ohio St.3d 268 (1990) and Daniel v. Daniel, 139 Ohio St.3d 275, 2014-Ohio-1161.

Observation: The court of appeals detailed how under a DROP account “is funded, in part, by marital property in the form of Ohio Police and Fire Pension Fund Benefits [Mr. Dunton] earned during the course of the marriage.” It noted that because “Marital assets retain their character…” the DROP account is “continually funded by both marital property, in the form of benefits earned during the course of the marriage, and nonmarital property, in the form of benefits earned before and after the marriage as well as current contributions.”

How we can help: We offer model separation agreement language on our website for free. We are also available to help you draft custom settlement agreement language to ensure that your client receives the benefit that he/she agreed to and prevent claims of ambiguity in the separation language.