                                                                                 FILED
                                                                         Nov 16 2018, 9:32 am

                                                                                 CLERK
                                                                             Indiana Supreme Court
                                                                                Court of Appeals
                                                                                  and Tax Court




      ATTORNEY FOR APPELLANT                                    ATTORNEY FOR APPELLEE
      Jonathan R. Deenik                                        Janice Mandla Mattingly
      Deenik Law, LLC                                           Janice Mandla Mattingly, P.C.
      Greenwood, Indiana                                        Carmel, Indiana



                                                 IN THE
          COURT OF APPEALS OF INDIANA

      Kimberly L. Eads,                                         November 16, 2018
      Appellant-Petitioner,                                     Court of Appeals Case No.
                                                                18A-DR-249
              v.                                                Appeal from the Johnson Superior
                                                                Court
      Robert J. Eads, Jr.,                                      The Honorable Peter D. Nugent,
      Appellee-Respondent                                       Judge
                                                                Trial Court Cause No.
                                                                41D02-1110-DR-779



      Vaidik, Chief Judge.



                                           Case Summary
[1]   In October 2011, Kimberly L. Eads (“Wife”) filed a petition to dissolve her

      marriage to Robert J. Eads (“Husband”). Nearly six years later, in July 2017,

      the trial court issued a decree dissolving the parties’ marriage. In the decree,

      the court used a coverture fraction to determine that 77.2% of Husband’s


      Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018                           Page 1 of 23
      firefighters’ pension was earned during the marriage. The court then ordered

      Husband, once he retires, to forward half of 77.2%, or 38.6%, of his monthly

      pension payment to Wife each month and then issue her a Form 1099-R (an

      IRS form for distributions from pensions and retirement plans) so that Wife

      pays the taxes on her share of his pension. In addition, the court found that

      Wife, who receives social-security disability payments for injuries she sustained

      in a car accident, is entitled to rehabilitative maintenance and ordered Husband

      to pay her $1000/month for twenty-four months. Finally, the court ordered

      each party to pay their own attorney’s fees.


[2]   Both Husband and Wife now appeal. We conclude that the trial court erred in

      calculating the coverture fraction because it included pension rights that

      Husband earned after Wife filed for divorce. We therefore remand this case

      with instructions for the court to apply one of two methods—the date-of-

      retirement approach or the date-of-divorce approach—to determine the portion

      of Husband’s pension that was earned during the marriage. We also conclude

      that the trial court erred in ordering Husband to issue Wife a Form 1099-R each

      year and therefore order the court to consider different options of making Wife

      responsible for the taxes on her share of Husband’s pension. Although we find

      no abuse of the trial court’s discretion in ordering each party to pay their own

      attorney’s fees, we find that the record does not support an award of

      rehabilitative maintenance. On remand, the court must determine whether

      Wife is entitled to incapacity maintenance instead of rehabilitative

      maintenance. We therefore affirm in part and reverse and remand in part.


      Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018     Page 2 of 23
                                Facts and Procedural History
[3]   Although the dissolution decree covers many topics, this appeal concerns only a

      few of them. Accordingly, we set forth the facts that are relevant to the issues

      the parties raise on appeal.


[4]   Husband began working as a firefighter on February 7, 1994. As a firefighter,

      Husband is a member of the 1977 Police Officers’ and Firefighters’ Pension and

      Disability Fund (“1977 Fund”), which is administered by the Indiana Public

      Retirement System (INPRS). Appellant’s App. Vol. II p. 23 (Finding 37); see

      also Thatcher v. City of Kokomo, 962 N.E.2d 1224, 1225 n.1 (Ind. 2012) (“The

      ‘1977 Fund’ is a disability and pension fund for police officers and firefighters

      established by Indiana Code section 36-8-8-4 that is managed by [INPRS].”).

      Members of the 1977 Fund become vested with twenty years of service and are

      eligible for an unreduced retirement benefit when they have twenty years of

      service, are at least fifty-two years old, and have separated from service.

      Appellant’s App. Vol. II p. 23 (Finding 37); see also Ex. 1. Unlike other

      pensions, the 1977 Fund pension is not subject to a Qualified Domestic

      Relations Order (QDRO).1




      1
          According to INPRS,

                The fund is not required by federal law to honor [QDROs]. The 1977 Fund is not
                authorized by law to split payments between payees. . . . The Fund will not make any
                payments directly to a Fund Member’s alternate payee under a QDRO. . . . The Fund
                will also not make any payments prior to the time that distributions would otherwise
                begin to the member by law. This means that the member must have actually retired or

      Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018                             Page 3 of 23
[5]   About three-and-a-half years after Husband began working as a firefighter, on

      November 15, 1997, Husband and Wife married. In 2000, Wife was involved

      in a car accident and sustained back injuries. See Tr. Vol. II p. 9 (Wife testifying

      that her back injuries prevent her from sitting, standing for long periods of time,

      and concentrating and that her medications make her sleepy). Wife, who

      worked as a finance manager before the accident, has not worked since the

      accident. Id. Wife was eventually awarded social-security disability payments

      dating back to 2000. In 2002 and 2003, Husband was “medically retired” due

      to an injury. Appellant’s App. Vol. II p. 23 (Finding 39); Tr. Vol. III p. 177.

      Husband then returned to work.


[6]   On October 25, 2011—which was before Husband, then age forty-five, became

      vested in his 1977 Fund pension—Wife filed for divorce.2 In the petition, Wife

      requested spousal maintenance. Tr. Vol. II pp. 95-97. After Wife filed for

      divorce, Husband and Wife did not live together or commingle assets. The




                separated from employment from a 1977 Fund covered position in order for the Fund to
                begin making payments to the member.


      Ex. 2C.


      2
        According to INPRS, on October 25, 2011, Husband “was not vested in a pension benefit”; however, if
      Husband separated from employment on October 25, 2011, “he could have withdrawn his member
      contribution account balance,” which at that time was approximately $67,853.45. Ex. 2C; see also Tr. Vol. II
      pp. 216-17. After becoming vested, however, Husband cannot withdraw his member contributions “because
      [they] are used to fund the 1977 pension benefit.” Ex. 2C.

      Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018                             Page 4 of 23
      divorce was pending for nearly six years. During this time, Husband reached

      twenty years of service and thus became vested in his pension.


[7]   The final hearing was held over the course of three days between December

      2016 and February 2017. Husband was still working and thus continuing to

      accrue pension benefits. At the hearing, substantial time was devoted to

      Husband’s 1977 Fund pension, as it was one of the parties’ two major assets

      (the other being the marital residence). Wife presented evidence from Dan

      Andrews, a Franklin College business and accounting professor and a CPA.

      Specifically, Andrews testified that Husband’s monthly benefit amount

      (calculated by INPRS as though Husband had separated from service on

      October 4, 2016—the date of valuation—and would apply for an unreduced

      retirement benefit when he turned fifty-two in July 2018) would be $3254.86

      and that the present value of Husband’s 1977 Fund pension was $1,278,133.26.

      See Tr. Vol. II pp. 200, 223; Ex. 2A. Andrews, at Wife’s request, then applied

      the coverture fraction formula (discussed below), concluding that Husband

      earned 61.52% of his pension during the marriage. Tr. Vol. II pp. 201-02; Ex.

      2A (although Andrews testified that the coverture is 61.54%, his report provides

      that the coverture is 61.52%).3 Both Husband and Wife asked the trial court to




      3
       According to Exhibit 2A, Andrews calculated the length of marriage as 13.94 years, that is, from November
      15, 1997 (date of marriage) to October 25, 2011 (date Wife filed for divorce). Andrews calculated the term of
      Husband’s employment as 22.66 years, that is, from February 7, 1994 (date of hire) to October 4, 2016 (date
      Husband’s pension was valued).

      Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018                             Page 5 of 23
      order the other party to pay their attorney’s fees. Tr. Vol. II p. 111; Tr. Vol. III

      p. 49.


[8]   On July 5, 2017, the trial court issued a decree of dissolution of marriage, which

      it amended in December following the parties’ motions to correct error. The

      amended decree addresses Husband’s 1977 Fund pension as follows:


               46. The Court finds that the period of time from the date of
               [Husband’s] employment (February 7, 1994) until the Date of the
               Decree (July 5, 2017) to be a total period of 281 months.
               However, the parties were not married for the first 40 months of
               [Husband’s] employment, and there was [a] 24-month period of
               time in 2002-3 in which [Husband] was not working and
               contributing to his pension. Therefore, the pension vesting
               period was 217 months. (281 months – 64 months). Thus, the
               percentage of the pension earned during the marriage is 77.2%
               (217 divided by 281). [Wife] is entitled to half of that amount, or
               38.6%.


                                                    *****


               48. [Wife] presented evidence in the form of a valuation report
               prepared by Dan Andrew[s] for [Husband’s] 1977 Police and
               Firefighter pension. (Exhibit 2A). The Court accepts . . .
               Andrew[s’] valuation and places a value of $1,278,133.26 on said
               pension. However, only 77.2% of that amount was earned
               during the marriage, or $986,718.83.


      Appellant’s App. Vol. II p. 24. The court then divided the $986,718.83 equally,

      awarding Husband and Wife each $493,359.42. Id. at 27 (Finding 59). As to

      how Wife would receive her share of Husband’s pension, the court explained:


      Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018       Page 6 of 23
               62. Because the parties do not have sufficient assets to divide the
               value of [Husband’s] pension, the Court elects to divide the
               monthly benefit instead.


               63. [Husband’s] pension benefit at age 52 is calculated to be
               $3,254.86 per month . . . . [Husband] could apply for a reduced
               pension benefit January 1, 2017 in the amount of $2,894.22.
               (Exhibits 1, 2A, 2B, 2C).


               64. Upon his retirement, [Husband] shall forward 38.6% . . . of
               his monthly pension each month to [Wife], as a [QDRO] is not
               possible with the Firefighter Pension. Because [Husband] . . .
               cannot determine his income tax liability before his earnings are
               calculated, [Husband] shall forward the pension amount directly
               to [Wife] and, each year, issue her a Form 1099 for her share of
               the pension.


               65. The Court chooses this method of distributing [Husband’s]
               pension due to the parties lacking sufficient resources to
               otherwise allocate sufficient assets and the inability of the
               pension to be divided by [QDRO].


      Id. at 28.4


[9]   As for Wife’s request for spousal maintenance, the court found:




      4
        This method of distributing Husband’s retirement benefits is referred to as the deferred-distribution method.
      Under this method, the court makes no immediate division of the retirement benefits but determines the
      future benefits to which the non-owning spouse is entitled. Kendrick v. Kendrick, 44 N.E.3d 721, 726 (Ind. Ct.
      App. 2015), trans. denied. Traditionally, the benefits have been stated as a share of the owning spouse’s future
      benefit, and payment can be ordered to come directly from the owning spouse. Id. Under the other method,
      the immediate-offset method, the court determines the present value of the retirement benefits and awards the
      non-owning spouse his or her share of the benefits in an immediate lump-sum award of cash or property
      equal to the value of his or her interest. Id.

      Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018                               Page 7 of 23
               74. The Court finds that [Wife] is disabled and in need of
               maintenance. [Wife] has been determined to be disabled by the
               Social Security Administration and receives Social Security
               Disability payments. [Wife] has been unable to work for several
               years.


                                                     *****


               82. The Court GRANTS [Wife’s] request for spousal
               maintenance. The Court has reviewed I.C. 31-15-7-2 and the
               trial exhibits and agrees that [Wife] is in need of spousal
               maintenance. While [Wife] does currently receive disability
               income, it is not sufficient to sustain her needs. Pursuant to I.C.
               31-15-7-2(3), the Court finds that [Husband] shall pay to [Wife]
               the sum of $1,000.00 or 16.2% of his monthly income as
               rehabilitative maintenance for a period of twenty-four (24)
               months.


       Id. at 29-30. Finally, the trial court ordered Husband and Wife to pay their own

       attorney’s fees:


               86. Each party will receive sufficient funds from the sale of the
               marital residence out of which to pay his or her attorney fees.
               Accordingly, each party shall be responsible for his or her
               attorney fees and costs.


       Id. at 30.


[10]   Wife now appeals, and Husband cross-appeals.




       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018          Page 8 of 23
                                  Discussion and Decision
                            I. Husband’s Firefighters’ Pension
[11]   It is well settled that in a dissolution action, all marital property, whether

       owned by either spouse before the marriage, acquired by either spouse after the

       marriage and before final separation of the parties, or acquired by their joint

       efforts, goes into the marital pot for division. Ind. Code § 31-15-7-4(a);

       Falatovics v. Falatovics, 15 N.E.3d 108, 110 (Ind. Ct. App. 2014). “Final

       separation” generally means the date that the petition for dissolution of

       marriage is filed. Ind. Code § 31-9-2-46. “Property” is defined in part as all the

       assets of either party or both parties, including:


               (1) a present right to withdraw pension or retirement benefits;


               (2) the right to receive pension or retirement benefits that are not
               forfeited upon termination of employment or that are vested (as
               defined in Section 411 of the Internal Revenue Code) but that are
               payable after the dissolution of marriage; and


               (3) the right to receive disposable retired or retainer pay (as
               defined in 10 U.S.C. 1408(a)) acquired during the marriage that
               is or may be payable after the dissolution of marriage.


       Ind. Code § 31-9-2-98(b). “The requirement that all marital assets be placed in

       the marital pot is meant to insure that the trial court first determines that value

       before endeavoring to divide property.” Montgomery v. Faust, 910 N.E.2d 234,

       238 (Ind. Ct. App. 2009). “Indiana’s ‘one pot’ theory prohibits the exclusion of

       any asset in which a party has a vested interest from the scope of the trial

       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018         Page 9 of 23
       court’s power to divide and award.” Falatovics, 15 N.E.3d at 110 (quotation

       omitted). While the trial court may decide to award a particular asset solely to

       one spouse as part of its just and reasonable property division, it must first

       include the asset in its consideration of the marital estate to be divided. Id.


[12]   After determining what constitutes marital property, the trial court must then

       divide the marital property under the presumption that an equal division is just

       and reasonable. Barton v. Barton, 47 N.E.3d 368, 379 (Ind. Ct. App. 2015),

       trans. denied. This presumption may be rebutted by relevant evidence that an

       equal division would not be just and reasonable, such as the extent to which the

       property was acquired by each spouse before the marriage. Ind. Code § 31-15-

       7-5. However, the trial court must state its reasons for deviating from the

       presumption of an equal division in its findings and judgment. Barton, 47

       N.E.3d at 379.


[13]   We first note that Husband does not argue on appeal that his 1977 Fund

       pension is not “property” because it was not vested when Wife filed for divorce.

       See In re Marriage of Adams, 535 N.E.2d 124, 125-26 (Ind. 1989) (holding that a

       police pension that vested after the dissolution petition was filed but before the

       dissolution decree was entered was “property” according to Section 31-19-2-

       98(b)(2)5 as a right to receive pension or retirement benefits not forfeited upon

       termination), reh’g denied; see also Kirkman v. Kirkman, 555 N.E.2d 1293, 1294




       5
           At the time of Adams, this statute was located at Indiana Code section 31-1-11.5-11 (repealed in 1997).


       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018                               Page 10 of 23
       (Ind. 1990) (applying Adams to situation where the husband’s pension vested

       after the dissolution decree was entered and concluding: “In contrast to Adams,

       Danny Kirkman’s right to pension benefits was neither vested nor had it

       become ‘not forfeited upon termination’ prior to the entry of the dissolution

       decree”); but see Granzow v. Granzow, 855 N.E.2d 680, 684 n.1 (Ind. Ct. App.

       2006) (calling into doubt Kirkman’s use of “the date of dissolution as the point

       on which to identify marital property subject to division”). Accordingly, we

       start from the premise that Husband’s 1977 Fund pension is marital property to

       be divided between the parties.


[14]   Wife argues that the trial court erred “by utilizing a coverture fraction” to

       exclude a portion of Husband’s 1977 Fund pension from the marital pot

       because it resulted in an unequal division of the marital property “without

       sufficient justification,” contrary to Indiana law. Appellant’s Br. pp. 8, 10. But

       it was Wife’s own expert who applied the coverture fraction to Husband’s

       pension (in both his report and at the hearing). See Tr. Vol. II p. 201 (Andrews

       testifying that Wife asked him to calculate the coverture). Wife has therefore

       invited any error concerning the trial court’s application of the coverture

       fraction to Husband’s pension. In any event, the trial court included Husband’s

       “pension rights” “in the marital pot.” Appellant’s App. Vol. II p. 24 (Finding

       47). The court explained, however, that it was setting aside a portion of the

       pension to Husband because it was earned before the parties’ marriage; the

       court then equally divided the rest of the pension. Id. (Finding 46). This

       satisfies Indiana law.

       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018     Page 11 of 23
[15]   Husband challenges the trial court’s division of his 1977 Fund pension.

       Specifically, he argues that the trial court improperly calculated the percentage

       of his pension that was earned during the marriage as 77.2%. He claims that

       the percentage should be lower, because the court improperly included pension

       rights that he earned after Wife filed for divorce. Husband is correct.


[16]   The court calculated 77.2% using a coverture fraction. Specifically, the court

       found:


               46. The Court finds that the period of time from the date of
               [Husband’s] employment (February 7, 1994) until the Date of
               the Decree (July 5, 2017) to be a total period of 281 months.
               However, the parties were not married for the first 40 months of
               [Husband’s] employment, and there was [a] 24-month period of
               time in 2002-3 in which [Husband] was not working and
               contributing to his pension. Therefore, the pension vesting
               period was 217 months. (281 months - 64 months). Thus, the
               percentage of the pension earned during the marriage is 77.2%
               (217 divided by 281). [Wife] is entitled to half of that amount, or
               38.6%.


       Appellant’s App. Vol. II p. 24 (emphasis added). The court then ordered

       Husband to forward 38.6% “of his monthly pension each month” to Wife. Id.

       at 28 (Finding 64).


[17]   Determining the portion of a pension that was earned during a marriage “is one

       of the most difficult tasks in all of equitable distribution.” 2 Brett R. Turner,

       Equitable Distribution of Property 3d, Defined Benefit Plans: The Coverture

       Fraction § 6.25 (Nov. 2017 update). Because neither the employer nor the


       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018      Page 12 of 23
       employee normally makes specific contributions to such a plan, the court

       cannot use a proration of funds. Id. Rather, the court can use a proration of

       time. Id. This proration is used to determine the coverture fraction, that is, the

       portion of the pension that was earned during the marriage.6 Id. There are two

       formulas used to calculate the coverture fraction. The first one, which a “large

       majority” of courts use, is the date-of-retirement approach:


       Date-of-retirement coverture fraction                =       creditable time during marriage
                                                                    total creditable time

       Id.; see also Morey v. Morey, 49 N.E.3d 1065, 1071 (Ind. Ct. App. 2016)

       (explaining that the numerator is the period of time during which the marriage

       existed while pension rights were accruing and the denominator is the total

       period of time during which pension rights accrued). For example, if the

       employee is employed for 20 years, 12 of which occurred during the marriage,

       then 12/20 or 60% of the pension was earned during the marriage. Turner,

       supra, § 6.25. To compute the total marital interest in the pension, the fraction

       is multiplied by the employee’s monthly benefit at retirement. Id.


[18]   The second formula, which a “small but significant minority” of courts use, is

       the date-of-divorce approach:


       Date-of-divorce coverture fraction                   =       creditable time during marriage
                                                                    total creditable time at divorce




       6
        According to Turner, “marital share fraction” is more accurate terminology than “coverture fraction.”
       Turner, supra, § 6.25 at n.0.50.

       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018                          Page 13 of 23
       Id. Although the numerators are the same in both formulas, this fraction uses

       total creditable time at divorce as the denominator, because the fraction is

       multiplied by what the monthly payment would be at divorce. Id. As Turner

       explains it, “[d]ifferent formulas are required because the denominator of the

       fraction must match exactly the period of time over which the employee

       acquired the benefit by which the fraction is being multiplied.” Id. For

       example, an employee works 30 years: 5 years before the marriage, 15 years

       during the marriage, and 10 years after the marriage. According to the evidence

       presented, the employee’s pension payment would have been $1000 per month

       had he retired at divorce. Thus, the coverture fraction is years married divided

       by years of employment at divorce, or 15/20 (75%). Id. To compute the total

       marital interest in the pension, the fraction is multiplied by what the monthly

       payment would be at divorce (not the actual pension payment, which

       presumably would be larger), 75% x $1000 per month= $750 per month. Id.


[19]   Here, the trial court did not use either formula. We therefore remand this case

       with instructions for the court to re-calculate the coverture fraction,

       acknowledging that Husband has since turned fifty-two and might be retired.

       To assist the trial court, we illustrate how each of the formulas would work in

       this case.


[20]   Using the date-of-divorce approach, the numerator of the coverture fraction is

       the creditable time during marriage, which is calculated from November 15,

       1997, the date of marriage (since Husband was already accumulating pension



       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018      Page 14 of 23
       benefits when the parties got married),7 to October 25, 2011, when Wife filed

       for divorce. See Barton, 47 N.E.3d at 380 & n.15 (calculating the numerator

       from the date of marriage to the date the dissolution petition was filed); Turner,

       supra, § 6.25 at n.28 (explaining that the ending date for the numerator is the

       “date of classification,” which in Indiana is the date of “final separation”). This

       is a period of 167 months.8


[21]   The denominator is the total creditable time at divorce, which is calculated

       from February 7, 1994 (Husband’s date of hire) to October 4, 2016 (date

       Husband’s pension was valued).9 This is a period of 271 months. 167/271 is

       61.62%.10 To compute the total marital interest in the pension, 61.62% is

       multiplied by Husband’s estimated monthly benefit amount of $3254.86

       (calculated by INPRS as though Husband had separated from service on

       October 4, 2016, and would apply for an unreduced retirement benefit when he




       7
        The earliest starting date is the date of marriage. However, the date of marriage is not always the starting
       date because the employee could have started working after the date of marriage. In such a case, the date
       would be the date the employee started earning pension rights.
       8
         Although Husband testified, and the trial court found, that Husband did not accrue pension rights for
       twenty-four months while he was “medically retired,” INPRS and Andrews said he did. See Exs. 1 & 2C; see
       also Ind. Code § 36-8-8-12(e) (“Time spent receiving disability benefits, not to exceed twenty (20) years, is
       considered active service for the purpose of determining retirement benefits.”); Tr. Vol. II p. 218 (Andrews
       testifying that “time off on disability in the 77 Plan counts as time served”). Therefore, the twenty-four
       months should be included.
       9
         If Husband’s pension could have been valued on the date Wife filed for divorce, that date presumably
       would have been used. However, Husband’s pension was not vested when Wife filed for divorce and
       therefore had no value (other than Husband’s member contributions). Neither party objected to using
       October 4, 2016.
       10
            This is almost the same number that Andrews calculated—61.52%. See Tr. Vol. II p. 202; see also Ex. 2A.


       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018                              Page 15 of 23
       turned fifty-two in July 2018), which is $2005.64. According to the trial court’s

       finding, Wife would be entitled to 50% of this monthly payment, or $1002.82.


[22]   The date-of-retirement approach can also be used. As with the date-of-divorce

       approach, the numerator is 167 months. However, the denominator, the total

       creditable time, cannot be determined until Husband retires. If, on remand,

       Husband has retired, the denominator would be from February 7, 1994

       (Husband’s date of hire), to Husband’s date of retirement. To compute the total

       marital interest in the pension, the resulting fraction would be multiplied by

       Husband’s actual monthly pension payment. If, however, Husband is still

       working, this formula can be used, but the denominator cannot be calculated

       until Husband retires. Likewise, the monthly benefit amount would be not

       known until Husband retires. If, on remand, Husband is still working, the trial

       court may place the formula in its order for the parties to calculate at Husband’s

       retirement.


[23]   Husband’s next argument addresses taxes on Wife’s portion of his pension.

       According to Indiana Code section 31-15-7-7, “The court, in determining what

       is just and reasonable in dividing property under this chapter, shall consider the

       tax consequences of the property disposition with respect to the present and

       future economic circumstances of each party.” Here, the trial court ordered

       Husband, upon retirement, to forward a percentage of his monthly pension

       payment each month “directly to [Wife] and, each year, issue her a Form 1099

       for her share of the pension.” Appellant’s App. Vol. II p. 28 (Finding 64); see

       Cross-Appellee’s Br. p. 6 (stating that the trial court was likely referring to Form

       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018     Page 16 of 23
       1099-R). Husband contends that Form 1099-R is not the proper way to

       transfer the tax burden on Wife’s portion of his pension to her. We agree.


[24]   According to the IRS, Form 1099-R should be filed “for each person to whom

       you have made a designated distribution or are treated as having made a

       distribution of $10 or more from,” among other things, retirement plans and

       pensions. IRS, About Form 1099-R, https://www.irs.gov/forms-pubs/about-

       form-1099-r. But Wife is not receiving a distribution from her pension; rather,

       Husband is receiving a distribution from his pension and then giving Wife a

       portion of it as part of the property settlement. Once Husband retires and starts

       receiving his pension, he will receive a Form 1099-R from INPRS for the full

       amount of his annual benefit and thus be responsible for taxes on the full

       amount. Accordingly, Form 1099-R is not a proper way to transfer Wife’s tax

       burden to her.11 On remand, the trial court can address the tax consequences by

       reducing Wife’s percentage of Husband’s monthly pension payment to account

       for the fact Husband is paying taxes on her portion. Or, if Husband has retired

       and his monthly pension payment is known, the trial court can determine the

       net, or after-tax, amount of Husband’s monthly pension payment based on his




       11
         As explained earlier, Husband’s 1977 Fund pension is not subject to a QDRO. However, when a deferred-
       distribution award is implemented through a QDRO, the plan administrator gives a separate benefit check to
       each spouse, and each spouse is responsible for his or her own tax consequences. 2 Brett R. Turner,
       Equitable Distribution of Property 3d, Defined Benefit Plans: Deferred Distribution Method § 6.32 (Nov. 2017
       update).

       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018                           Page 17 of 23
       withholding12 and then multiply the coverture fraction by Husband’s net

       monthly pension payment.


                                      II. Maintenance Award
[25]   Wife contends that the trial court erred in awarding her “rehabilitative”

       maintenance instead of “incapacity” maintenance. Spousal-maintenance

       awards in Indiana are “restricted to three, quite limited options”: incapacity,

       caregiver, and rehabilitative. In re Marriage of Gertiser, 45 N.E.3d 363, 367 (Ind.

       2015) (quotation omitted). Indiana Code section 31-15-7-2 sets forth the

       requirements of each:


               A court may make the following findings concerning
               maintenance:


               (1) If the court finds a spouse to be physically or mentally
               incapacitated to the extent that the ability of the incapacitated
               spouse to support himself or herself is materially affected, the
               court may find that maintenance for the spouse is necessary
               during the period of incapacity, subject to further order of the
               court.


               (2) If the court finds that:




       12
          According to INPRS, it must “withhold federal taxes on monthly payments. You may choose not to have
       taxes withheld. Make sure to complete the tax withholding forms when you apply for benefits.” INPRS,
       [1977 Fund] Member Handbook: Taxation of Retirement Benefits,
       https://www.in.gov/inprs/77fundmbrhandbooktaxationofrtmtbenefits.htm. If the trial court is worried that
       Husband will withhold too many taxes, thus decreasing the amount that Wife receives each month, the court
       can order Husband to withhold a specific amount.

       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018                        Page 18 of 23
                 (A) a spouse lacks sufficient property, including marital
                 property apportioned to the spouse, to provide for the
                 spouse’s needs; and


                 (B) the spouse is the custodian of a child whose physical or
                 mental incapacity requires the custodian to forgo
                 employment;


        the court may find that maintenance is necessary for the spouse
        in an amount and for a period of time that the court considers
        appropriate.


        (3) After considering:


                 (A) the educational level of each spouse at the time of
                 marriage and at the time the action is commenced;


                 (B) whether an interruption in the education, training, or
                 employment of a spouse who is seeking maintenance
                 occurred during the marriage as a result of homemaking or
                 child care responsibilities, or both;


                 (C) the earning capacity of each spouse, including
                 educational background, training, employment skills, work
                 experience, and length of presence in or absence from the
                 job market; and


                 (D) the time and expense necessary to acquire sufficient
                 education or training to enable the spouse who is seeking
                 maintenance to find appropriate employment;


        a court may find that rehabilitative maintenance for the spouse
        seeking maintenance is necessary in an amount and for a period


Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018         Page 19 of 23
               of time that the court considers appropriate, but not to exceed
               three (3) years from the date of the final decree.


[26]   In the absence of an agreement between the parties, the trial court’s authority in

       ordering maintenance is limited to these three statutory options. Cannon v.

       Cannon, 758 N.E.2d 524, 526 (Ind. 2001) (“Where none of these circumstances

       exist, a court may not order maintenance without the agreement of the

       parties.”). This is because the policy regarding spousal maintenance reflects a

       clear legislative intent to retain fairly strict limits on the power of courts to order

       maintenance without the consent of the parties. Id.


[27]   In its findings, the trial court quoted only Section 31-15-7-2(1), which addresses

       incapacity maintenance, but then found that Wife was “disabled” and entitled

       to “rehabilitative maintenance” under Section 31-15-7-2(3) for twenty-four

       months (unlike incapacity maintenance, which lasts for the duration of the

       incapacity until further order of the court, rehabilitative maintenance may not

       exceed three years from the date of the final decree). 13 However, the trial

       court’s findings do not address the requirements for rehabilitative maintenance.

       And Wife concedes that “[t]here is no evidence of record which would support

       a finding of ‘Rehabilitative Maintenance.’” Appellant’s Br. p. 12. Further

       adding to the confusion is the fact that the trial court found that Husband “does




       13
         Wife posits that the trial court awarded her rehabilitative maintenance for twenty-four months so that it
       ended “at approximately the time she will begin receiving her share of [Husband’s] monthly pension benefit.”
       Appellant’s Br. p. 13.

       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018                          Page 20 of 23
       not have the financial means to meet all the obligations this Court has now

       burdened him with and pay the spousal maintenance award.” Appellant’s App.

       Vol. II p. 30 (Finding 84) (emphasis added). Accordingly, we remand this case

       to the trial court with instructions to determine whether Wife is entitled to

       incapacity maintenance, taking into consideration Husband’s ability to pay.

       Barton, 47 N.E.3d at 375-77. If the court awards Wife incapacity maintenance,

       it should last for the “period of incapacity, subject to further order of the court.”


                                         III. Attorney’s Fees
[28]   Both Husband and Wife asked the trial court to order the other party to pay

       their attorney’s fees, but the court ordered Husband and Wife to pay their own

       fees. The court reasoned that they will each “receive sufficient funds from the

       sale of the marital residence.” Appellant’s App. Vol. II p. 30 (Finding 86).

       Wife contends that the trial court erred in not ordering Husband to pay her

       attorney’s fees. Pursuant to Indiana Code section 31-15-10-1, a trial court may

       order a party in a dissolution proceeding to pay a reasonable amount of the

       other party’s attorney’s fees. Barton, 47 N.E.3d at 377. The court has broad

       discretion in deciding whether to award attorney’s fees. Id.


[29]   In determining whether to award attorney’s fees in a dissolution proceeding,

       trial courts should consider the parties’ resources, their economic condition,

       their ability to engage in gainful employment and earn income, and other

       factors bearing on the reasonableness of the award. Id. A party’s misconduct

       that directly results in additional litigation expenses may also be considered. Id.


       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018      Page 21 of 23
       Consideration of these factors promotes the legislative purpose behind the

       award of attorney’s fees, which is to ensure that a party who would not

       otherwise be able to afford an attorney is able to retain representation. Hartley

       v. Hartley, 862 N.E.2d 274, 286-87 (Ind. Ct. App. 2007). When one party is in a

       superior position to pay fees over the other party, an award is proper. Id.


[30]   Wife argues that the court should have ordered Husband to pay her attorney’s

       fees of $22,000 due to her disability as well as Husband’s superior earning

       capacity and conduct during the divorce proceedings, such as his failure to

       appear at some of the hearings and his failure to fully comply with discovery.

       The trial court made several findings regarding the parties’ financial situation.

       That is, the court found that the parties were living “well above their means

       while married,” that a “balloon payment” on the mortgage became due during

       the dissolution proceedings, and that “[Husband] and [Husband] alone has

       been responsible for the obligations relating to the marital residence during the

       almost 6-year pendency of this case.” Appellant’s App. Vol. II p. 30 (Findings

       83 & 84). Although the trial court did not make any findings regarding

       Husband’s conduct, the trial court was well aware that the divorce had been

       pending for nearly six years. The trial court did not abuse its discretion in

       ordering each party to pay their own attorney’s fees. However, because this

       case is being remanded, the court can revisit the topic of attorney’s fees if it

       chooses.




       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018       Page 22 of 23
[31]   Affirmed in part and reversed and remanded in part.


       Riley, J., and Kirsch, J., concur.




       Court of Appeals of Indiana | Opinion 18A-DR-249 | November 16, 2018   Page 23 of 23
