II. The Law

A. Under federal law, courts cannot divide Social Security benefits
   The plain language of the Social Security Act forbids the division of social security benefits between two divorced spouses. 42 U.S.C. ss 407(a), 1304 1 . In Hisquierdo v. Hisquierdo , 439 U.S. 572, 99 S.Ct. 802 (1970), a case involving the allocation of railroad retirement benefits pursuant to a property division in divorce, the United States Supreme Court discussed the anti-assignment clause of the Railroad Retirement Act. The Court held that the clause prevents the assignment of railroad retirement benefits to the ex-spouse of a benefit recipient. Hisquierdo , 439 &.S. at 584-91, 99 S.Ct. at 810-13. The Court's opinion analogized to the Social Security Act, indicating that the Social Security Act also forbids a division of social security benefits in order to pay a divorced spouse. 439 U.S. at 575-77, 99 S.Ct. at 805-06. The Hisquierdo Court also noted that the Social Security Act's prohibition against division has two narrow exceptions for payments made to satisfy alimony or child support obligations, further indicating that any other attempts to assign benefits to a non-beneficiary were forbidden 2 . 439 U.S. at 576-77, 99 S.Ct. at 805-06. There has been little confusion since Hisquierdo , therefore, about the force of the Social Security Act's prohibition against division of social security benefits for the benefit of a divorced spouse. Such a division is forbidden.
   Despite the prohibition, courts have struggled with the inequities created by the statutory bar against dividing benefits, and they have attempted to find ways to resolve those inequities. In Illinois, the caselaw following Hisquierdo maintained a strict prohibition on dividing such benefits, but evolved to not only permit, but sometimes require a court to consider one party's future receipt of social security benefits pursuant to its determination of a just and equitable division of other marital property that leaves both parties financially secure. See, e.g., In re the Marriage of Benz , 165 Ill. App. 3d 273, 287-88, 116 Ill. Dec. 336, 344, 518 N.E.2d 1316, 1324 (Ill. App. Ct., 4th Dist., 1988) (appellate panel did not disapprove of trial court's consideration of social security benefits).
   This practice of "considering" social security benefits when dividing other marital property was not just employed in Illinois, but was also followed by many courts across the country. See In re the Marriage of Zahm , 138 Wash. 2d 213, 221-22, 978 P.2d 498, 502 (Wash., en banc. , 1999) ("a judge may consider a spouse's social security benefits as a factor coequal with others when determining an equitable division of any distributable marital assets" in order to equalize the parties' standards of living following the divorce); Eickelberger v. Eickelberger , 93 Ohio App. 3d 221, 227, 638 N.E.2d 130, 135 (Ohio Ct. App., 12th Dist., 1994) (when one spouse's pension is divisible but the other spouse's social security benefits are not, "a trial court should consider" the spouse's social security benefits before dividing marital assets); Pleasant v. Pleasant , 97 Md. App. 711, 720 n.3, 632 A.2d 202, 207 n.3 (Md. Ct. Spec. App. 1993) ("in an appropriate case, of course, it may be that a court could consider the fact that a party is receiving, or will receive, social security benefits . . . in determining whether to make a monetary award."); In re the Marriage of Knipp, 15 Kan. App. 2d 494, 495-96, 809 P.2d 562, 564 (Kan. Ct. App. 1991) (although a court cannot divide social security benefits, it can consider the value of the award in dividing other marital property); Holland v. Holland , 403 Pa. Super. 116, 119, 588 A.2d 58, 60 (Pa. Super. Ct. 1991) (approving the trial court's consideration of social security benefits in determining an appropriate division of other marital assets); Rudden v. Rudden , 765 S.W.2d 719, 720 (Mo. Ct. App., East. Dist., 1989) (social security benefits are not assignable as marital property, but they "are economic factors to be considered, along with other factors, in the disposition of the marital property" and other awards).
   In 2002, the Fourth Division of the Illinois Appellate Court not only approved of the principle that courts could consider social security benefits when determining the appropriate property division between a splitting couple, but it actually held that a trial court abused its discretion when it did not consider social security benefits pursuant to its property determination. In re the Marriage of Crook , 334 Ill. App. 3d 377, 268 Ill. Dec. 323, 778 N.E.2d 809 (Ill. App. Ct., 4th Dist., 2002). In Crook , the trial court divided the wife's pension benefits equally between the parties, and ignored the husband's social security benefits (which were substantially equal to the wife's benefits). 334 Ill. App. 3d at 380, 268 Ill. Dec. at 326, 778 N.E.2d at 312. In addition, the trial court ignored the husband's future social security benefits in determining a just division of the marital property and debt, which primarily included the wife's substantial family farm holdings. 334 Ill. App. 3d at 380-81, 268 Ill. Dec. at 326-27, 778 N.E.2d at 312-13. Under the trial court's determination, the husband would ultimately receive roughly three times the wife's retirement benefits, and the wife was assigned substantial debt that was related to marital property improvements on her family farm property but for which she had no income to service.
   The appellate panel in Crook affirmed the longstanding principle that social security benefits are not marital property and may not be directly or explicitly divided by state courts in divorce settlements, but also held that the trial court had abused its discretion in not considering the husband's future social security benefits in its division of other marital property. 334 Ill. App. 3d at 381-87, 268 Ill. Dec. at 827-32, 778 N.E.2d at 313-18. The panel advised the trial court to consider the husband's future receipt of substantial social security benefits and arrange a settlement that placed the parties in similar long-term financial situations. 334 Ill. App. 3d at 387 268 Ill. Dec. at 332, 778 N.E.2d at 318. Last month, however, the Illinois Supreme Court called an abrupt end to courts' consideration of social security benefits in their determination of the appropriate division of other material assets by reversing Crook on appeal.

Under the Illinois Supreme Court's holding in In Re Marriage of Crook, courts may not consider Social Security benefits in the division of other marital assets.

   The Crook decision that failing to consider one spouse's future receipt of social security benefits in determining a just property division constitutes an abuse of discretion was reversed on appeal to the Illinois Supreme Court last month. In re Marriage of Crook , __Ill.2d__, No. 95132, slip op. at 11 (Illinois June 24, 2004). In crafting its opinion, the Court emphasized that it was mindful both of the numerous courts around the country that allow the consideration of social security assets in determining a just property distribution (some of which are listed supra ), and of the potential inequity created by its decision. Nevertheless, it takes Congress' explicit prohibition on the division of assets literally, equates a court's consideration of social security benefits in determining the just division of other assets as an offset prohibited by the federal statute, and adheres strictly to the view "that it is not the province of this court--or of any state court--to interfere with the federal scheme, no matter how unfair it may appear to be." Id . at 11. Therefore, Illinois law now soundly precludes a court from either dividing a spouse's social security benefits or considering them in the context of a division of all other marital property during a dissolution proceeding.

III. Future direction of the law

   After Crook, attorneys may neither directly nor indirectly divide or consider social security benefits in the distribution of property between two divorcing individuals. Under the Illinois Supreme Court's holding, taking social security benefits into consideration in the division of all other marital assets is forbidden to the extent that the consideration has any substantive effect--or in other words, changes the ultimate division in any way. This will be inequitable--and potentially financially devastating--to clients who have not accrued retirement income in their own name.
   For practitioners, there are a few avenues to pursue in order to attempt a resolution of the inequity. First, as the Crook Court itself noted, The Illinois Marriage and Dissolution of Marriage Act requires a property division in "just proportions" based on an analysis of numerous factors including pension benefits. Id . at 3. Practitioners should therefore argue that when one party's social security benefits are exempt from division, the other party's own retirement benefits should likewise be exempt in order to achieve a division in "just proportions." Courts around the country have begun to adopt this approach, and it remains an open question in Illinois precedents. Id . at 12. See also Cornbleth v. Cornbleth , 397 Pa. Super. 421, 580 A.2d 369 (1990); Walker v. Walker , 112 Ohio App. 3d 90, 677 N.E.2d 1252 (1996); In re Marriage of Kelly , 198 Ariz. 307, 9 P.3d 1046 (2000). Although equalizing the treatment of social security benefits and pension benefits in property dissolutions may be more equitable for some couples, it fails to help spouses that worked inside the home (and therefore have no retirement benefits) and it fails to acknowledge that often, a husband draws substantially more retirement income than a wife due to many couples' allocation of responsibilities at home.
   Practitioners should also aggressively pursue a generous alimony award. This will be much more difficult, because it cannot appear that the alimony award is a back-door division of the social security benefits, or any kind of offset for the social security benefits. Nevertheless, practitioners should argue that an appropriate alimony award is necessary to protect a spouse who has no adequate means of support and ultimately, the other spouse's social security benefits may be tapped for any unpaid alimony pursuant to that award.
   On the other hand, attorneys for clients who will receive social security benefits should vigorously argue that even the existence of those benefits should be excluded from the dissolution record and proceedings. The Crook opinion makes clear that any form of consideration is prohibited, and the only reason to introduce the existence of benefits into the record is to in some way affect the division of property in favor of the non-beneficiary spouse. Likewise, the attorneys for clients who will receive social security benefits should be vigilant for awards or arguments in favor of property divisions and alimony awards that appear to be out of proportion to the pool of assets that does not include social security benefits.

Notes:
1. The Social Security Act does allow divorced spouses to collect a reduced benefit upon application if they are at least 62 years old, will not receive their own benefits in an amount equal to or greater than half of their ex-spouse's benefits, and are not remarried. See 42 U.S.C. ss 402(b)(1)(A)-(D), 402(c)(1)(A)-(D).
2. The Social Security Act has exceptions to the anti-assignment clause for the satisfaction of alimony and child support obligations. 42 U.S.C. ss 659(a).