## Facts

- John and Annette Peterson married in 1994 and separated in 2010.
- John, a private attorney, paid into Social Security during the marriage through mandatory payroll deductions.
- Annette, a Los Angeles County deputy district attorney, earned benefits in LACERA Plan E, a defined-benefit pension funded solely by the employer.
- Participation in LACERA Plan E excluded Annette from Social Security; federal Windfall Elimination and Government Pension Offset rules prevented her from receiving Social Security benefits on her own record or as John’s spouse.
- The parties stipulated that John’s Social Security benefits were his separate property under federal law and that Annette’s LACERA benefits earned during marriage were community property under California law.
- Annette sought an adjusted distribution of community property (including a reduced share to John of her LACERA benefits) to account for John retaining all of his Social Security benefits.
- The trial court ruled it could not consider or offset Social Security in dividing community property and divided the community interest in LACERA equally; Annette appealed.

## Issues

1. Whether a California court may consider or offset one spouse’s Social Security benefits when dividing the community-property interest in the other spouse’s public pension earned in lieu of Social Security.
2. Whether the Social Security Act preempts a state court from using Social Security benefits as a basis to adjust the division of other marital/community property.

## Decision

- The Court of Appeal affirmed.
- A court may not value, consider, or offset one spouse’s Social Security benefits to alter the division of the other spouse’s community-property pension.
- Federal law treats Social Security benefits as separate property insulated from transfer and legal process; an offset would be an impermissible indirect division.
- Annette’s LACERA benefits earned during marriage remained community property and were properly divided equally.

## Legal Principles

- The Social Security Act (including 42 U.S.C. § 407(a)) prevents Social Security benefits from being assigned, transferred, or subjected to legal process, and this protection preempts contrary state dissolution rules.
- A state court may not do indirectly—by reallocating other marital assets—what it cannot do directly, i.e., divide or invade Social Security benefits.
- In California, public pension rights earned during marriage are community property and must be divided equally absent statutory authority to deviate.
- Inequities created by the interaction of Social Security rules and governmental pensions do not permit state courts to recharacterize Social Security or to adjust community-property division on that basis.

## Conclusion

The court held that federal law bars California courts from accounting for a spouse’s Social Security benefits through an offset or unequal distribution of other community assets, and it affirmed an equal division of the community interest in the non-Social-Security public pension.


In re Marriage of Peterson, 243 Cal. App. 4th 923, 197 Cal. Rptr. 3d 588 (Cal. Ct. App. 2016)