Ex-Husband Not Liable For Tax Bill After Ex-Wife’s Pension Withdrawal
Tennessee case summary on tax liability and property division after in divorce.
Ebenezer Olusegun George v. Byrle Victoria Smith-George
Ex-Husband Not Liable For Tax Bill After Ex-Wife’s Pension Withdrawal
The husband and wife were divorced in Shelby County, Tennessee, after executing a marital dissolution agreement. The agreement provided that the wife was to be awarded a total of $450,000 from the husband’s retirement, and provided that there would be a qualified domestic relations order (QDRO) making the payment tax-free to wife.
With respect to one $90,000 payment called for under the agreement, the wife withdrew $125,000. Taxes were withheld, and the wife’s net payment was slightly more than the $90,000. The wife sought reimbursement of the almost $35,000 withheld taxes, and the husband refused to reimburse this amount. The wife then requested a judgment for the amount of the taxes, and the case was heard by Judge Jerry Stokes.
The trial court denied her any relief, and she appealed to the Tennessee Court of Appeals.
The appeals court agreed with the trial court that the taxes were the wife’s responsibility. She was aware of the terms of the pension, and she had signed the QDRO. Thus, she was aware of the tax ramifications. She was entitled to a lump sum payment of $90,000, but the appeals court agreed that she had received this, and was still entitled to the remainder of the interest in the pension.
The appeals court agreed that the tax liability was the result of the wife’s actions, and not the language of the QDRO or the dissolution agreement. Therefore, the husband had no obligation to reimburse her.
Even though the appeals court ruled in favor of the husband, it declined his request to award attorney’s fees for the unsuccessful appeal. The Court of Appeals affirmed the trial court and remanded the case.
The appellate court’s opinion was authored by Judge Arnold B. Goldin, and Judges Kenny Armstrong and Carma Dennis McGee joined.
No. W2020–01583-COA-R3-CV (Tenn. Ct. App. Jan. 19, 2022).
See original opinion for exact language. Legal citations omitted.
To learn more, see Property Division in Tennessee Divorce and view our video Is Tennessee a 50 50 divorce state?
