Military service can complicate a divorce in several ways. For example, deployment can greatly inhibit a serviceman or servicewoman’s ability to respond to a complaint. In addition, determining which courts and which states have jurisdiction can be difficult.
Military retirement pay is often a point of contention in divorce. Servicepersons and their spouses always have the option of reaching a mutually satisfactory divorce settlement. If the settlement is not grossly unfair to one person and if it is consistent with the best interests of the couple’s children, a court will likely approve it regardless of how it treats military retirement pay. If a court must intervene to divide the couple’s assets, it is likely to consider retirement pay as marital property.
The Uniformed Services Former Spouse Protection Act (USFSPA)
The first issue many divorcing couples confront is whether a state divorce court even has the authority to control how retirement benefits are issued. Since 1982, the answer has been “yes.” The USFSPA is a federal law that explicitly authorizes state courts to treat military retirement benefits as marital property pursuant to the laws of the state in which the court sits. State courts are not compelled to do so, but nearly all of them do. The sole exception is Puerto Rico, which does not treat military retirement pay as divisible.
The USFSPA requires state courts to award retired pay either as a percentage of the retired person’s pay or as a fixed dollar amount. It’s worth noting that awards of a fixed dollar amount are not eligible to receive cost of living increases from Defense Finance and Accounting Services (DFAS). Former spouses are entitled to other benefits pursuant to other rules and regulations, including medical benefits, commissary and post exchange access, and survivor’s benefits.
Not all retirement pay is divisible. A court may only divide disposable pay. It is defined as gross pay less the amount of disability pay that the service member is receiving, the amounts being forfeited pursuant to the disposition of a court-martial, and amounts being paid to previous spouses.
Disabled veterans waive a certain percentage of retired pay in lieu of receiving disability pay, which is not taxable. However, states differ in how they treat disability pay.
What Determines The Division Of Marital Assets?
Since the USFSPA allows courts to treat retired pay as marital property, determining the precise amount to which each party is entitled can be difficult. DFAS recommends – but does not require – that state courts use a formula consisting of half the amount of time that the spouse was married to the serviceman or servicewoman while he or she was in the service divided by the total amount of time that he or she was in the service. However, these are merely recommendations. Courts will ultimately award retired pay in accordance with the laws of their respective states.
State laws fall along one of two lines. A minority of states follow the community property rule, where each spouse is entitled to exactly half of the value of the marital assets. In such states, the value of military retirement pay accrued over the course of the marriage is divided equally between the two spouses.
This may or may not entail dividing the actual retirement pay. If the spouse who is to receive the retirement pay has the assets to buy out the other, he or she may be able to do so.
Most states follow an equitable distribution rule, wherein the trial judge attempts to effect an equitable distribution. Such analyses hinge upon a myriad of factors and may or may not result in the serviceman or servicewoman’s benefits being considered marital property.
Courts have considerable latitude in how they rule on these matters. For example, if one spouse did not contribute to the marriage while the other spouse’s benefits were accruing, a court may rule that the benefits constitute separate property, and thus are not divisible.
A few states take the equitable distribution concept even further. In such states, separate property may be awarded as a part of a divorce decree. A service member may be ordered to pay a greater percentage of his or her retired pay if the judge believes that it is necessary to effect an equitable distribution.
Military Retirement Pay Vs. Private Retirement Assets
Awarding a portion of military retired pay is not like awarding a portion of a pension earned in the private industry. Private pensions are divided pursuant to a qualified domestic relations order, which orders the plan administrator to divide assets in a certain manner. The Department of Defense (DoD) has its own requirements. The DoD will not divide retired pay if the couple was not married for at least 10 years. Additionally, there are limits on the amount of compensation that the DoD will provide to the other spouse.
A trial judge still has the option of dividing assets in any manner consistent with state law. However, if one party is to receive benefits beyond the federal threshold, he or she must receive them from the other party.
The issues surrounding a military divorce are complicated and often confusing. If you or your spouse is serving in the armed forces and considering divorce, it is recommended that you speak with an experienced divorce lawyer. Doing so will help to ensure the process of dissolving your marriage and splitting the marital property goes as smoothly as possible.