Divorce rates in the military appear to be higher than in the civilian population and the Military divorce has unique issues that a civilian divorce does not contain. Military service can add extra stress to a marriage due to financial and deployment reasons. Certain federal laws pertain to military retired pay, protections to service members, special jurisdiction requirements, and unique enforcement of court orders. For example, for non-payment of child support, you can go to the service member’s commanding officer for enforcement of a court order. You also may have to locate your spouse somewhere in the world. Service of process may be more difficult. In addition, adultery is a crime in the military, while state law may not consider adultery as an issue in a divorce. Adultery could lead to early discharge from the military affecting future benefits for both parties. The military also has its own system requiring service members to pay temporary support immediately after a divorce is filed. (The Service member must provide support to dependents in an amount equal to his full housing allowance at the “with dependent” rate. If the couple is not legally separated, the spouse may need to request that an allotment be made against the service member’s pay.) Interpretation of military pay and how it can affect child support, property settlements, and alimony can be complex.
Military pay computation can be complicated as it varies based on many factors including: pay grade, years of service, Basic Allowance of Housing, Basic Allowance for Subsistence, special skill pay, bonuses, hostile fire pay, and other factors. Housing is considered an “in-kind payment” like a company car provided by a private-sector employer. Some pay rules may be special rules applicable for only one year such as combat zone exclusion or a PCS move. Some allowances are tax free. So the gross pay must be adjusted upwards to compensate for the missing taxes which are often eliminated in child support calculations, providing an artificially low pay. Leave and Earnings Statements (LESs) should be obtained to calculate all pay and allowances.
To minimize the amount of pay the former spouse receives the language needs to read as such: Former Spouse is awarded as his/her sole and separate property the following portion of Service Member’s military retired pay:
One half of the fraction (years of marriage divided by Service Member’s years of service). Former spouse's portion of the military retirement shall be based on the high 36 month base pay at the time of the divorce, which the court has determined to be $____. Former Spouse shall receive COLA adjustments after Service Member retires.
Otherwise the Former Spouse will be entitled to your future value of your retirement income (including all promotions and raises) and not the value at the time of the divorce.
Some states may require payment of retired pay once the service member is eligible for retirement, even though the service member continues on active duty. Most states do not, but beware that this can become an issue.
Military Retired Pay is considered property in a divorce (and yet in other cases income and is taxed as income) and can be divided during divorce proceedings per state law. However, special attention must be paid to a couple of laws to properly divide military pay in a divorce.
The Uniformed Services Former Spouses’ Protection Act (USFSPA) (10 U.S.C. 1408) applies to all active duty, reserve/guard, retired military, Coast Guard, U.S. Public Health Service, and the National Oceanographic and Atmospheric Administration. The USFSPA allows state courts in a divorce to award up to 50% of a military member’s retired pay (or 65% if it includes court-ordered child support). Courts could award more but the Defense Finance and Accounting System (DFAS) will only pay that amount, the rest is up to the service member to pay. It would be wise to check with DFAS for proper wording of a decree prior to the judge signing a decree as the specific wording is governed by strict rules.
Jurisdiction: In a military divorce there may be 3 jurisdictions for filing: legal residence of the service member, legal residence of the spouse, and the state the service member is stationed in. The SCRA (50 U.S.C. App. 501) provides protections to the service member that need to be reviewed, and allows the service member to live in one state and yet claim another state as their legal residence, but that is not true for the spouse whose legal residence is usually the state he/she is residing in. Minimum residency requirements may pertain for filing. The SCRA also allows a stay at the discretion of the court for the duration of time on active duty plus 60 days. However, a motion must be made to the court, and the divorce must still be dealt with at some point. If a divorce is inevitable, it may be in the service member’s interest to get the divorce as soon as possible as the portion of military retirement claimed by the spouse will increase in time.
Another issue involving jurisdiction concerns child custody. The Uniform Child Custody Jurisdiction and Enforcement Act as enacted by each state influences whether the state has jurisdiction over child custody determinations. In Iowa, Code § 598B covers the court’s jurisdiction. The criteria is specific and if not met, a state cannot make a child custody order except for emergencies. This jurisdiction is different from the jurisdiction under USFSPA, and the personal jurisdiction of either the spouse or the service member.
USFSPA requires jurisdiction for enforcement of property awards. Jurisdiction must be by reason of : residence, other than military assignment in jurisdiction of court; domicile in jurisdiction of court; or consent to jurisdiction to court (section 1408(c)(4)). State jurisdiction may not be sufficient under the USFSPA for property awards, but may be sufficient for alimony or child support awards. The court must be a court of competent jurisdiction of any State, D.C., Puerto Rico, Guam, American Samoa, Virgin Islands, Northern Mariana Islands, and Trust Territory of the Pacific Islands. Foreign court orders may not be sufficient. There must be an agreement with the U.S. requiring the U.S. to honor any court order of the country.
USFSPA requires a court order which means a final decree of divorce, dissolution, annulment, or legal separation issued by a court, or a court ordered, ratified, or approved property settlement incident to such a decree, or a support order, as defined in section 453(p) of the Social Security Act (42 U.S.C. 653(p)), which is issued in accordance with the laws of jurisdiction of that court and provides for payment of child support (as defined in 42 U.S.C. 659(i)(2))), payment of alimony as defined in section 659(i)(3), or division of property which specifically provides for the payment of an amount, expressed in dollars or as a percentage of disposable retired pay, from the disposable retired pay of a member to the spouse or former spouse of that member.
A final decree means a decree from which no appeal may be taken or from which no appeal has been taken within the time allowed for taking such appeals under the laws applicable to such appeals, or a decree from which timely appeal has been taken and such appeal has been finally decided under the laws applicable to such appeals.
Disposable retired pay is defined in 10 U.S. Code 1408(a)(4) of P.L. 97-252 as amended by P.L. 99-661, Nov. 14, 1986 and Section 555 of P.L. 101-510, Nov. 5, 1990. Disposable retired pay is the gross monthly pay entitlement, including renounced pay, less authorized deductions. For divorces effective on or after February 3, 1991, the authorized deductions are:
a. Amounts owed to the U.S. for previous overpayments of retired pay and recoupments required by law
b. Forfeitures of retired pay ordered by court-martial
c. Amounts waived in order to receive compensation under Title 5 or 38 of U.S.C.
d. Premiums paid as result of election under 10 U.S.C. Chapter 73 to provide an annuity to a spouse or former spouse to whom payment of a portion of such member’s retired pay is being made pursuant to a court order.
e. Amount of member’s retired pay under 10 U.S.C. Chapter 61 computed using the percentage of the member’s disability on the date when the member was retired (or date member’s name was placed on the temporary disability retired list).
The former spouse must have been married to the service member for 10 years or more during the time when the service member performed at least 10 years of service creditable for retirement. (10 U.S.C. 1408(d)(2). This requirement cannot be waived for property payments, but does not apply to alimony or child support payments. Ten years of marriage does not entitle a former spouse to military retired pay, but provides that a former spouse may receive direct payment of up to 50% of disposable retired pay when: the former spouse was married to a service member for 10 years or more concurrent with creditable service for retirement and a court treats the military retired pay as marital property.
This does not mean that if you are married less than 10 years that you cannot be awarded a portion of the military retirement. In fact, you can be awarded a portion of the retirement and never have been married to the service member during his/her military career. The USFSPA only means that DFAS will only pay directly if the couple was married 10 years or more during the 10 years of service. DFAS will only pay a maximum of 50% of disposable income. If there are two spouses filing, only 50% will be paid out. It is first come, first served as to who receives the 50%. Also, just because the marriage was for 10 years doesn’t mean that a former spouse can automatically receive retired pay. The service member must also be eligible to retire. A spouse cannot receive something that the service member cannot even receive.
There is no statute of limitations for reopening divorce decrees to be awarded back-payments and interest for retired pay. Former spouses can be awarded back payments and interest provided the divorce court judge follows the USFSPA. However, there are special rules for reopening divorces prior to June 21, 1981.
Many Spouses are also beneficiaries of the Survivor Benefit Plan (SBP) while married. SBP is an annuity that continues to pay retirement benefits with the death of the retiree. Otherwise retirement benefits terminate upon death of the retiree. If divorce occurs after retirement and the service member had initially elected SBP, the divorce terminates SBP. SBP can continue voluntarily to honor an agreement between the parties or to comply with a court order. Typically the spouse is seeking a court order to continue the SBP and the wording must be correct in the order. A member may elect former spouse SBP coverage for a former spouse who was originally a spouse beneficiary under SBP provided that the parties were divorced after the member became eligible to receive retired pay. In addition, a former spouse may initiate SBP coverage on her own behalf provided the election was made within 1 year of issuance of the court order requiring SBP coverage (deemed election coverage) All court orders requiring SBP coverage should be sent to the Retired Pay office. SBP Information.
Veterans Administration compensation needs to be considered. If the service member is still on active duty but has a disability, he/she may be eligible for VA compensation which reduced his/her retired pay under the rules prior to 2004. Prior to 2004, only one check was received for combined retired pay and VA disability pay. After 2004, two checks are received. For disabilities other than VA, there is a sliding scale. For all ratings 50% or greater, over a 10 year period, the service member will receive gradually increasing amounts of money until by 2013 he will receive his full retired pay and full VA disability pay. The result is that the spouse will no longer lose her interests if the service member gets VA disability pay.
Consider separation bonuses. If the service member leaves active duty prior to retirement, but receives a bonus, consideration must be given as to whether the bonus is considered as marital property. If the member then joins the reserve or guard, there may be restrictions or pay backs on the bonus.
Consideration must be given to how to compute retirement time for reserve or guard members. Consider bad years or inactive, IRR years, or non-paid status years.
USFSPA often requires a clarifying order to determine the award. Military retired pay is a federal government entitlement and not a pension plan so ERISA does not apply (such as requiring a QDRO). A Qualified Domestic Relations Order (QDRO) is not required if the court order specifies the former spouse’s award in the court order. USFSPA requires that an award of a portion of a service member’s retired pay as property must be expressed in dollars or as a percentage of disposable retired pay. (section 1408 (a)(2)(C)).
Assuming military retirement is a pension plan is a common mistake. There is no money set aside for military retirement as in a pension plan, and the plan cannot be valued as a pension plan is valued. If the retiree dies, the retirement dies with him/her. The money is paid out of the budget annually with Cost of Living Allowances (COLAs) and offsets due to VA disability pay. The difference between a pension and retired pay is tremendous and can create very costly mistakes. Retirement is based on points (active duty for 20 years is about 7305 points). Retirement at 20 years of active duty equates to about 50% of base pay with an increase yearly to about 75% of base pay after 30 years of active duty.
If the award is expressed as a formula or hypothetical retired pay amount, the only number that can be supplied by the Defense Finance and Accounting Services will be the years of creditable service. All other information must be in the court ordered formula. Reservists must have the number of “points” earned during the marriage included in the order.
Problems often occur based on the computation of retired pay. Unless a formula is provided by the court, retired pay is based on rank at retirement and time in service. States often calculate payment as rank at date of divorce and retired pay at date of divorce. The two calculations are not the same and need a clarifying order. The former spouse is not strictly entitled to half the retirement pay, but half of the points accumulated during the marriage. Thus, it is crucial to calculate the number of points accumulated during the marriage. This becomes crucial especially if there is a mixture of active and reserve duty.
USFSPA also does not allow for award of disability pay. Disability pay is deducted by DFAS prior to calculating disposable retired pay for division to the spouse. Disability pay is subject to garnishment for alimony or child support though.
Payments to the former spouse begin not later than 90 days after effective service of application for payments on the agent (section 1408(d)(1)). This allows time for processing the application and notice to the service member. The member has 30 days from the date of notice to provide evidence as to why the payments should not begin. Payments may not begin until after the 30 day notice. Payments terminate if the service member dies. Payments also begin within 90 days after entry into the retired ranks if the order was submitted before retirement. Note that reservists cannot receive retired pay until the age of 60.
Additionally if the service member dies before retirement, no retirement is paid to the former spouse. If the former spouse dies, the service member must send proof of death to stop the payments otherwise the payments continue. Payments also continue after the former spouse remarries unlike other government retirement plans.
Taxes are paid by the former spouse on the payments to the former spouse. Taxes by the service member are only paid on the retirement income received by the service member (not the payments to the former spouse).
USFSPA does not provide for collection of arrearages of property or alimony payments. Child support arrearages may be collected under section 1408(d)(6). Alimony and child support may also be collectible by garnishment under 42 U.S.C. 659.
Cost of Living Allowance increases (COLA) are payable only for awards based on a division of retired pay awarded as a percentage or fraction of the retired member’s retired pay. (Vol 7b, DoD FMR Chapter 29, Subchapter 290902).
USFSPA also covers commissary and exchange privileges and military care provisions that should also be covered in the military divorce. These benefits are created under federal law and will supersede your settlement agreement unless you specifically ask for them. If you were married for 20 years or more, the military member performed at least 20 years of service creditable for retirement, and there was at least a 20 year overlap of the marriage and the military service (20/20/20 rule), then you are eligible for medical coverage (and the other benefits), and your dependent children continue to receive coverage. Check Tricare for more information.
If the spouse remarries the eligibility for benefits is terminated, but is reinstated if the subsequent marriage ends in divorce.
If the overlap is only for 15 years, then the former spouse is entitled to full military medical benefits only for a transitional period of five years following the divorce (20/20/15 rule).
If neither the 20/20/20 nor 20/20/15 rule applies then no military health benefits are available after divorce, but the former spouse is eligible for DOD Continued Health Care Benefit Program for 36 months of coverage until coverage can be obtained if they enroll within 60 days of losing full military health care benefits. Premiums are expensive running about $1000 per quarter per individual and $2000 for families.
Legal separation may be an important option if the marriage is less than 20 years in length to obtain the above benefits. Otherwise serious consideration should be made of the effects of falling short of the above rules before divorcing.
To apply for payments under USFSPA, a completed application form (DD Form 2293) signed by the former spouse, together with a certified copy of the Court order, within 90 days immediately preceding its service sent personally, by fax, or by mail to Defense Finance and Accounting Service, Cleveland Center, Code L, PO Box 998002, Cleveland, OH 44199-800 (phone 216-522-5301). Photocopies of certified documents are acceptable. The application form should state which awards the former spouse is seeking to enforce under the Act (alimony, child support, and/or division or retired pay as property). If the application does not so state, then only awards of retired pay as property will be enforced under the Act. A former spouse should also indicate the priority of awards to be enforced under the act, if there is not sufficient disposable income to cover multiple awards. The court order should contain sufficient information to determine whether the SCRA, Act’s jurisdictional and 10/10 requirements (if applicable) have been met. If the order does not contain the marriage date, then a photocopy of the marriage certificate must be included. If the former spouse is requesting child support, and the court order does not contain the birth dates of the children, then photocopies of their birth certificates must be included.
Common Mistakes made with the division of retired military pay include:
a. Not studying USFSPA and the implementing regulations.
b. Not understanding the special jurisdictional requirements of section 1408(c)(4) of the USFSPA.
c. Not understanding the rules on reopening divorces before June 21, 1981.
d. Not understanding the “10 year” rule in section 1408(d)(2) of the USFSPA.
e. Not understanding the special protections of the SCRA.
f. Preparing a QDRO to effect the division of military retired pay.
g. Not following the regulation when sending the application to the finance center
h. Not ensuring that the order is clear as to the portion of the retirement that the former spouse is to receive.
i. Not considering the rules about the effect of the death of the military member on payments to the former spouse.
Dividing Military Retirement
USFSPA Fact Sheet
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