Dividing Military Retirement Pay in Divorce

Divorce is tough on everyone involved. For career military service personnel, one of the most hotly contested assets in divorce may be military retirement pay. Career service members need to know the facts about their military pension and how those retirement benefits might be divided in a divorce.

How many years do you have to be married before you can be awarded pension benefits?

There is not a minimum number of years a couple must be married to receive pension benefits. A state court may award a portion of the disposable military retired pay to the spouse even if the marriage lasted less than a year.

What is the Uniform Services Former Spouses Protection Act?

The Uniform Services Former Spouses Protection Act (USFSPA) is the federal statute governing how military retired pay is treated in divorce. It allows the state courts handling a service member’s divorce to treat the military pension as divisible property. Until the 2017 rule changes, the USFSPA allowed state courts to split retired pay 50/50 based on the value of that military pension at the time of retirement.

The new rules instituted the “frozen benefit rule". The former spouse has their benefits frozen the date the marriage is dissolved, and the spouse’s portion is based on the time in service and service member’s rank during the marriage.

Example:

Sam and Pat were married in 2010. At the time, Pat was a Second Lieutenant in the Air Force. When the couple divorced in 2018, Pat was a Captain, who hoped to make Major in the next two years. The most Sam can be awarded by the divorce court, from Pat’s military retired pay, is 50% of the calculated disposable retirement for a Captain with 8 years of service. Sam may also get Cost of Living Adjustments (COLA) for their portion. When Pat eventually retires as a full Bird Colonel, the portion of the pension representing the service and rank beyond an 8-year Captain will be Pat's sole and separate property. Of course, Sam will not get anything until the Pat actually retires.

How Does the Statute Define Disposable Retirement Benefits?

Under the USFSPA, “disposable retired pay” is the gross retired pay minus one or more of the following:

Amounts owed by the member for previous overpayments or recoupments;

Amounts deducted for court martial fines;

Amounts waived under Title 5 for Civil Service employment or under Title 38 for VA Disability compensation;

Survivor Benefit Plan premiums, but only if the former spouse receiving the pension division is also the named former spouse beneficiary;

Amounts of retired pay based on disability;

Amounts withheld for federal and state taxes.

What is the 10/10 Rule?

The 10/10 Rule determines which former spouses are entitled to receive payment directly from the DFAS (Defense Finance Accounting Service). If the former spouse was married to the service member for at least 10 years of the member’s creditable military service, the 10/10 rule applies. It allows the former spouse to be paid directly from DFAS. Direct payment does not happen automatically. It must be incorporated into the state court order dividing the retired pay in the divorce. When there is more than one former spouse, payment orders are handled on a first-come, first-serve basis.

If the divorcing couple was married for less than 10 years of creditable service, the service member is responsible for paying his or her former spouse through state court directed means. State court divisions of military retired pay must meet strict federal requirements set out in the statute. If the state order does not meet those criteria, the division of military retired pay is invalid.

How do military benefits change when the service member leaves the military?

There are additional considerations when the retired service member gets a combination of retired pay and disability benefits. Many disability benefits are not divisible in divorce. Military retirees who take a federal civil service job after leaving the military and later retire from the federal civilian job have an option. They can waive their right to military retired pay and roll their military service into their time in civil service. That eliminates military retired pay, incorporating it into a federal civil pension, and it also eliminates the former spouse’s share of retirement.

What are additional Benefits for former spouses with long term military marriages?

In addition to a share of the service member’s pension, the former spouse may be entitled to receive certain military benefits so long as the spouse meets required criteria. These benefits are statutory and are not subject to negotiation in the divorce. If the former spouse was married to the service member for at least 20 years of their military service prior to the divorce, the spouse is entitled to lifetime military benefits including commissary, medical benefits, and military exchanges. If there is less than 20 but at least 15 years of overlap between the marriage and the military service of the member, the former spouse is entitled to one year of medical benefits only. Medical benefits are available only if the former spouse is not covered by an employer health plan, and those benefits terminate upon remarriage.