Division of Military Pension in Divorce
By COL Mark E. Sullivan, JAGC, USAR
Several members have called or written with questions about division of military Reserve retired pay in divorce proceedings. Because this subject is outside my area of expertise, I asked Colonel Sullivan to write this article as a guest author. The situation set forth below, although hypothetical, is very true-to-life.-CAPT Samuel F. Wright, JAGC, USNR ROA OmbudsmanMAJ Bill Smith has five years of active-duty service and nine years of service in the Army Reserve. He married when he left active duty. He has been sued for divorce by Hilda Smith, his wife, and wants to know whether his Reserve pension is in jeopardy. Here are some oft-asked questions (with answers provided) that might help him decide what to do.
Q: I've heard that my pension can be divided under USFSPA. What is that?
A: USFSPA, the Uniformed Services Former Spouses' Protection Act, is a law passed by Congress in 1982 to offer some financial protection to certain former spouses of service members. It allows states to divide military disposable retired pay as marital property upon divorce. It allows some former spouses (through a court order) to be awarded a share of disposable retired pay by direct payment from DFAS (Defense Finance and Accounting Service) and to obtain medical care and certain other benefits. Disposable retired pay is the total monthly pay to which a retired service member is entitled, less most VA disability pay, federal debt repayments, fines, forfeitures, and Survivor Benefit Plan premiums.
Q: I thought that my wife wasn't entitled to any part of my pension because we hadn't been married 10 years during my military service. Is that right?
A: No. The "10-year rule" applies only to how the payment is made-directly from you or as a garnishment of your retired pay from DFAS. Hilda must meet the "10-year test" to receive payment from DFAS. When the former spouse has been married to the service member for at least of 10 years, during which the member performed at least 10 years of creditable service for retirement purposes, then the Act allows direct payment from DFAS. In such a case, it would be necessary for Hilda to get a court order specifically stating that the award shall be made as direct payment of retired pay and to serve the court order on DFAS. It is a common misconception that the "10-year rule" somehow limits or prohibits division of the pension.
Q: Do all states allow military retired pay to be divided as marital or community property?
A: Yes. Only Puerto Rico bars the division of pension rights upon divorce. All states have one method or another of granting the division of military pensions as marital property. An overseas court, however, cannot grant military pension division. DFAS will only honor orders regarding division of retired pay from U.S. courts.
Q: Is there any way the court can divide the retired pay so my spouse won't have to wait until I retire?
A: Some states, such as California, allow payments to be made under court order while the member is still serving in the Guard or Reserve or on active duty. Most states, however, do not. In all states, however, the law allows the present value of the pension to be used as a set-off or trade against other property that the nonmilitary spouse will receive. Thus the retired pay might be traded against the marital residence if the values of each were roughly equal. If the values were not equal and the service member received "too much" of the marital property, the judge could order the service member to transfer other property to the nonmilitary spouse. The court could also order the service member to make regular payments to the other party (called a "distributive award") until the shares of the parties were adjusted as the judge ordered.
Q: If state law allows the retired pay to be divided, how will the division take place?
A: The rules for retired pay division vary from state to state. For example, the court can divide the pension by ordering that a portion be paid to the nonmilitary spouse upon the service member's retirement. This would be paid on a monthly basis as long as the retiree receives payments. The payments could come from the retiree or, if the "direct payment" conditions set out above are met, directly from DFAS, so long as it is contained in a court order (not just in a separation agreement).
Q: My wife just moved to California; can it, or any other state, divide my Reserve pension if I live in North Carolina?
A: The answer to this question depends on your legal residence (or domicile). A state has jurisdiction over the pension if:
If none of the above applies, then that state's courts cannot divide your retired pay.
Q: How much of my retired pay will be divided or awarded to my wife?
A: In most states, the court can only divide the "marital portion" of the pension, that is, the portion that was earned during the marriage. The rest of the pension (that earned before marriage or after separation or divorce) is the member's separate property. In addition to this, the Act says that no more than half of the pension can, under most circumstances, be divided. Many states presume an equal division of all marital property, including retirement rights. Other than this, there is no way of telling how much marital property will be awarded or how much of the pension will be granted to you or your wife.
Q: If I die, what happens to the pension division award?
A: Under USFSPA, your rights (or those of your wife) to a portion of military retired pay end upon your death. Payments cannot be made to her estate, survivors, or heirs.
Q: Is there any way that pension payments can continue after my death?
A: Yes. Federal law states that, in the event the service member dies, the person receiving the award shall receive no further benefits unless the member elected the Survivor Benefit Plan (SBP). Payments will continue if SBP coverage has been chosen (but not necessarily in the amount of payments under USFSPA). The court can order a spouse to provide SBP coverage for the non-service spouse. The order, to be effective, must be served on DFAS within one year after the divorce; otherwise it will not be honored. Once again, this must be ordered by a U.S. court, not the court of a foreign country.
Q: What are the key aspects of USFSPA regarding Reserve and Guard pensions?
A: There are two key considerations in dividing Reserve retirement rights. First, because Reservists do not begin to get retirement pay until age 60 (regardless of when they retire), this deferral of payment must be taken into account in the negotiations and the present value calculations. Second, the "marital fraction" should be computed twice-once using marital years of service over total years of service, and then again using marital retirement points over total retirement points-to determine which computation will best benefit the member or spouse. To see what a difference this might make, let's take Major Smith's case. With five years of active duty and nine years of service in the Army Reserve (the marriage occurred when he left active duty), here's how the numbers work out-
*To calculate the marital fraction using points, start by counting the points he acquired during active duty by multiplying 5 times 364 to get 1,820 points. Then count his Reserve points: during his time in the Reserve, assume he acquired 60 points a year (for weekend drill, "summer camp" and membership) for 9 years, or 540 points. Thus, his total points at 14 years of combined service are 2,360 [1,820 + 540], of which 540 (or about 23 percent) are marital. This should mean that 23 percent of his retirement pay (assuming retirement and date of separation both occur at year 20) is marital.
If we apply the marital fraction using years to his retirement pay, however, then his pension is 9/14 (or 64 percent) marital.
What a difference! Recognition of these two ways of calculating the marital benefit, and the difference when Major Smith's pension is calculated, is essential to competent representation in the Guard/Reserve pension case. Once again, the federal statutes do not tell what to do, what fraction to use, or what results to expect. This is state-law territory, not something set out in USFSPA.
Q: Besides retired pay, what other benefits can my wife receive under USFSPA?
A: A spouse or a former spouse who meets certain requirements may be able to receive full or partial medical, dental, commissary and post exchange benefits.
Q: What is required for full medical benefits?
A: A spouse or former spouse can receive full benefits (including medical care on a space-available basis and CHAMPUS/TRICARE coverage) if he/she meets the "20/20/20 test." This three-part test requires that the spouse must have been married to the member for at least 20 years. The member must have performed at least 20 years of creditable service toward retirement. Finally, at least 20 years of the marriage must overlap at least 20 years of active service. All three parts of the test must be met.
Q: If a spouse doesn't meet the "20/20/20 test" for full benefits, are there other benefits available?
A: Yes. He/she may be able to receive permanent medical benefits if the divorce decree was final before 1 April 1985 and the spouse meets the "20/20/15 test." This requires that the parties must have been married for at least 20 years and the member must have performed at least 20 years of creditable service towards retirement. Finally, at least 15 years of the marriage must be during military service. Again, as with the "20/20/20 test," all parts of the test must be met.
Q: If a spouse receives full benefits, can she or he be covered by other medical insurance?
A: Under either test, a spouse who receives full benefits cannot be covered by any type of employer-sponsored medical coverage. However, one can refuse your employer-sponsored medical benefits and retain the military medical benefits. A spouse would also be disqualified if he/she had individually obtained medical insurance. Finally, under either of the above tests, a spouse must remain unmarried; any subsequent remarriage eliminates the benefits, even if the spouse is widowed or divorced later.
Q: If a spouse meets the "20/20/15 test," but the divorce decree is final after 1 April 1985, is the spouse still eligible for some benefits?
A:Yes. The spouse is entitled to one year of transitional benefits, after which he/she has the right to convert to a private health plan set up by the Department of Defense. However, he/she must remain unmarried and not be covered under employer-sponsored medical coverage.
Q: Are there any other aspects of military benefits that I should know?
A: Yes, there are other aspects of military benefits to remember. Consider the following points:
If the nonmilitary spouse for some reason loses eligibility to medical care, he/she may purchase a "conversion health policy" under the DoD Continued Health Care Benefit Program (CHCBP), a health insurance plan negotiated between the Secretary of Defense and a private insurer. This must ordinarily be purchased within the 60-day period beginning on the date that the former spouse ceases to meet the requirements for being considered a dependent. Upon purchase of this policy, the former spouse is entitled, upon request, to medical care until the date that is 36 months after (1) the date on which the final decree of divorce, dissolution or annulment occurs; or (2) the date the one-year extension of dependency under 10 U.S.C. 1072(2)(H) (for 20/20/15 spouses with divorce decrees on or after 1 April 1985) expires, whichever is later. Premiums must be paid three months in advance; rates are set for two rate groups, individual and group, by the assistant secretary of defense (health affairs). CHCBP is not part of TRICARE. For further information on this program, contact a military medical-treatment facility health-benefits advisor, or contact the CHCBP Administrator, P.O. Box 1608, Rockville, Md. 20849-1608; telephone 1-800-809-6119.
A: former spouse who qualifies for any of these benefits may apply for an ID card at any military ID card facility. He or she will be required to complete DD Form 1172, "Application for Uniformed Services Identification and Privilege Card." The former spouse should be sure to take along a current and valid picture ID card (such as a driver's license), a copy of the marriage certificate, the court decree, a statement of the member's service (if available) and a statement that he/she has not remarried and is not participating in an employer-sponsored health-care plan.
Note: The benefits we have been discussing are statutory entitlements. They belong to the nonmilitary spouse if he/she meets the requirements as set out above. They are not terms that may be given or withheld by the military member, and thus they should not ordinarily be part of the "give and take" of pension and property negotiations because the military member has no control over these spousal benefits.
Q: Are there any civilian agencies available to help me; to help my spouse?
A: EXPOSE is an organization that has been lobbying Congress for increased military benefits for ex-military wives. EXPOSE can be reached at 703-941-5844 or Post Office Box 11191, Alexandria, Va. 22312. The American Retirees Association (ARA) is an organization that serves divorced military members-active duty, Reserve, Guard and retired. ARA can be reached at 2009 N. 14th St., Suite 300, Arlington, Va. 22201, telephone 703-527-3065. ARA has also published a book, Divorce and the Military II, that has in-depth coverage of most of the issues discussed here.
Q: This stuff is so complicated, I can't find a civilian attorney who knows anything about USFSPA and military pension division. How can I get a good, competent lawyer to help me?
A: There are many military cases where rights and advantages have been lost because of the attorney's lack of knowledge on the subject matter. As a practical matter, there are very few attorneys in any given state (and even fewer overseas) who know much about this little-known corner of the law-USFSPA and the division of military retirement benefits. And because you only get one chance to do it right, it makes sense to find the right lawyer right off the bat! Here are a couple of tips to help you:
Ask a friend who's been through this already; if he/she has had a good attorney, this kind of word-of-mouth advertising may help you hook up with the right attorney.
If you already have a lawyer, ask how much experience he/she has in the area of military pension division. A good lawyer should never hesitate to answer a question like this; an honest attorney will not flinch at giving you a straightforward answer. Be careful if your lawyer is "offended" or becomes defensive.
If you're generally satisfied with your current lawyer but he/she needs some help, don't hesitate to suggest that another attorney be hired to act as co-counsel in the area of USFSPA and military pension division. The code of ethics in virtually every state requires attorneys to be competent in the area in which they practice or else to bring on board competent co-counsel. Maybe if your lawyer has a "silent partner" to help out when the going gets rough, your case will be settled (or tried) more effectively and fairly.
Try to get a Reservist who practices in the field of family law as your attorney. Members of the Reserves are frequently the ones who are the most "up to speed" on current law and regulations in this area.
Find out from the state bar or bar association if there are "certified specialists" in family law in your state. A majority of states have "specialty" designations for lawyers that concentrate their practices in a particular field, and these lawyers (although charging a premium for their services) will be more likely to be able to handle your case competently.
Contact the family law section of your state's bar association or the American Bar Association to see if they can recommend attorneys who have spoken or written in the area of military divorce law
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