Dividing Military Pensions

Because our law practice is in close proximity to Wright-Patterson Air Force Base (“WPAFB”) and because I am a “former” military spouse (who receives a fifty percent (50%) share of my former spouse’s military pension), a decision was made to add several articles to our Family Law Blog Site related to special considerations which must be made in assisting a military member and/or his/her spouse in the termination of their marriage.   This is the first article having special emphasis on the division of military pensions.

Historically, it is important to note that military pensions were not always subject to division.   In 1981, in a decision that was hailed by military members and greatly criticized by their former spouses, the Supreme Court of the United States in McCarty v. McCarty, 453 U.S. 210 (1981), decided that military pensions were NOT marital property or community property; and as such, were not subject to division between spouses going through a divorce or dissolution.  In response to pressure from former spouses and other supportive groups, in 1982 the Congress  drafted and passed corrective legislation known as the Uniformed Services Former Spouses’ Protection Act (“USFSPA”) to nullify the holding in McCarty v. McCarty.  Since the passage of the USFSPA, military pensions are considered to be marital property and are divisible in divorce or dissolution proceedings.

But, one may just ask which or what retirement benefits are divisible between the military member and the anticipated former spouse?  The term or phrase “Disposable Retirement Pay” is an important one to learn and understand.  Disposable Retirement Pay is the service member’s gross or total monthly retirement pay less deductions for:

–disability retirement pay;

–amounts deducted to provide for a Survivor Benefit Plan (“SBP”);

–federal income and social security taxes;

–other amounts required by law to be deducted from the member’s gross retirement pay.

It is ONLY the military member’s Disposable Retirement Pay as set forth above that may be divided by the domestic relations divisions of state courts.   It is also interesting to note that some military service members will knowingly elect to increase the percentage of their disability retirement in order to decrease the amount of Disposable Retirement Pay that is subject to division.  For example, assume that a USAF pilot receives a twenty percent (20%) disability for a lower back problem from years of sustaining G-Forces to his spine.  If he later succeeds in arguing that his percentage of disability should be forty to fifty percent (40% – 50%) for the same lower back condition, his Disposable Retirement Pay would decrease in an amount resulting in a lower monthly retirement benefit for his former spouse.

It is crucial for the soon-to-be former spouse to have counsel familiar with the division of military retirement pay in order to have the necessary and vital language in the parties’ Separation Agreement and/or Final Judgment and Decree of Divorce to ensure that the former spouse will indeed get his/her fair share of the service member’s military retirement.  The following language should be incorporated into the parties’ pleadings:

“The Former Spouse shall receive one-half (½) of Member’s Disposable Retirement Pay according to the following formula: one-half (½) of the length of the parties’ marriage/service overlap divided by the total years of the Military Member’s total military service times the amount of Member’s Disposable Retirement Pay.”

To illustrate the formula, I shall provide two examples:

Example #1: We have a marriage lasting twenty years with twenty years of marriage and service overlap.  Husband is expected to receive $2000.00 per month in Disposable Retirement Pay.   With the formula set forth above, the former spouse should expect to receive one-half (½) of twenty (20) years of marriage/service overlap divided by twenty (20) years of military service times $2000.00 per month (½ times 20/20 times $2000.00 = $1000.00).

Example #2: But if the Husband remains in the military for thirty (30) years, the formula changes to one-half (½) of twenty (20) years of marriage/service overlap divided by thirty (30) years of military service times $2000.00 per month (½ times 20/30 times $2000.00 = $667.00). This formula provides the former spouse with a smaller portion of the military member’s retirement benefits.

To conclude, the military member’s retirement benefits may be the most significant asset of the marriage (along with the value of the parties’ marital residence and other investment accounts).  It is crucial for the former spouse to have counsel who will advocate for him/her to receive their fair share of that military benefit. Click here to be linked to the Department of Defense website if you have more questions about the USFSPA provisions.

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Anne Shale

Anne Shale is of counsel to Dayton, Ohio, law firm, Holzfaster, Cecil, McKnight & Mues. She is a former registered nurse and concentrates her practice in Family Law and Divorce cases.

www.hcmmlaw.com