What's New in Family Law?

Dividing Military Pensions in Divorce

On December 23, 2016, the President signed the National Defense Authorization Act for Fiscal Year 2017, which contained a little known provision that applied to division of military retired pay. Congress rewrote the Uniformed Services Former Spouses’ Protection Act (10 U.S.C. § 1408) to require that the pension of a member not yet retired on the date of the divorce to be divided as though the member was retired on that date.

In other words, the pension is to be now divided using the rank and years of service at the date of such division. DFAS has now interpreted the date of division as the date of divorce. 

The new act is in direct conflict with IRMO Lehman (1998) 18 Cal.4th 169.  Prior to the Act, majority of states divide all pensions – military, state, federal and civilian –using the “Time Rule," which means that the community property interest in retirement benefits is determined by a fraction whose numerator is the employee’s length of service from the date of marriage through the date of separation, and whose denominator is the employee’s total length of service at retirement. For military retirement benefits division, martial asset equaled disposable retired pay multiplied by marital duty time divided by total duty time. About half of states (prior to the Act) used a "snapshot" approach to dividing retirement benefits treating the member spouse as already retired on the date of the division. The federal government just made that minority rule to be implemented in all the states.  

The new military division order must include the following information:

1) If the member entered the service before September 8, 1980: 

a. A fixed amount, a percentage, a formula, or Time Rule formula that the former spouse is awarded;

b. The member’s pay grade at the time of divorce;

c. The member’s years of creditable service at the time of divorce; or in the case of a reservist, the member’s creditable reserve points at the time of divorce.

2) If the member entered military service on or after September 8, 1980: 

a. A fixed amount, a percentage, a Time Rule formula that the former spouse is awarded;

b. The member’s highest amount at the time of divorce (the actual dollar figure);

c. The member’s years of creditable service at the time of divorce; or in the case of reservist, the member’s creditable reserve points at the time of divorce.

DFAS is less than cooperative in providing this information in order to prepare the division orders.

To give you an example of how this law changes pension division, here is an example:

John Doe just retired as a sergeant major (E-9) in the Army with 30 years of service.  He was divorced from Jane Doe ten years prior to retirement when he first enlisted in the Army. The pension division order was entered on the date of divorce, when he was a sergeant first class (E-7) with 20 years of creditable service. So, under the old rule, John would be given the benefit of the last ten years of service after the divorce (majority of states.) In about six states, Jane would receive half of 20/30 of John's actual retired pay. 

Under the new rule the court would require to order for Jane 50% of the retired pay  of sergeant first class with 20 years of service (as if he retired on the date of the divorce). Her share is frozen in time (date of pension division order or date of divorce for DFAS).

The new law is silent as to COLAs (Cost of Living Adjustment) for the non-military spouse. There is also no language whether other division methods are allowed if the military spouse agreed to different division. California and other western states already allow immediate payments but now presumably since the pension is frozen at the time of divorce, non-military spouses may demand immediate payments. Unhappy spouse may also remove the case to federal court. 

The change in law is inapplicable to an award of the Survivor Benefit Plan (“SPB”), where strict deadlines must be met before retirement.  The changes also have no impact on determining "entitlement benefits" for the Former Spouse, such as 20/20/20 Determinations for Base Access and TRICARE.