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The National Defense Authorization Act for Fiscal Year 2017 made some important changes to federal law. These changes will impact dividing military pensions for certain service members. Those who have not yet started drawing retirement benefits will be affected. A recent Supreme Court case may also affect how much a former spouse of a service member can receive via a divorce order.
Military Pensions Can Be Divided Like Civilian Retirement
A service member’s military retired pay can be divided in a divorce just like civilian pensions and 401k’s. It’s considered a potential marital asset by our courts and has a value, just like any private retirement plan. If the military benefits were earned during the marriage they may be divided in a divorce.
Dividing Military Pensions is Not So Simple
Military pay has a lot of technical requirements before it can be divided. Thus it is often a bit more complicated than a private plan. Before the new law, it was possible to divide the retired pay of a service member who had not yet retired in a way that allowed the non-service member spouse to receive part of any future increase in benefits. Dividing the pension as of the time of retirement captured increases after the divorce due to the service member’s continued time in the military and potential retirement at a higher rank. The new changes to the law require that the service member’s rank be “frozen” as of the date of the divorce. Depending on the case, this could cause a big change in how much a former spouse of a service member might get.
Supreme Court Case Complicates Things Too
Not only are there changes in the law, but a recent U. S. Supreme Court case has also impacted what the former spouse of a service member might get in terms of military retired pay. If a service member is eligible for disability pay, military regulations allow service members to reduce their future military retirement benefits in order to increase their disability pay. However, under the regulations that allow military pay to be divided in a divorce as a marital asset, disability pay is exempt and can’t be divided.
So, if a service member elected to swap retirement for disability, they could reduce retired pay that could be divided in a divorce. This would decrease retirement that could be divided, while giving the service member disability pay that could not be divided. This would keep a former spouse from getting a share of the portion of their retired pay that they had chosen to reallocate as disability.
In Howell v. Howell, decided on May 15, 2017, the U. S. Supreme Court said there is nothing the divorce court can do about this. A service member electing to receive more disability pay can’t be required to make up the difference to a former spouse that gets cheated out of a part of their retired pay as a result.
Law is In a State of Uncertainty
These recent changes have changed the way court orders dividing military pay will be carried out. The changes don’t apply to cases where the service member does not have a disability and has already retired. If you are married to a service member who has not yet retired and were counting on a division of their retirement as part of your divorce, get some advice about how or whether you might be affected.