A significant legislative change just took place that reduces the marital share of military pensions that a former spouse may be awarded after the parties divorce.
In Section 641 of the National Defense Authorization Act (NDAA) of 2017, signed by then-President Barack Obama on Dec. 23, 2016, the definition of “disposable pay” was revised in the Uniformed Services Former Spouses’ Protection Act.
The law now reads, that in the case of a division of military retired pay as property that becomes final prior to the service member’s retirement, the service member’s disposable income is limited to retired pay that is based on the high-3 pay (defined below) of the service member at divorce.
Previously, the disposable retired pay that was subject to division at the time of divorce utilized service time creditable toward retirement performed during the marriage as a percentage of the total service time creditable toward retirement when the service member retired.
The end result is that, instead of the former spouse having the ability to get a percentage that is based upon the entire service member’s career, the former spouse’s share will be “frozen” based upon the rank and pay tables in effect at the date of divorce.
By way of background, the USFSPA was enacted Feb. 1, 1983 in response to a 1981 Supreme Court decision that held state courts were pre-empted from dividing a service member’s military pension and were therefore barred from awarding a share to the former spouse.
When Congress enacted the USFSPA, it achieved two objectives:
- It recognizes the right of state courts to distribute military retired pay that is earned through length of service to a spouse or former spouse.
- It provides a method of enforcing these state court, military pension-division orders through the Department of Defense’s Defense Finance and Accounting Services, or DFAS.
The USFSPA does not automatically award the former spouse a marital share of the military pension. The former spouse must have secured the award of a portion of the service member’s military retirement pay as a division of marital property through a final court order such as a court-mandated legal separation/limited divorce, court-ordered property settlement or absolute divorce decree.
The Department of Defense’s Financial Management Regulation DoD 7000.14-R, Volume 7B governs the process for dividing the military pension and provides authorized sample language for practitioners seeking to draft court orders.
In cases in which the divorce decree will be finalized prior to the service member’s retirement, the court order must provide the following facts:
- A fixed amount, a formula, a percentage or a hypothetical formula defining the former spouse’s share
- The service member’s high-3 pay amount at the time of divorce (average of the three highest years of continuous compensation stated in an actual dollar amount)
- The service member’s years of creditable service, or if a member of the Guard or Reserves, the service member’s creditable retirement points at the time of divorce
The maximum a former spouse could receive would be 50 percent of the disposable military retired pay. But awarding 50 percent would mean that the parties were married during the entire career of the service member.
If the service member opts into the Blended Retirement System after divorce, any division of the disposable military retired pay would be applicable to the military pension portion only, not to the funds in the Thrift Savings Plan.
There are several difficulties with this new method for dividing the military pension. Most obviously, it ensures that a former spouse does not receive any benefit from the service member’s post-divorce promotions or pay increases, despite the fact that a service member who is promoted to E-7 or O-6 post-divorce was presumably supported by the spouse during the marriage when previous ranks were achieved.
In other words, the service member usually cannot get promoted to a senior noncommissioned officer, general or admiral unless he successfully climbed through the subordinate ranks that occurred during the marriage with the support and encouragement of the spouse.
The new military pension division method also requires the service member to provide verifiable information regarding his or her service and pay history prior to divorce in order to prepare the acceptable language.
With divorce being an inherently contentious matter, it will come as no surprise that service members may be reluctant to gather and share this information with their soon-to-be former spouse.
The Department of Defense is expected to publish detailed guidance for implementing this change. Practitioners who handle military divorce cases should pay close attention to the DoD guidance when it is released, and also contemplate other methods to ensure there is an equitable division of marital assets in order to achieve fairness.
To discuss your personal legal questions, call the Legal Assistance Office to schedule an appointment at 301-677-9504 or 301-677-9536.