NOTE: This article was written by Dondi West and The Law Office of Dondi West. It is for informational purposes only and should not be considered to be or used as legal advice. It is always best to contact a lawyer.

Dividing military retirement benefits is one of the more complicated aspects of a military divorce.

     1.  NO AUTOMATIC ENTITLEMENT.  Federal law does not provide any automatic or absolute right for a divorced spouse of a military servicemember to receive any portion of the servicemember’s military retired pay, regardless of the length of the marriage. 

     2.  CONTROLLING FEDERAL LAW. The controlling federal law, the Uniformed Services Former Spouses’ Protection Act (USFSPA), 10 USC § 1408, allows a state divorce court to treat a servicemember’s right to receive “disposable retired pay” (whether presently existing or a future expectancy) as a marital property asset that can be divided between the servicemember and his or her spouse incident to dissolution of marriage, doing so in accord with the property division laws of the state in which the divorce occurs.  

    NOTE:  The divorce court’s authority under USFSPA is expressly limited to dividing only “disposable retired pay,” a term that has a unique and specific federal law definition, set forth in 10 USC § 1408(a)(4).  “Disposable retired pay” is NOT “net pay” (after-tax amount) as that term is commonly understood in the civilian world.  Indeed, “disposable retired pay” as defined by the USFSPA law is more akin to “gross pay” (or “before tax” pay) as the civilian context. Further, disposable retired pay is different from military “disability retired pay” from the Dept. of Defense and also different from “disability compensation” payable by the Dept. of Veterans Affairs, neither of which is subject to division by a state court as part of a divorce proceeding. (In many but not all cases, receipt of disability benefits will reduce the amount of “disposable retired pay” otherwise payable to the retiree, and thus also reduce the amount of money that may be awarded by the divorce court to the retiree’s former spouse.)


10 USC § 1408(a)(4):
http://www.law.cornell.edu/uscode/html/uscode10/usc_sec_10_00001408—-000-.html#a_4

USFSPA Legal Overview from DFAS
http://www.dfas.mil/garnishment/usfspa/legal.html

USFSPA – FAQs from DFAS
http://www.dfas.mil/garnishment/usfspa/faqs.html

    3.  DISCRETIONARY DIVISION.  The USFSPA law does not require the state divorce court to divide the military retirement asset nor does it tell the state court judge how to divide the asset if the court decides to do so.  Those matters are left entirely to the discretion of the judge, who would presumably act in accordance with the domestic relations property division laws of the particular state involved.  USFSPA just says the state court judge can do it, and this is true regardless of the length of the marriage, be it one year or 20+ years.  (Contrary to widespread misunderstanding, there is no “10 year minimum rule.”)

    4.  GENERAL PRACTICE FAVORS DIVISION.  Divorce courts in virtually every state routinely follow the federal authorization derived from the USFSPA law and consider the servicemember’s right to receive military disposable retired pay as a marital property asset to the extent the right was acquired during the years of marriage (the “marital portion”), with the nonmilitary spouse usually being awarded one-half of the calculated “martial portion.”  Various formulations (as discussed below) are used to determine the marital portion.  

     NOTE:  Division of a spouse’s right to receive disposable retired pay as “marital property” and awarding a portion thereof to the nonmilitary spouse is a matter that is generally separate and apart from an award of alimony (or spousal support).  Depending on the domestic relations laws of the particular state involved, it is not unusual for a divorcing spouse to be awarded both alimony (or spousal support) and well as a share of military disposable retired pay, the latter being deemed as a property right that has nothing to do with financial need.  In other words, one does not necessarily substitute for the other.  Further, an award of a portion of military disposable retired pay should not be confused with (or viewed as) an award of alimony (or spousal support).


    5   USE SPECIFIC LANGUAGE IN JUDGMENT DOCUMENT.  The division of a servicemember’s right to receive “disposable retired pay” (whether presently existing or a future expectancy) and the award of a portion thereof to the nonmilitary spouse does not automatically occur.  The divorce decree (or judgment) rendered by the court must include appropriate language expressly providing for the division of the disposable retired pay entitlement and awarding a portion thereof to the nonmilitary spouse.  Generally, this will be done only if the court is  requested to do so by one or both parties.

     IMPORTANT:  If the divorce decree (or judgment) does not address and resolve the issue of the division of military disposable retired pay and make an award thereof to the nonmilitary spouse, the right to receive military disposable retired pay (whether present or in the future) will remain and belong 100% to the military spouse, with the nonmilitary spouse being entitled to absolutely nothing.  In sum, if not dealt with at the time of the divorce, as part of the divorce decree itself (and the use of a special Military Retired Pay Division Order, if appropriate, as discussed below), the nonmilitary spouse may end-up never receiving a penny of the military retirement money.


    6.  PERSONAL LIABILITY OF SERVICEMEMBER FOR PAYMENT OF COURT-AWARDED SHARE OF RETIRED PAY.  When the divorce court awards a portion of a servicemember’s military retirement entitlement to the servicemember’s spouse (regardless of length of marriage and regardless of extent of the award), it imposes on the servicemember a personal liability that is the functional equivalent of a debt obligation owing to the spouse, to be paid when, as and if the servicemember commences actual receipt of military disposable retired pay.  The former spouse then has the legal right to look to the military retiree for payment, the same as any creditor would have to look a debtor for payment of a “judgment debt” obligation.  To the extent the servicemember ends-up actually receiving any portion of the court-awarded share of disposable retired pay, it must be paid over to the former spouse.  Failure to do so may result in legal debt collection action be taken.

    7.  TYPICAL METHOD FOR DIVISION OF RETIRED PAY.  The most common method used by divorce courts for calculating the division of military retired pay between divorcing spouses is by the use of a “coverture fraction” (years of military service during marriage divided by total years of military service at time of retirement) to derive the “marital portion” of the total asset, with the nonmilitary spouse then being deemed as having the right to receive one-half (50%) of the marital portion.  (Example: 16 marital years coinciding with 20 years of military service.  16/20 = .80, or 80%, which is the total “marital portion.”  Nonmilitary spouse is then awarded one-half (50%^) of the “marital portion,” which ends-up being 40% of each monthly payment of disposable retired pay to which the retired servicemember is otherwise entitled to receive.).  While the “coverture fraction” formula award is the one most frequently used, other methods are also available.  

    See ”DFAS Guide to Dividing Military Retired Pay,” online at:
http://www.dfas.mil/dms/dfas/garnishments/pdf/AttorneyGuidance-01-29-2012-revised-04-02-2012/AttorneyGuidance-01-29-2012-revised%2004-02-2012.pdf

    8.  DISTRIBUTION DIRECTLY FROM DFAS — THE 10-10 RULE.  A spouse who has been awarded a portion of a military retirement entitlement may opt to receive the court-awarded share by payments made directly by DFAS (Defense Finance and Accounting Service), the military’s payroll agency.  However, direct payment from DFAS may occur only when the spouse in whose favor the award is made meets the military’s “10-10 Rule,” meaning that the marriage must have lasted for at least 10 years, with at least 10 years of the marriage coinciding (overlapping) with 10 years of the servicemember’s military service creditable for retirement eligibility.  If the 10-10 Rule is not met, DFAS will not be involved in the implementation of the divorce court’s division of the military retirement asset.  Instead, DFAS will pay the entire amount of disposable retired pay directly to the military retiree, leaving it to the retiree’s former spouse to then collect the court-awarded share from the military retiree, using court-sanctioned debt collection remedies if necessary.  Further, if the 10-10 Rule is not met, there is no need for the special type of court order (“Military Retired Pay Division Order”) as discussed below, and it would a waste of time and money to have such an order prepared.

The 10-10 rule:

http://www.offutt.af.mil/shared/media/document/AFD-081001-046.pdf

    9.   THE USE OF A “MILITARY QDRO.”  If the spouse meets the 10-10 Rule and wishes to receive the court-awarded share of disposable retired pay directly from DFAS (which typically is the case), it is usually accomplished through the use of a special type of court order that instructs DFAS as to the court-awarded amount of disposable retired pay that is to be paid to the retiree’s former spouse and directs DFAS to deduct that amount from the disposable retired pay that the retiree is otherwise entitled to receive and pay it directly to the retiree’s former spouse.  This special type of court order is often confused with the “qualified domestic relations order” (QDRO) used by divorce courts to divide private-sector civilian pension plans and is therefore often (but erroneously) referred to as a “military QDRO.”  Properly, the court order that is directed to DFAS should be titled as a “Military Retired Pay Division Order” or a “Court Order for Division of Military Retired Pay” (or similar descriptive title).  The order must be in a form that complies with the rather ridged and confusing technical requirements that have been adopted by DFAS.  While it is possible that the divorce judgment itself will satisfy all of the DFAS requirements, such is typically not the case.  If the divorce judgment itself is submitted to DFAS, it will usually result in rejection and a request from DFAS for a “clarifying order” that will satisfy the DFAS specifications.  The problem is most often resolved by then obtaining the separate court order referred to above and submitting a court-certified copy to DFAS.  

      NOTE:  To get this properly done, it is very important to utilize a lawyer who is conversant with the USFSPA law and with the DFAS technical requirements.  Many divorce lawyers, including the one who handled the divorce case involved, think the know what to do but really do not and should not be relied upon to get the job done.  The nonmilitary spouse who has been awarded a share of a disposable retired pay as part of a divorce proceeding and who wishes to receive payments from DFAS should independently obtain the services of a lawyer to take care of the drafting and processing of the necessary court order, and this should be done immediately after the divorce has been finalized (and NOT deferred until the time of actual retirement.

FURTHER NOTE:  Drafters of divorce decrees, marital settlement agreements, and military retired pay division orders (and their clients) need to use correct terminology in describing the property asset that is being divided.  As explained earlier, only “disposable retired pay” as defined in 10 USC § 1408(a)(4) is subject to division by a state divorce court.  Nothing else.  The language used should refer only and simply to “disposable retired pay,” nothing more and nothing less, and without further embellishment.  For example, in military parlance, “retired pay” by itself is different from “disposable retired pay.”  Also, avoid phrases such as “net disposable retired pay” or “gross disposable retired pay,” as both simply add to the confusion and will result in future problems.  Likewise as for “net retired pay” and “gross retired pay.”


    See “Getting Military Pension Orders Honored by DFAS.”  Online at:
http://www.ncbar.gov/lamp/s_wording.pdf

    10.  CONCURRENT RETIREMENT AND DISABILITY PAY (CRDP).  Federal law bars a disabled military retiree from receiving both military retirement benefits and VA disability compensation at the same time.  In order for the disabled retiree to receive VA disability compensation, the retiree was required to waive all or part of the military pay, doing so on a dollar-for-dollar basis, commonly referred to as the “VA disability offset.”  However under a special program that began in 2004 and is being phased-in over a period of nine years, military retirees with 20 or more years of service and a 50% (or higher) VA rated disability will receive both their full military retirement pay and their full VA disability compensation.   This special progran is referred to as “Concurrent Retirement and Disability Pay” (CRDP).  However, under the law, if the disability is less than 50%, the member must still waive, dollar-for-dollar the “regular” pension in exchange for the “disability waiver” amount.  

    11. COMBAT RELATED SPECIAL COMPENSATION (CRSC).   Yet another special program, know as “Combat Related Special Compensation” (CRSC), allows eligible military retirees to recover some or all of their retired pay that was offset by their Department of Veterans Affairs (VA) disability compensation.  To qualify, eligible retirees with a combat-related disability of at least 10% under certain conditions.  If eligible, the retiree then receives tax-free CRSC in lieu of taxable retired pay.

More info:
http://www.military.com/benefits/military-pay/retired-pay/retired-concurrent-receipt-overviewhttp://www.dfas.mil/retiredmilitary/disability/crsc.html

    12.  INDEMNIFICATION IN THE EVENT OF WAIVER.  A cautious lawyer represention the servicemember’s spouse will be sure to include in the dissolution judgment an “idemnification provision” to protect the former spouse from any financial loss the might result from the retiree’s post-divorce decision to waive retired pay in order to receive VA disability compensation.  Military retired pay is taxable, whereas as VA disability is not.  Consequently, it is financially advantageous for the retiree to seek to be rated as VA disabled, thus allowing the retiree to then receive VA disability dollars in lieu of military retired pay dollars.  But the reduction of the retiree’s military retired pay results in a corresponding reduction in the former spouse’s court-awarded share thereof.  Inclusion of an “idemnification provision” in the dissolution judgment will require the retiree to indemnify (reimburse) the former spouse to the extent of the former spouse’s financial loss due to the reduction of the former spouse’s court-awarded share of military retired pay.  Such a provision might read as follows:

    “If husband takes any action (such as accepting disability pay) that reduces the pay the wife receives, then he shall pay her directly the amount by which her share is reduced. In addition, he hereby consents to the deduction of this amount from any periodic payments he receives (such as wages) to allow this payment to wife, and this clause may be used to show said consent when this is necessary for the entry of a garnishment, wage assignment or income withholding order.”

    13.  SURVIVOR BENEFIT PLAN (SBP).  Military retired pay ends automatically upon the death of the military retiree.  There is no provision allowing for continuation of retired pay after the retiree’s death.  However, federal law allows a military retiree to “elect” Survivor Benefit Plan (SBP) insurance coverage, designating a spouse or former spouse  as beneficiary.  If such coverage has been elected, the retiree receives a reduced amount of disposable retired pay during his or her lifetime, but with the understanding that if the designated beneficiary outlives the retiree, the designated beneficiary will then receive a monthly annuity payment for the balance of his or her life in an amount equal to 55% of what the retiree had been receiving at the time death (subject to certain limitations in the event of remarriage prior to age 55).  SBP is the sole means by which a surviving spouse or former spouse  can receive a portion of military re/tired pay.  Without it, retired pay stops on the date of the retiree’s death.  When divorce occurs, SBP coverage for a spouse automatically ends.  

      However, SBP “former spouse” coverage may be voluntarily elected by the servicemember.  If the divorcing servicemember does not voluntarily elect “former spouse” SBP coverage, the divorce court judge may include in a divorce decree a provision that such coverage nonetheless be elected.  If such a provision is contained in a court order (or an agreement approved by a court order), the former spouse may then submit a “deemed election” request to DFAS within one year of the date of the court order or agreement requiring the retiree to provide coverage.

    IMPORTANT:  If the “election” process for former spouse SBP coverage is not done within one year of the court order requiring such election to be made, or if the servicemember fails to voluntarily elect former spouse coverage upon retirement, SBP coverage could be irretrievably lost despite the divorce court’s order. Therefore, for his/her protection, the former spouse should always submit the appropriate” deemed election”  request to DFAS within one year of the court order, and not depend upon the servicemember to make a timely election of former spouse coverage.  Use DD Form 2656-10 for this purpose.


SBP explained (Overview of Secretary of Defense)
http://militarypay.defense.gov/survivor/sbp/01_overview.html

SBP former spouse coverage
http://www.retirees.af.mil/factsheets/factsheet.asp?id=11579

SBP – Plan Overview (from Air Force Retiree Services)
http://www.retirees.af.mil/sbp/

“Deemed election” by former spouse 
http://www.military-divorce-guide.com/sbp-election.htm

DD Form 2656-10
http://www.dtic.mil/whs/directives/infomgt/forms/eforms/dd2656-10.pdf

    14.  SUMMING UP.  The right of a military retiree to receive disposable retired pay is a federal right that belongs exclusively to the military retiree, except as otherwise allowed by law.  One such exception is the USFSPA law, which authorizes (but does not require) state divorce courts to treat the right to receive disposable retired pay as a marital property asset and award a portion thereof as part of a divorce proceeding.  But if the right to receive disposable retired pay is not specifically dealt with in a timely manner as part of the divorce proceeding, with a portion thereof being awarded to the nonmilitary spouse, the “right” will most likely remain forever that of the military retiree, with the former spouse having no future recourse and never receiving an portion thereof.

For more information on dividing military pensions during divorce, please contact The Law Office of Dondi West or call Dondi at 410-814-7557