One of the most valuable benefits for armed forces veterans is the retirement pay, and it could be the most important marital asset. It’s vital that divorcing military couples take into account the nature of the benefits and the way courts approach them. It’s not the same in every state.
The Uniform Services Former Spouse Protection Act (USFSPA) governs the distribution of retirement benefits when a marriage breaks up. The law recognizes the right of state courts to decide how the money is to be split up, and it provides a mechanism through the federal government to make sure the money gets to whom it is supposed to go. USFSPA does not decide how much each former partner gets. Rather, the state courts are expected to include the entire value of the benefit package in the division of marital assets. Bottom line, the ex-spouse can’t get the money until the court has issued a final divorce decree, dissolution, annulment, or legal separation.
From the military’s point of view, the retirement package is the same as a bank account or a stock fund or a pile of cash stuffed into a pillowcase. Whatever the court decides is “equitable distribution” is fine with the government. Figuring out what part of the retirement plan is considered marital property depends on several factors. First, how long was the service member’s career? Second, how many of those years were the couple married? If the service member spent 25 years in the military and was married for 20 of those years, the ex-spouse would only be entitled to a portion of 80 percent of the total package. It’s complicated and that is why people hire lawyers.
If the soon-to-be-ex is still on active duty, the value of the retirement package can’t be calculated. Courts can apply a formula and issue an order stating the former partner is entitled to a portion of the fractional amount that covers the time the marriage endured, compared to the whole. Of course, the “whole” won’t be known until after the service member actually hangs up the uniform, which means both sides may see each other in court again long after the divorce is finalized.
Source: About.com, “How is military retired pay divided during divorce?” Cathy Meyer, Nov. 2012