The Great Divide: Military Issues in Civilian Matters - South ...

presented by

The South Carolina Bar Continuing Legal Education Division

The Great Divide: Military Issues in Civilian Matters

Friday, July 10, 2020

http://www.scbar.org/CLE

SC Supreme Court Commission on CLE Course No. 206013ADO

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Table of Contents

Agenda ...................................................................................................................................................3 Speaker Biographies .............................................................................................................................4 Federal v. State: Jurisdiction Questions and Service of Process ......................................................7 Jennifer M. Creech SCRA—Military Considerations in Civil Actions and SCRA Violatons .........................................28 Paul M. Murray Military Clients in South Carolina Matters: What You Need to Know ..........................................50 Jeffrey S. Stephens Family Law Bootcamp: Basic Military Issues in Family Law Matters ...........................................103 Mary Fran Quindlen Military Pension Division: Crossing the Minefield ............................................................................136 Mark E. Sullivan

The Lawyer Discipline Process in South Carolina and Keeping Civility in the Courtroom; case summaries of recent ethics rulings .......................................................................................356 C. Tex Davis, Jr. Your Trauma. My Trauma. Our Solutions. .......................................................................................396 Beth Padgett

SC Bar-CLE publications and oral programs are intended to provide current and accurate information about the subject matter covered and are designed to help attorneys maintain their professional competence. Publications are distributed and oral programs presented with the understanding that the SC Bar-CLE does not render any legal, accounting or other professional service. Attorneys using SC Bar-CLE publications or orally conveyed information in dealing with a specific client's or their own legal matters should also research original sources of authority. ©2020 by the South Carolina Bar-Continuing Legal Education Division. All Rights Reserved THIS MATERIAL MAY NOT BE REPRODUCED IN WHOLE OR IN PART WITHOUT THE EXPRESS WRITTEN PERMISSION OF THE CLE DIVISION OF THE SC BAR. TAPING, RECORDING, OR PHOTOGRAPHING OF SC BAR-CLE SEMINARS OR OTHER LIVE, BROADCAST, OR PRE-RECORDED PRESENTATIONS IS PROHIBITED WITHOUT THE EXPRESS WRITTEN PERMISSION OF THE SC BAR - CLE DIVISION.

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LIVE WEBCAST

The Great Divide: Military Issues in Civilian Matters Friday, July 10, 2020

This program qualifies for 7.0 MCLE credit hours, including up to 1.0 LEPR credit hour and 1.0

SA/MH credit hour. SC Supreme Commission on CLE Course #: 206013ADO

8:25 a.m. Welcome and Opening Remarks Mary Fran Quindlen Quindlen Law Firm, P.A., Beaufort 8:30 a.m. Federal v. State: Jurisdiction Questions and Service of Process

Jennifer M. Creech Law Office of Jennifer M. Creech, LLC, Rock Hill

9:15 a.m. SCRA – Military Considerations in Civil Actions and SCRA Violations

Paul M. Murray Hafemann, Magee, Thomas, LLC, Savannah, GA

10:15 a.m. Break 10:30 a.m. Military Clients in South Carolina Matters: What You Need to Know

Jeffrey S. Stephens USMCR (Ret.), Beaufort

11:30 a.m. Lunch Break 12:30 p.m. Family Law Boot Camp: Basic Military Issues in Family Law Matters

Mary Fran Quindlen 1:15 p.m. Military Pension Division: Crossing the Minefield

Mark E. Sullivan Mark E. Sullivan, P.A., Attorneys at Law, Raleigh, NC

2:45 p.m. Break 3 p.m. The Lawyer Discipline Process in South Carolina and Keeping Civility in the

Courtroom; case summaries of recent ethics rulings. C. Tex Davis Jr., Sr. Assistant Disciplinary Counsel, SC Office of Disciplinary Counsel, Columbia

4 p.m. Your Trauma. My Trauma. Our Solutions. Beth Padgett Co-Director, Lawyers Helping Lawyers, SC Bar, Columbia 5 p.m. Adjourn

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The Great Divide: Military Issues in Civilian Matters

SPEAKER BIOGRAPHIES (by order of presentation)

Mary Fran Quindlen

Quindlen Law Firm, P.A., Beaufort (course planner)

Mary Fran Quindlen holds two bachelor’s degrees in History and English from Rutgers University. She received her law degree from the University of South Carolina in 1998, where she was a member of Women in Law and the Phi Alpha Delta Fraternity. Following her admission to the South Carolina Bar, Mary Fran practiced as a Marine Corps Judge Advocate serving as a Legal Assistance Attorney and Defense Counsel. She continued to serve in the United States Marine Corps Reserve until May of 2006 when she resigned her commission as a Major. After her release from active duty in 2002, Mary Fran became an Associate at Harvey & Battey, P.A. in Beaufort, South Carolina. She worked as their family law practitioner until 2005 when she opened her own practice in Beaufort. Mary Fran’s practice is concentrated in the areas of Military and Family Law, to include custody, visitation and divorce. Mary Fran is a Fellow in the American Academy of Matrimonial Lawyers, the International Academy of Family Lawyers, is a Member of the South Carolina Family Law Council, and serves on the South Carolina Bar’s Fee Dispute Resolution Board. Mary Fran has been qualified as an expert in South Carolina Family Courts regarding military matters related to divorce and she teaches military family law CLE’s around the country.

Jennifer M. Creech Law Office of Jennifer M. Creech, LLC, Rock Hill

Ms. Creech is a graduate of Davidson College, and the University of South Carolina School of Law. Prior to law school, she worked as a Child Support Specialist with the South Carolina Department of Social Services and blames that experience for her decision to pursue her Juris Doctorate. Ms. Creech was admitted to the South Carolina Bar in December 1998, while on active duty in the United States Marine Corps. During her time on active duty, she served as Environmental Counsel for MCB Camp Pendleton, Water Counsel with the Western Area Counsel Office of the Office of General Counsel for the United States Navy, Trial Counsel for MCAS Cherry Point, and Senior Defense Counsel for MCAS Cherry Point. Ms. Creech resigned her commission as a Captain in September 2006 and returned to her home of Rock Hill, South Carolina where she entered private practice as the Law Office of Jennifer M. Ash, LLC (now the Law Office of Jennifer M. Creech, LLC). Since September 2006, her practice is almost exclusively in the area of family law. While in private practice, Ms. Creech worked as counsel for the York County Department of Social Services and counsel for the York County Volunteer Guardian ad Litem Program. She currently serves as Assigned Member to investigate as directed by the Chairman of the Resolution of Fee Disputes Board for the Sixteenth Judicial Circuit. Ms. Creech is a member of the York County Bar, the South Carolina Bar Family Law Division, the ABA Family Law and Solo, Small Firm and General Practice divisions, and the South Carolina Women Lawyers Association Old English and Military Law divisions. She is a certified Family Court mediator since 2011, and mediations are the highlight of her days.

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Paul M. Murray Hafemann, Magee, Thomas, LLC, Savannah, GA

Paul Murray Graduated from University of Illinois at Chicago in 2008 and Attended Law School at Florida Coastal School of Law in Jacksonville, Florida and graduated in 2012. Paul Murray was commissioned as an officer in the U.S. Marine Corps in 2009 and became a sworn and certified Judge Advocate for the Marine Corps in 2013, Murray has spent most of his career thus far serving Marines and Sailors in the legal field. After graduating law school in 2012, then, Captain Murray was permanently stationed at MCRD Parris Island where he vigorously represented clients in landlord and tenant law, consumer law, estate planning, contract disputes, family law, Service-Member Civil Relief Act (SCRA) and many other areas of law. Following his duties as a legal assistance attorney, he went on to defend Marines and Sailors at court-martial and adverse administrative action where service-members faced charges ranging from DUI/DWI and drug use/distribution to serious charges of rape and aggravated assault with a deadly weapon. Throughout his time practicing, Murray has gained experience representing both the government and individual clients at court-martial, adverse administrative action, state and federal court. He was honorably discharged from the active duty U.S. Marine Corps. Murray is admitted to the bar in the states of South Carolina, Georgia and Illinois. He is also admitted to practice in Federal District Court in both Illinois, South Carolina, and Wisconsin. As a civilian attorney, he currently concentrates in the areas of DUI Defense, and various areas of law, criminal and civil, affecting U.S. Service-members. Specifically, he practices in the area of Workers Compensation under the Defense Base Act (DBA), providing assistance to men and women who were injured in furtherance of their work for private defense contracting companies abroad. He also assists clients in enforcement of their rights under the Servicemember Civil Relief Act (SCRA) and the Uniformed Servicemember Employment and Re-employment Rights Act (USERRA). Finally, standing true to trade, he continues to defend service-members at courts-martial and administrative hearings in Military Justice. Mr. Murray is a member of South Carolina Association of Criminal Defense Lawyers, Georgia Association of Criminal Defense Lawyers, and the American Association of Premier DUI Attorneys.

Jeffrey S. Stephens

USMCR (Ret.), Beaufort

Jeff Stephens holds a Bachelor of Science degree from Georgia Tech, and a Juris Doctorate degree from the University of Tennessee. He served as an enlisted Marine Corps reservist in college and law school and was later commissioned as an officer and spent 10 years as an active duty Marine Corps judge advocate. After leaving active duty, he served for 5 years as an assistant solicitor for South Carolina’s 14th Judicial Circuit, prosecuting crimes committed in Beaufort and Jasper counties. Except for 3 years spent in Washington, D.C. as a military appellate attorney and deployed in support of combat operations in the Middle East, he has lived in Beaufort County since 1999 with his wife and three children. Jeff’s focus of practice is military, criminal, and criminal appellate law.

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Mark E. Sullivan Mark E. Sullivan, P.A., Attorneys at Law, Raleigh, NC

Mark E. Sullivan is the principal of Law Offices of Mark E. Sullivan, P.A. in Raleigh, North Carolina. A retired Army Reserve JAG colonel and a Board-Certified Specialist in Family Law, Mr. Sullivan is a fellow of the American Academy of Matrimonial Lawyers and author of The Military Divorce Handbook (Am. Bar Assn., 3rd Ed. 2019). He was co-founder of the military committee of the North Carolina State Bar in 1981 and is past chair of the Military Committee of the ABA Family Law Section. He received the ABA’s Grassroots Advocacy Award in 2014 for his work on the military custody statutes and the Uniform Deployed Parents Custody and Visitation Act. He assists attorneys nationwide in drafting military pension division orders and consulting on military divorce issues.

C. Tex Davis

Assistant Disciplinary Counsel, SC Office of Disciplinary Counsel, Columbia

Tex Davis received his B.A. in Political Science from the University of South Carolina in 1991. He graduated from the University of South Carolina School of Law in 1994. Tex began his legal career with the Richland County Department of Social Services, where he prosecuted abuse/neglect cases involving children and adults. In 2002, Tex began working for the Office of Disciplinary Counsel. His focus is on the investigation and prosecuting of ethical misconduct by attorneys. During his tenure with the Office of Disciplinary Counsel, Tex has spoken to numerous groups on the topics of ethics and professional responsibility.

Beth Padgett

Co-Director, Lawyers Helping Lawyers, SC Bar, Columbia

Beth Padgett is Co- Director of Lawyers Helping Lawyers at the SC Bar. Beth received a Bachelor of Arts Degree from the University of South Carolina, a Masters Degree in Education from the University of South Carolina and a Master of Arts in Human Behavior and Conflict Management from Columbia College. She has completed numerous graduate hours in counseling and addiction studies. Beth has a background in education, mental health and addiction treatment services, domestic violence counseling, as well as curriculum and program development in these disciplines. She is trained and experienced in civil and family mediation. She is also certified in Lombard Mennonite Church Mediation. Beth completed training in the Wellness Recovery Action Plan Program in 2002 and in Emotional CPR in 2013. Beth has particular expertise in diagnosing communication problems in families and other groups, helping individuals learn techniques to overcome communication challenges. She has written three workbooks on recovery skills for people with mental illnesses that have been widely used in South Carolina and several other states. She draws from a wide variety of disciplines in her work, regularly exploring new interests, including the field of dialogue and conflict transformation, mindfulness practice and improvisational comedy. Beth has become an avid Improv Comedy practitioner, using this performing art form as the foundation for several personal and professional development programs. She completed the Mindfulness for Professionals Program at Duke Integrative Medicine Center in 2011, learning to bring the benefits of mindful awareness into her work with attorneys, law students, mediators and other clients. Also, Beth completed a 200-hour yoga teacher training course in 2014 and completed a teacher training in Y12SR (Yoga for 12-Step Recovery) in 2015. She completed Phase I of Koru Mindfulness Teacher Certification, a mindfulness program for emerging adults developed and researched at Duke University, in 2015 and is pursuing full certification. At the beginning of 2017 Beth began the process of becoming a Certified Addictions Counselor through SCAADAC--South Carolina Association of Alcoholism and Drug Abuse Counselors.

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Federal v. State: Jurisdiction Questions and Service of Process

Jennifer M. Creech

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Federal v State: Jurisdiction Questions and Service of Process

J E N N I F E R M . C R E E C H

L AW O F F I C E O F J E N N I F E R M . C R E E C H , L L C

R O C K H I L L , S O U T H C A R O L I N A

All’s fair…The wife of a Marine comes to your office to hire you to handle her divorce. Her husband is this guy----->

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Where the h*ll can he be??

Finding the Service Member

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Locator Services

For all services, if you know the base, look up the base locator

If you have no clue where to start, you need either the worldwide locator for that service, or other locator services.

Make sure that you have the member’s full name, and, if possible last known rank, duty assignment, and SSN*

Once Upon a Time, in your mom’s Army...

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…there was a WWL.But in today’s stealthier Army…

Seriously, need to know only…

Army. Due to security reasons, the Army has closed their World-Wide Locator Service to the general public. To access the Army locator, you now need an Army Knowledge Online account (AD Army,ANG,AR, Ret, or Army Dependent)Other requests to locate active duty Army members are handled on a case-by-case basis. Send your written requests to:CommanderU.S. Army Enlisted Records & Evaluation CenterATTN: Locator8899 East 56th StreetFort Benjamin Harrison, IN 46249-53011-866-771-6357

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Former Army and Reservists

Reserve Personnel CenterATTN: ARPC‐VSE‐VS9700 Page AvenueSt. Louis, Missouri 63132‐5200

National Personnel Records Center9700 Page AvenueSt. Louis, Missouri 63132

In the Navy…

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In the Navy

Navy World Wide Locator Navy Personnel Command PERS 312E2 5720 Integrity Drive Millington, TN 38055-3120

1-866-827-5672 or 1-901-874-3388

Today’s Air Force…in a bunker, in a desert...

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Off we go to the Air Force

HQ AFPC/MSMIDL550 C Street, West, Suite 50Randolph AFB, Texas 78150-4752Voice: (210) 565-2660

Meanwhile, Colonel Jessup…

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Contact Higher….

Commandant of the Marine Corps Headquarters, USMC Code MMSB-10 Quantico, VA 22134-5030

(760) 725-5171

Gotta love the Marines…

The Marine Corps is not able to assist in locating former Marines. They suggest you place an ad in Leatherneck Magazine. There is a monthly feature called "Mail Call" that includes locator requests. There is no charge for the service and you may send your request to:

Mail Call Editor P.O. Box 1775 Quantico, Virginia 22134

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Coast Guard, here‐there‐everywhere

Coast Guard WWL?

MAYBE?? Never throw away a contact…

Coast Guard Personnel Command (CGPC-adm-3) 2100 Second St, SW Washington, DC 20593-0001 Facsimile: (202) 267-0581

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Coast Guard Headquarter Locator (per really helpful Paralegal Specialist with USCG Legal)

If someone knows what unit or District a member is attached they should and/or can reach out to the District’s admin/personnel office.

If you need to locate a CG member or to find out if they are currently or were in the CG, The CG locator in Headquarters will tell you where a CG member is assigned/attached. Please reach out via email or phone

202-493-1697 [email protected]

What about when the service member is deployed to a “danger zone”?

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After you find the service member, what’s next?

Serving the service member off base

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Serving the service member on base

Service Rules on Service

32 C.F.R. § 516.10(d)(1)(Army)

32 C.F.R. § 720.20(a)(1)(Navy and USMC)

Chapter 7 of the Coast Guard MJM

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In General (pun intended)

Best starting point is contact the base or installation security office or Provost Marshall (MPs). They’ll usually tell you how or enough to start.Typically, either the Provost Marshall or security will provide an escort or direct a process server to a designated area for service.Service members are given the option to consult legal advice prior to accepting service.

Army

Will help facilitate but aren’t required to complete it for a process server and are not responsible for seeing it through. Forbidden from preventing or evading service. If a soldier chooses to consult with legal, process servers can’t attempt service at that time. If the service member voluntarily accepts service, no problem.

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When your soldier refuses service…

“Army regulations permit access to Army property only when the state has reserved the right to serve process, in areas of concurrent jurisdiction, and in areas where the federal government has only a proprietary interest. See 32 C.F.R. §516.10(d)(2). These criteria would presumably not be satisfied in most cases involving process from an out-of-state court.”

FN 45 SERVICE OF PROCESS AND THE MILITARY by W. Mark C. Weidemaier, Administration of Justice Bulletin No. 2004/08 December 2004

Army – not if we don’t have to

If an Army base has exclusive federal jurisdiction, and the soldier refuses to accept service, then the Army deems service on base precluded. If you are trying to serve out-of-state papers on base, then like exclusive federal jurisdiction, if the soldier refuses to accept, further attempts on base are precluded.If you aren’t sure of the jurisdiction, call and ask.

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Go Farther, Go Air Force

Air Force regulations are similar to the Army, but looser:

◦ The Air Force may allow access to installations even to serve out of state process.

◦ In situations where service is refused by the service member prior to consulting legal advice, Air Force policy allows process SERVERS in areas of exclusive federal jurisdiction. Mind. Blown.

◦ IOW, the Air Force is more liberal and allows process servers Air Force installations, regardless of federal or state jurisdiction.

Navy and Marine Corps

As outlined in the Code of Federal Regulations (Navy and Marine Corps 32 C.F.R. § 720.20), it’s much the same as the Army.Main difference is the commanding officer must provide consent for the service member to be served and either the CO or her designated officer must be present when the SM is served. Also, Navy and Marine Corps regulations specifically allow service members to refuse service from out-of-state courts.

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US Coast Guard

Basically how it’s done in the Army.Commanding Officers must make SM available, but aren’t required to actually effectuate the service. Typically, either the Provost Marshall will escort the process server or arrange for service.

Overseas service of process

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The Hague Convention 

Central Authority

Each member of the Hague Service Convention must have a Central AuthoritySend documents to the host Central Authority for serviceMake sure you ask for specific type of service if needed, or most likely will be by acceptance of service

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APO, FPO, DPO….oh no

If you want the Hague Service Convention to apply, then you need an actual address.

FPO, APO, etc are like P.O. Box addresses: they aren’t where someone lives.

Who are they?

The State Department is best source for up-to-date Hague member lists

Check the list- you can’t just serve someone in Taiwan like you would in Germany, Texas, or Rock Hill.

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DD214…

RESOURCES…

ABA – www.abanet.org/family/military

https://www.americanbar.org/products/inv/book/358661564/ Military Divorce Handbook

https://www.archives.gov/veterans/locate-service-members.html direct links to WWLs and other resources

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…more resources

https://travel.state.gov/content/travel/en/International-Parental-Child-Abduction/abductions/hague-abduction-country-list.htmlhttps://www.sog.unc.edu/sites/www.sog.unc.edu/files/reports/aoj200408_0.pdf Service of Process and the Military, W. Mark C. Weidemaierhttps://www.haguelawblog.com

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SCRA—Military Considerations in Civil Actions and SCRA Violations

Paul M. Murray

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Military Considerations in Civil Actions The Servicemembers’ Civil Relief Act (SCRA)

P A U L M U R R A Y , E S Q .

F O R T H E

S C B A R 2 0 2 0 0 7 1 0

BackgroundJoined the Marine Corps in 2009 - Officer Candidate School.

Law School from 2009-2012. Summers in Camp Lejeune Legal Offices

Admitted to first bar in 2012 – Illinois.

Stationed at MCRD Parris Island, SC - Legal Assistance & Defense Counsel

Admitted to SC Bar 2017

Civilian immediately after doing primarily civil matters under the SCRA and light criminal defense work.

Admitted to Georgia Bar in 2018.

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Learning ObjectivesGain familiarity with the areas of coverage of the SCRA including those that impact most practice areas:

- protection from default judgment

- SCRA Stay

- Right of a civil action for violation.

After today, you should be able to identify areas in your practice where you may need to reference the SCRA as those issues arise. Nobody is an expert on the SCRA.

SCRA – 50 U.S.C. § 3901

ORIGINALLY KNOWN AS THE SOLDIERS AND SAILORS CIVIL

RELIEF ACT OF 1940

FORMERLY CODIFIED UNDER

50 APP. USCA §501

CONVERSION CHART

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Purpose Of the SCRA:

(1) to provide for, strengthen, and expedite the national defense through protection extended by this chapter to servicemembers of the United States to enable such persons to devote their entire energy to the defense needs of the Nation; AND

(2) to provide for the temporary suspension of judicial and administrative proceedings and transactions that may adversely affect the civil rights of servicemembers during their military service.

§ 3911 - Definitions:

SERVICEMEMBER =

ACTIVE DUTY

- ARMY

- NAVY

- MARINE CORPS

- AIRFORCE

- COAST GUARD

Commissioned Officer of the Public Health Service AND / National Oceanic and Atmospheric Administration, Active Duty

National Guard – Only when ordered to active duty under Title 10 orders (i.e. Activated by Federal Government – Out of Home State)

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HOW WILL I KNOW IF SOMEONE IS ON ACTIVE DUTY?

Find the Address Bar and Type:

https://scra-w.dmdc.osd.mil/scra/#/home

§3912 Jurisdiction and Applicability

The SCRA Applies to:

(1) The United States;

(2) each of the States; and

(3) all territory subject to the jurisdiction of the United States.

Court in Which Application may be made:

When under this chapter any application is required to be made to a court in which no proceeding has already been commenced with respect to the matter, such application may be made to any court which would otherwise have jurisdiction over the matter.

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General Position of CourtSupreme Court has generally taken the position that the statute should be read “with an eye friendly to those who have dropped their affairs to answer their country’s call”. Le Maistre v. Leffers, 333 U.S. 1, 6 (1948).

§ 3917 – Extension of Rights to Reserves Appointed to Active Service and Persons Ordered to Report for Induction.

(a) Reserves ordered to report for military service

A member of a reserve component who is ordered to report for military service is entitled to the rights and protections of this subchapter and subchapters II and III during the period beginning on the date of the member's receipt of the order and ending on the date on which the member reports for military service (or, if the order is revoked before the member so reports, or the date on which the order is revoked).

(b) Persons ordered to report for induction

A person who has been ordered to report for induction under the Military Selective Service Act [50 U.S.C. 3801 et seq.] is entitled to the rights and protections provided a servicemember under this subchapter and subchapters II and III during the period beginning on the date of receipt of the order for induction and ending on the date on which the person reports for induction (or, if the order to report for induction is revoked before the date on which the person reports for induction, on the date on which the order is revoked).

Use Caution: These Service-members are protected, but they are likely not going to show up as active duty on the DMDC SCRA website.

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Military ServicePeriod of military service

The term "period of military service" means the period beginning on the date on which a servicemember enters military service and ending on the date on which the servicemember is released from military service or dies while in military service.

Title 10 Orders to Active Duty

Not Drill Time (Reservists)

Not Regular National Guard Duty – Because regular National Guard Duty is not authorized per Title 10.

USE CAUTION WHEN DEALING WITH RESERVISTS: They will have multiple periods of military service.

Dependent =Servicemember’s Spouse;

Servicemember’s Child; AND

An individual for whom the servicemember provided more than one-half of the individual's support for 180 days immediately preceding an application for relief under this chapter.

- Elderly Parents

- Unemployed Fiancé

- incompetents and mentally incapacitated

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SUBCHAPTER II:

General Relief

SUBCHAPTER II

3931. - Protection of servicemembers against default judgments.

3932. - Stay of proceedings when servicemember has notice.

3933. - Fines and penalties under contracts.

3934. - Stay or vacation of execution of judgments, attachments, and garnishments.

3935. - Duration and term of stays

3936. - Statute of limitations.

3938. - Child custody protection.

Overview

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§ 3931 Protection from Default Judgment

- Applies to ANY CIVIL ACTION

- Plaintiff must file an affidavit regarding their knowledge of potential military service of party in default.

If Servicemember is in military Service, THEN:

- Court may not enter default judgment until after the court appoints an attorney to represent the servicemember.

§ 3931 continuedIf military status unknown, THEN:

Court may require the plaintiff to file a bond.

- bond remains in effect until expiration of the time for appeal and setting aside of judgment.

CAUTION: This could be a long time. Active duty can run continuously in excess of 20 - 30 years.

See Section 3936 – [period of military service may not be included in calculating (any statute of limitations)]

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§ 3931 – May not be the best remedy for the servicememberRemedy under 3931 for default is set-aside of the default judgment and allowing the servicemember to defend the action.

CAUTION to Plaintiff’s:

See Section 4042, allowing for a private right of action for the violation of the SCRA in a suit for actual, special, and punitive damages and recovery of attorney fees.

This can hurt your Plaintiff worse than the set aside.

3931 – Mostly applicableDebtor / Creditor Law - SM buys a car, goes on active duty or deploys, then during deployment, autopay gets turned off. Creditor swoops in for the default judgment.

Landlord / Tenant – Service-member terminates lease, landlord pursues action after they leave, provide service to landlord via notice to “last known address.” Service-member doesn’t know address at time of termination to be able to forward and receives no notice.

(Contracts)

Child Custody matters could be problematic, especially where waiver of SCRA rights was snuck into a separation agreement.

PROPERTY – Home foreclosures.

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Stay of Proceedings - §3932Applies to Civil Action, including any child custody proceeding if servicemember in military service, and has notice.

- May be granted at any stage before final judgment

- Court may grant on its own motion; but

- SHALL grant upon application by servicemember.

- REQUIREMENTS:

1. Letter stating manner in which military duty requirements materially affect service-member presence AND stating the date he will be able to appear.

- Can be from servicemember, attorney, or command.

2. Letter From Commanding Officer, verifying that A. Current military duty prevents appearance and; B. That military leave is not authorized.

3932 Continued…Application for a stay is not a waiver of defenses

Additional stay Allowed based on continuing material affect of military duty.

If additional stay denied, the court MUST appoint an attorney to represent.

Under this section, no absolute bar has been erected to proceedings against one in military service, though court has discretion as to whether to postpone such proceedings. Swiderski v. Moodenbaugh, D.C.Or.1942, 44 F.Supp. 687. See, also, Fluhr v. Fluhr, 1947, 52 A.2d 847.

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3932 ContinuedStay can be used in any kind of qualifying civil case.

STAY v. Continuance

§3934 Stay or Vacation of Execution or Judgments, Attachments and Garnishments

(a) Court action upon material affect determination

If a servicemember, in the opinion of the court, is materially affected by reason of military service in complying with a court judgment or order, the court may on its own motion and shall on application by the servicemember--

(1) stay the execution of any judgment or order entered against the servicemember; and

(2) vacate or stay an attachment or garnishment of property, money, or debts in the possession of the servicemember or a third party, whether before or after judgment.

(b) Applicability

This section applies to an action or proceeding commenced in a court against a servicemember before or during the period of the servicemember's military service or within 90 days after such service terminates.

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§3936 – Statute of Limitations

(a) Tolling of statutes of limitation during military service

The period of a servicemember's military service may not be included in computing any period limited by law, regulation, or order for the bringing of any action or proceeding in a court, or in any board, bureau, commission, department, or other agency of a State (or political subdivision of a State) or the United States by or against the servicemember or the servicemember's heirs, executors, administrators, or assigns.

(b) Redemption of real property

A period of military service may not be included in computing any period provided by law for the redemption of real property sold or forfeited to enforce an obligation, tax, or assessment.

(c) Inapplicability to internal revenue laws

This section does not apply to any period of limitation prescribed by or under the internal revenue laws of the United States.

Hypo:

HYPO 1: Servicemember buys Car 1 in 2000 at 8% interest from dealer / lender. Enters active duty in 2001; Car 1 repossessed by lender without a Court Order in January 2002 for alleged non-payment. Buys Car 2 in January 2002 without issue; Leaves active duty in January 2008. Picks up active duty reserve orders in February 2008 – February 2009; New active reserve orders in March 2009 - December 2009; SM medically discharged in January 2010. SM Realizes his credit is messed up from the repossession in January 2002. All active duty orders are under title 10.

Q1: Can he sue lender in Febrruary 2010 (8 years later) if the state statute for such a suit is 2 years?

Q2: What if a federal lending law places a statute of limitations at 2 years?

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SUBCHAPTER III:

Subchapter III: 3951.Evictions and distress.

3952.Protection under installment contracts for purchase or lease.

3953.Mortgages and trust deeds.

3955.Termination of residential or motor vehicle leases.

3958.Enforcement of storage liens.

3959.Extension of protections to dependents.

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§3951 Evictions and DistressExcept by court order, a landlord (or another person with paramount title) may not--

(A) evict a servicemember, or the dependents of a servicemember, during a period of military service of the servicemember, from premises--

(i) that are occupied or intended to be occupied primarily as a residence; and

(ii) for which the monthly rent does not exceed $2,400, as adjusted under paragraph (2) for years after 2003; or

(B) subject such premises to a distress during the period of military service.

§ 3952 – Protections Under Installment Contracts for Purchase or Lease

(a) Protection upon breach of contract

(1) Protection after entering military service

After a servicemember enters military service, a contract by the servicemember for--

(A) the purchase of real or personal property (including a motor vehicle); or

(B) the lease or bailment of such property,

may not be rescinded or terminated for a breach of terms of the contract occurring before or during that person's military service, nor may the property be repossessed for such breach without a court order.

This section applies only to a contract for which a deposit or installment has been paid by the servicemember before the servicemember enters military service.

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§3955 – Termination of Residential and Motor Vehicle Leases

(a) Termination

(1) Termination by lessee

The lessee on a lease described in subsection (b) may, at the lessee's option, terminate the lease at any time after--

(A) the lessee's entry into military service; or

(B) the date of the lessee's military orders described in paragraph (1)(B) or (2)(B) of subsection (b), as the case may be.

Subsection (b): Leases of Premises (residential, professional, business, agricultural or similar purpose) and Motor Vehicles.

Hypo Servicemember signed a one-year lease, Lease 1, on January 1, 2018 for property in California. Servicemember receives orders to South Carolina, November 1, 2018 for a permanent change of station (PCS) to Parris Island, SC to execute on or about February 1, 2019. On January 14, 2019 service-member’s orders are changed directing servicemember to Jacksonville, NC instead of Parris Island, SC. On January 15, 2019, the day after the orders change, SM executes lease 2 for SC apartment just off base at MCRD Parris Island, SC. Servicemember is given his/her changed orders on January 16, 2019, the day after the lease 2 is executed.

Q1: Can servicemember terminate lease 1 under the SCRA? When?

Q2: Can service-member terminate lease 2 under the SCRA? If so, when?

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Hypo: Servicemember is on active duty in California starting in January 1, 2019. Service-member executes a Vehicle lease for three years on January 15, 2019. Servicemember receives orders to retire and return to home of record in Arizona. Retirement orders received on January 2020, for execution March 1, 2020.

Q1: Can Servicemember terminate the vehicle lease? If so, how / when?

Q2: What are servicemembers remedies if the termination is refused?

§3958 Enforcement of Storage Liens(a) Liens

(1) Limitation on foreclosure or enforcement

A person holding a lien on the property or effects of a servicemember may not, during any period of military service of the servicemember and for 90 days thereafter, foreclose or enforce any lien on such property or effects without a court order granted before foreclosure or enforcement.

(2) Lien defined

For the purposes of paragraph (1), the term “lien” includes a lien for storage, repair, or cleaning of the property or effects of a servicemember or a lien on such property or effects for any other reason.

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§3959 – Extension of Protection to DependentsUpon application to a court, a dependent of a servicemember is entitled to the protections of this subchapter if the dependent's ability to comply with a lease, contract, bailment, or other obligation is materially affected by reason of the servicemember's military service.

Dependent = Basically the same definition provided by IRS.

SUBCHAPTER VIIICIVIL LIABILITY

“THE SWORD” of the SCRA

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Section: 4041 - Enforcement by Attorney General (a) Civil action

The Attorney General may commence a civil action in any appropriate district court of the United States against any person who--

(1) engages in a pattern or practice of violating this chapter; or

(2) engages in a violation of this chapter that raises an issue of significant public importance.

Section 4042: Private Right of Action(a) In general

Any person aggrieved by a violation of this chapter may in a civil action--

(1) obtain any appropriate equitable or declaratory relief with respect to the violation; and

(2) recover all other appropriate relief, including monetary damages.

(b) Costs and attorney fees

The court may award to a person aggrieved by a violation of this chapter who prevails in an action brought under subsection (a) the costs of the action, including a reasonable attorney fee.

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Section 4043:

Nothing in section 4041 or 4042 of this title shall be construed to preclude or limit any remedy otherwise available under other law, including consequential and punitive damages.

LAST TOPIC: WAIVER OF SCRA RIGHTS

This topic is out of order for your benefit.

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3918 Waiver of RightsThe waiver of rights under the SCRA:

- Certain rights must be in writing – usually those waivers allowing foreclosure, eviction, repossession, etc.

- Cannot execute a waiver until after a servicemember enters active duty.

- Must be made pursuant to a written agreement

- Must be in writing, on a sheet separate from any other provision of the contract (as an addendum) in 12-point font.

-

ResourcesSullivan, Mark E – The Military Divorce Handbook 2nd ed, ABA. 2011.

Always go back to the ACT:

https://uscode.house.gov/view.xhtml?path=/prelim@title50/chapter50&edition=prelim

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THANK YOU AND GOOD LUCK

Paul Murray

Hafemann, Magee, Thomas

340 Eisenhower Drive, Suite 1313

Savannah, GA 31401

912.221.4441

[email protected]

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Military Clients in South Carolina Matters: What You Need to Know

Jeffrey S. Stephens

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Military Clients in South Carolina Matters: What You Need to Know

Jeffrey S. StephensMajor, USMCR(Ret.)

Quindlen Law Firm, P.A.www.quindlenlaw.com

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Military Clients in South Carolina (Criminal) Matters: What You Need to Know

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i.e., what’s left after the good topics have all been taken

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Why should service members be treated differently in S.C. law?

“No persons should be more entitled to protection of their constitutional rights than the servicemen engaged in protecting the sovereignty of the United States.”

-Judiciary Committee Report, U.S. Senate, 1963

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BLUF:

When a service member is suspected of committing an “off-base”* offense in our state, civilian and military authorities have some overlapping interests in the outcome.

* “off-base” meaning an area of non-, or non-exclusive, Federal territorial jurisdiction and non-exclusive Federal subject matter jurisdiction

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Prevention, Punishment, Protection

Military - Criminal

Military -Administrative

Military Remedies

State - Criminal

State - Civil

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What types of offenses are we typically talking about?

• DUI’S• DOMESTIC VIOLENCE (formerly CDV)• ASSOCIATED PROPERTY CRIMES

• from small Trespassing, Malicious Injury to Personal Property, etc., to

• BIG Burglary, Drug Crimes, etc.

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Who is your client?

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Who is your client?

• Probably Military Member who walks in your door

• Could also be a spouse or romantic partner who is a victim of DV by a military member

• Could even be DoD civilian employee

• All require knowledge of how the Military Member/Employee will be treated by state and Military authorities

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S.C. Laws and Military Rules Examples for Most Common Offenses

• Impaired Driving Offenses

• Domestic Violence

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DUI

• Operating a motor vehicle while under the influence of alcohol:

South Carolina law prohibits a person from driving a motor vehicle while under the influence of alcohol to the extent that the person’s faculties to drive are materially and appreciably impaired. If you have a BAC of 0.08 percent or higher, it will be inferred that you were driving under the influence.

(S.C. Code of Laws Sections 56-5-2930, 56-5-2940, 56-5-2950, 56-5-2990, 56-5-6240)

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DUI

• Note that “motor vehicle” is broadly defined

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Other SC DUI Laws• Driving with an unlawful alc. concentration (illegal per se):

BAC 0.08 percent or higher; same penalties as you would for a DUI conviction

(S.C. Code of Laws Sections 56-5-2933 and 56-5-2940)

• Implied consent: any person driving in this state is considered to have given consent for testing of breath, blood or urine for the purpose of determining the presence of alcohol and/or drugs in the person’s system, if alleged to have committed a violation. If you refuse to submit to BAC testing, you face an automatic 90-day suspension of your driving privileges if you are 21 or older.

(S.C. Code of Laws Section 56-5-2950 and 56-5-2951)

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Department of Defense Alcohol Policy

• 32 CFR Ch. I (7–1–99 Edition) , PART 62b—DRUNK AND DRUGGED DRIVING BY DoD PERSONNEL

• § 62b.4 Procedures

• (see also, 32 CFR § 634)

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Department of Defense Alcohol PolicyEach DoD Component . . . shall establish procedures for mandatory suspension of driving privileges on military installations and in areas subject to military traffic supervision. They shall establish procedures for acquiring arrest reports and other official documentation of intoxicated driving incidents consistent with applicable laws and regulations. Such procedures shall be sufficiently flexible to meet local needs.

(1) Military personnel and their family members, retired members of the Military Services, DoD civilian personnel, and others with installation driving privileges may have those driving privileges suspended, regardless of the geographic location of an intoxicated driving incident.

§ 62b.4(b)(emphasis added)

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Department of Defense Alcohol Policy

A hearing authorized under paragraph (b) (2), (3), or (5) of this section, shall be conducted by the installation commander. . . . At a hearing under this paragraph, the individual shall have the right to present evidence and witnesses at his or her own expense [and] may be represented by counsel at his or her own expense. DoD civilian personnel may have a personal representative present in accordance with applicable laws and regulations.

§ 62b.4(b)(1)(iv)66

Department of Defense Alcohol Policy(i) Preliminary suspension of driving privileges is mandatory based upon an arrest report or other official documentation of the circumstances of an apprehension for intoxicated driving

BUT(v) If the individual is acquitted, the charges are dismissed, or there is an equivalent determination in a nonjudicial punishment proceeding or civilian administrative action, the preliminary suspension shall be vacated.

§ 62b.4(b)(2)(emphasis added)

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Department of Defense Alcohol Policy

But, Wait, There’s More!

In addition to the loss of base driving privileges, service members will get administrative counselings, reprimands, adverse evaluations, loss of eligibility for promotion, non-judicial punishment, or even risk of trial by court-martial and separation from military service from one DUI arrest, even if it is dropped to a non-alcohol related offense.

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Department of Defense Alcohol Policy32 § 634.13 Alcohol and drug abuse programs

(b) military personnel are referred to the installation alcohol and drug abuse program when they are convicted of, or receive an official administrative action for, any offense involving driving under the influence. This does not limit other actions that may be taken against an offender under separate Service/Agency polices (Army, see AR 600-85. Marine Corps, see MCO P1700.24B)

(i) Driving privileges of any person who refuses to submit to/complete breathalyzer, or is convicted of intoxicated driving, will not be reinstated unless the person successfully completes either an alcohol education or treatment program sponsored by the installation, state, county, or municipality, or other program evaluated as acceptable by the installation commander.

(j) Active duty Air Force personnel apprehended for drunk driving, on or off the installation, will be referred by their respective chain of command to the Air Force Substance Abuse office for evaluation in accordance with AFI 44-121/Alcohol Drug Abuse & Treatment Program, and local policies within seven days.

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Department of Defense Domestic Violence Policy

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“Domestic violence is an offense against the institutional values of the military services of the United

State of America.”

- Dep. Secy. of Defense Paul Wolfowitz, Nov. 2001

DoD Instruction 6400.06 “Domestic Abuse…”

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Off-Base Allegations of Abuse can lead to

• Criminal Charges by LE, such as…

– Domestic Violence, 1st, 2nd, 3rd Degree

– Assault & Battery, 1st, 2nd, 3rd Degree

– “High and Aggravated” charges

– Harassment, 1st, 2nd, 3rd Degree

– Stalking

• Civil Actions (e.g., restraining order or EPO)

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What is Domestic Violence? For $1,000, Alex

SOUTH CAROLIN CODE SECTION 16-25-20.

(A) It is unlawful to:

(1) cause physical harm or injury to a person's own household member; or

(2) offer or attempt to cause physical harm or injury to a person's own household member with apparent present ability under circumstances reasonably creating fear of imminent peril.

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When an Assault is just an Assault

“Household Member” S.C. Code Section 16-25-10

1. spouse or former spouse,

2. male and female cohabitants or former cohabitants,

(applied since 2018 to unmarried same sex couples) or

3. people with a child together.

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How do I stop this crazy thing?

• Police Officer can Dismiss

• Solicitor can Nolle Prosequi

• Pretrial Intervention (PTI)

• Plea agreement

• Trial

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Advising the Client about PTI• PTI participation is inadmissible as

evidence; statutory prohibition on release of records

• Communication with PTI counselors is privileged unless a court finds a compelling public interest to reveal it; and

• The solicitor cannot require a written admission of guilt as a condition of entrance into PTI

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Effects of Criminal Process for anyone

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Effects of Criminal Process

• Arrest

• Immediate confinement

• Possible Conviction

• Possible required supervision

– Probation, Conditional Discharge, Drug Court

• Possible Prison sentence or “jail time”

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Effects of Criminal Process for service member charged with DV

• Arrest

• Immediate jail

• Possible Conviction

• Probation or PTI REQUIRE completion of Batterer’s Treatment Program

• AWOL/UA? Possible Military Charges?

• Review of Case by IDC/REQ. COUNSELING

• Admin. Discharge?

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Civil Remedies• Grounds: Typically…

– Bodily injury

– Attempted bodily injury

– Threat of serious bodily injury

– Ex parte EPO, restraining order

– Full hearing on charges

• Make EPO permanent

• Dissolve it

• Modify it

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- An Example -

• Marine Corporal Glenn Gray

• and his wife, Jane Gray

• “Straighten up” plus assault

• Jane’s options…

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TRIP WIRE – The Servicemembers Civil Relief Act (50 U.S.C. Appx. 501 et seq.)

• Sec. 521 – limitations on issuing default decrees

• Sec. 522 – Motion for stay of proceedings

– 90 days

– or longer…

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Armed Forces Domestic Security Act, 10 U.S.C. 1561a

• Civilian orders of protection

• Full force and effect on military bases

• Responsibility of the command

• Violation of CPO may also be prosecuted by the military as an “assimilated crime” –Articles 128, 134 of UCMJ (Uniform Code of Military Justice)

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Military Responses: ZERO TOLERANCE

• Report of domestic violence, on or off base:

➢Family Advocacy Program [DoD Directive

6400.1]

-AND-

➢Disciplinary Action /Military justice

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Family Advocacy Program/Incident Determination Committee

• Identify

• Intervene

• Treat – not punish

• Primary focus: safeguard victims of DV

• Each branch of svc. different

• Uniform design and structure

I.I.T.

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Family Advocacy Program/IDC

• DoD Definition of DV

• Caseworker assigned

• Victim Advocate

• Interview of the accused SM

• Case Review Committee [CRC]

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Family Advocacy Program

• Ordinarily no confidentiality

• “Code of Silence”

• Implementation of “restricted reporting” [see Encl. 3, DoD Instruction 6400.06]

• Exceptions

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Commander’s Responses

• When SM is the victim…

– The civilian suspect may be debarred from the installation

– Case would STILL go to FAP/IDC, SM may still be ordered to do counseling

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Commander’s Responses

• Use of MPO if SM is perpetrator

• MPO = Military Protective Order

• “No Contact!” MPO’s and No Contact Orders

• If SM is being investigated or prosecuted by military, a legal counsel may be appointed to represent a military or civilian victim (not really available in civilian system in SC)

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Commander’s Responses

• Administrative Action

– Adverse evaluations, counseling, promotion effect

– Administrative Separation*

• UCMJ (Uniform Code of Military Justice)

– Court-martial

– Article 15 (nonjudicial punishment), Summary Court-Martial (not real court)

• Not mutually exclusive!

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Commander’s Responses

• Court-martial consequences…

– Forfeiture of pay & allowances

– Confinement

– Reduction in grade

– Punitive discharge = no pension

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Firearms Possession Problems

• 1996 – “Lautenberg Amendment”

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??

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Lautenberg Amendment18 USC Section 922 makes it a felony to possess a firearm, ammo, or explosives if you are a person who:

• has been convicted of any crime punishable by more than one (1) year in prison;

• been convicted of a misdemeanor for domestic violence; or

• subject to a (final) court order that finds that person “represents a credible threat to the physical safety of an intimate partner or child of that partner” and restrains that person from “harassing, stalking, or threatening an intimate partner of such person or child of such intimate partner or person, or engaging in other conduct that would place an intimate partner in reasonable fear of bodily injury to the partner or child.”

• “Lautenberg Checklist”

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Effects of Lautenberg on SM

• 18 U.S.C. § 922 makes no exception for those whose daily employment requires their ability to carry and use firearms (e.g., SM, police)

• Lautenberg requires admin separation

• BUT only convictions, not Art 15 or Summary Court, see Middendorf v. Henry,

425 U.S. 25 (1976)

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You parting gift: Transitional Compensation

• Source: 10 U.S.C. 1059

• Purpose: Provide temp. assistance

• …to spouses and family members

• …when SM is court-martialed

• …or administratively discharged

• Due to abuse of spouse or family member

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Trans. Comp. Benefits:

• Linked to discharge due to dependent-abuse offense

• Current spouse or dependent child

• Qualifying offenses

• Fin. Supt. = Title 38, U.S. Code [dependency compensation for dependents after svc-related death of the SM

• Terms: 12-36 months

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Terms, Conditions

• Early termination events: remarriage, cohabitation

• Disqualification due to “active participation”

• Election needed if “multiple benefits”

• On-base shopping privileges

• Health benefits involving abuse-related treatment

• Relocation

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Military Pension Division

• Source: 10 U.S.C. 1408(h)

• SM must be “retirement-eligible” (i.e., over 20 years of active duty)

• Similar benefits to Trans. Comp. – but longer-lasting

• Exchange, commissary shopping privileges

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DoD Instruction 6400.06 “Domestic Abuse…”

Resources,Resources,Resources

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Conclusion:Civilian and military authorities have some overlapping interests in the outcome of allegations of off-base misconduct,

BUT

The military response can be extensive and disproportionate to the alleged misconduct, and can result in career-ending administrative actions, separation from military service with stigmatizing discharge, and/or court-martial.

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THE END

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Military Clients in South Carolina Matters: What You Need to Know

Jeff [email protected]

(843) 379-2660www.quindlenlaw.com

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Family Law Boot Camp: Basic Military Issues in Family Law Matters

Mary Fran Quindlen

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MILITARY FAMILY LAWMary Fran Quindlen

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Before

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After – Will the military branches intervene?

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Military Support Orders

• Each branch has its own order on Family Support

• Air Force - Air Force Instruction 36-2906, Personal Financial Responsibility

• Merely requires the Servicemember to provide “adequate support”

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Army Reg 608-99

• The Army has a very complicated support regulation, but at least they offer Legal Assistance and their Order is punitive

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Navy Support Regulations

• MILPERSMAN 1754-030, Chapter 15, Support of Family Members,

• It’s very simple and based on base pay and BAH, but it is NOT punitive

• Spouse only: 1/3

• Spouse & 1 minor child: 1/2

• Spouse & 2 or more children: 3/5

• 1 minor child: 1/6

• 2 minor children: 1/4

• 3 minor children: 1/3

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Coast Guard Support Regulation

• What? Wait? Aren’t they actually cops or Homeland Security or something?

• BE NICE• COMDTINST M1000.6A, Personnel Manual, Chapter 8M

• Spouse only: BAH-Diff, plus 20% of base pay.

• Spouse & 1 child: BAH-Diff, plus 25% of base pay.

• Spouse & 2 or more children: BAH-Diff, plus 30% of base pay.

• 1 child: 1/6 of base pay.

• 2 children: 1/4 of base pay.

• 3 or more children: 1/3 of base pay.

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UNITED STATES MARINE CORPS

111

MAD DOG MATTIS

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MARINE CORPS SUPPORT ORDER• This Order is punitive

• Chapter 15 of the LEGADMINMAN• 1 family member: 1/2 BAH/OHA, minimum $350 each.• 2 family members: 1/3 BAH/OHA, minimum $286 each.• 3 family members: 1/4 BAH/OHA, minimum $233 each.• 4 family members: 1/5 BAH/OHA, minimum $200 each.• 5 family members: 1/6 BAH/OHA, minimum $174 each.• 6 or more family members: 1/7 BAH/OHA, minimum $152 each.

• Under no circumstances may a marine be required to pay more than 1/3 of his/her gross military pay, which includes base pay and all allowances.

• There is no support duty between active duty spouses without children.

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Exceptions to Every Rule

• All the branches have exceptions and allow for a commander to modify the support requirement based on specific circumstances set forth in each branchs regulations/orders

• In-kind support is a perfect example of the exception

• If you represent the spouse, remember the all powerful CONGRINT (Congressional Interest)

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Remember, this is Interim Support

• And like all good things, this too must end

• If you represent the servicemember, make certain that your client is paying what is required and you get a Family Court support Order as quickly as possible

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Military Protective Order (MPO)

• The Military’s answer to an Order of Protection

116

Do the State Courts have the authority to divide military retirement pay?

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Division of Military Pension

• McCarty v. McCarty, 453 U.S. 210 (1981)

• USFSPA, 10 U.S.C. 1408

• Mansell v. Mansell, 490 U.S. 581 (1989)

• Can only divide disposable military retirement

• SBP and VA pay come out first

• NDAA 2017 – Mark will cover in his presentation later

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Uniformed Services Former Spouses Protection Act

• The USFSPA was the Congressional response to McCarty v. McCarty, 453 U.S. 210 (1981)

• Also created the concept of a 20-20-20 spouse

• You should know there is also a 20-20-15 spouse talk about later

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How is it divided?

• Once the pay is narrowed down to disposable retirement pay, the division of that pay is subject to the individual state laws

• Disposable military retirement pay is a marital asset like a 401(k)

• Many people think there needs to be 10 years of marriage for a division, but the 10 years rule is only for direct payment from DFAS – which is what all former spouses desire

• Perfect language is also, only for DFAS, just like a QDRO – if it does not get past the Plan Administrator (in this case DFAS), the payor still needs to pay

• Drafting tips in Mark Sullivan’s book and Silent Partners

• This is its own CLE Mark will cover in his presentation

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Jurisdiction

• It’s not as tricky as it seems, but remember the SCRA. . .

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Calculating Child Support with Military Pay

• The South Carolina Child Support guidelines clearly identify all military pay as gross income for the purposes of calculating child support

• If you represent the spouse, watch for the opposing counsel to argue BAH or BAS or SDA is not income

• If you represent the servicemember, child support is often times less than the support required by your branch of service

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Reading an LES

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Retiree Account Statement

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Retiree Account Statement

Shows SBP premiums, VA

offsets, allotments

Often need both an LES, an RAS, and a DD-214 to make a perfect division of military retirement

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TriCare

• Standard is now Select

• Prime is Prime

• If divorced, custodial parent can choose in which the child is enrolled, but doesn’t hurt to write that into any Agreement you may have

• 20-20-20 Spouse keeps ID Card and TriCare

• 20-20-15 Spouse gets one year of free TriCarehttps://www.tricare.mil/Plans/Eligibility/FormerSpouses#:~:text=Scenario%202%3A%20The%20%2220%2D,for%20at%20least%2020%20years

• Critical to learn about Continued Healthcare Benefit Plan (CHCBP)• COBRA for TriCare• Former Spouse keeps an ID card and has access to base health facilities• This is worth every penny if the spouse has a chronic illness or requires expensive

maintenance medications

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CHCBP Premiums

Individual •Separated sponsor•Unremarried former spouse•Child who loses TRICARE due to age

$1,553 per quarter

Family •Separating service members and their families• Includes spouse and children

$3,500 per quarter

https://tricare.mil/Plans/SpecialPrograms/CHCBP/PurchaseCHCBP

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Survivor Benefit Plan (SBP)

• As an active duty Judge Advocate, I had no clue what SBP was

• Servicemembers learn about it when they are preparing to retire, Judge Advocates learn about it in Justice School or at TJAGS

• It is the same as any other defined benefit plan’s survivor annuity, but with no separate life annuity option

• Not usually a good investment

128

Division of SBP in Divorce

• Use the Magic Language

• “Deemed Election”

• “Former Spouse Beneficiary”

• Failure to do so is fatal, it can be corrected, but it is not easy

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Board of Correction of

Military Records (BCMR)

• This is where parties need to go if they wait longer than a year after the divorce to make the deemed election

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What about Custody?

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South Carolina Military Parent Equal Protection

Act§63-5-900, et seq

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Uniform Deployed Parents Custody and Visitation Act

§63-15-500, et seq

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What about Alimony?

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In conclusion, in case you were wondering

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Military Pension Division: Crossing the Minefield

Mark E. Sullivan

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South Carolina Bar, CLE Division

Mark E. SullivanCOL, USA (Ret.)

Raleigh, NC

[email protected]

MILITARY PENSION DIVISION:

CROSSING THE MINEFIELD

*www.nclamp.govFor Lawyers “Silent Partner”

*USFSPA (Uniformed Services Former Spouses’ Protection Act), 10 USC 1408

*DoDFMR (Dept. of Defense Fin. Mgt. Regulation), Vol. 7B, Ch. 29

Resources,Resources,

Resources

“Who ya gonna call?”

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How you may feel after this presentation is finished…

FEEDING FROM THE FIREHOSE!

Basic info: Military Pension Division

• USFSPA – 10 USC 1408

• JURISDICTION:– Domicile

– Residence, but not due to mil. orders

– Consent to the court’s jurisdiction

ALL AT 10 USC 1408 (c)(4)

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Basic info: Direct Pmt from Ret’d Pay Ctr

• 10 years of marriage

• 10 yrs of service

• Overlap of 10 years

THE “10/10 RULE”

Basic info: What instrument can divide the pension?

• Decree of divorce…

• Or of legal separation [divorce from bed and board?]

• Or in sep. agreement [incorporated into div. decree

• Or MPDO [military pension division order] incident to divorce/legal separation decree

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Basic info: What clauses can divide the pension?

• Fixed dollar amount

$400/mo. to Jane Doe

• Formula clause

Wife to get 50% of H’s retired pay times a fraction, 12 yrs/X – where 12 years is marital pension svc., and X is total pension service

Basic info: What clauses can divide the pension?

• Percentage clause:

Defendant will pay to plaintiff 44% of his military retired pay as property division.

• Hypothetical clause:

H to pay W 50% of his pension if he’d retired as a major with __ years of creditable service and a ret’d pay base of $__ as of [DATE]

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Basic info: Details & Logistics• Submission process

– Send to ret’d pay center [DFAS or USCG] a cert. copy of

• divorce decree and

• division document [if not in div. decree]

– With DD Form 2293

– Also copy of W-4P [tax w’holding] and

– DD Form 1059 [direct deposit]

Basic info: Details & Logistics

• 90 days for processing fm the later of:

– Order submission date, or

– Start of ret’d pay

• Interim pens. share pmts by retiree

• Taxable to payee, excludable by payor

• Ending at death of either party

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Survivor Benefit Plan

• Income continuation plan, “survivor

annuity” which can be purchased

• 55% of SBP base to the FS [former

spouse]

• Base is full ret’d pay as default

• Minimum for base = $300/mo.

Survivor Benefit Plan

• Cost = 6.5% of SBP base for retiree fm

active duty [“Regular Ret’ment”]

• For Guard/Reserve, ~10% [“Non-

Regular Ret’ment”] for RC-SBP

(immediate coverage as of 20-yr mark)

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Survivor Benefit Plan• Who pays the premium? [in same ratio as

pension division, e.g., 50-50 or 70-30]

• Thus FS always pays less than SM/retiree

• Cost-shifting

– Ret. pay center cannot do this

– FS can pay retiree with a check each month [?]

– OR… lower the % that FS receives

Today and Tomorrow –New Developments

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Frozen Benefit Rule

December 23, 2016

… for the Frozen

Benefit Rule

Sec. 641, Nat. Defense Auth. Act 2017

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Affects pension div. orders –ALL uniformed services

“Frozen Benefit Rule” – Benefit to be divided is

frozen

– As of date of divorce

– Ret’d pay centers locked

into that Disposable

Retired Pay

– As if SM retired then

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“Frozen Benefit Rule”

Data required for MPDO –

• HI-3 as of date of divorce

• Also years of service [or,

for Guard/Reserve

members, # of retirement

points] at divorce

“HIGH-3…??” –What it is…

• AVG OF HIGHEST THREE YEARS OF

COMPENSATION

• BASED ON ACTIVE-DUTY PAY

TABLES

• Ret’d pay center will not calculate for

you!

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Total Retirement Points??

– Annual ret. points stmt.

– Secure portal at Guard/Reserve HQ

– Use of discovery – “Within the

possession of other party”??

– Get written/notarized release from SM

“Frozen Benefit Rule” – Applies when:

• divorce is granted after 12/23/16 &

• member not getting ret’d pay at divorce

– Regardless of agreement of parties

otherwise

– Big reduction in amt for FS

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“Frozen Benefit Rule” Resources – DFAS:

• Sec. 2908, Ch. 29, Vol. 7B of the DoDFMR

• Two sample orders, Fig. 1 & 2. BUT cautions…

– no SBP mentioned

– SCRA reference should be Chap. 50, Title 10 U.S.C.

– 5 Silent Partner Infoletters, incl. --• “Fixing the Frozen Benefit Rule”

• “All Clauses Considered: Writing the Frozen Benefit Award”

• ”Mil. Pens. Div. and the Fr. Ben. Rule: Nuts & Bolts”

• “Rules, Remedies and Res Judicata”

AT www.nclamp.gov > For Lawyers

VA Waivers, Indemnification

May 15, 2017

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• Issue = indemnification for “VA waiver”

• VA waiver:

– When retiree elects VA disability compensation

– for svc-connected wound, illness, injury or

condition…

HOWELL V. HOWELLU.S. SUPREME COURT137 S.Ct. 1400 (2017)

• Issue = indemnification for “VA waiver”

• VA waiver:

– When retiree elects VA disability comp.

– for svc-connected wound, illness, injury or condition

–Dollar-for-dollar waiver of ret’d pay IF…

• VA rating < 50%, or

• Receiving CRSC [Combat-Related

Special Compensation] & ANY VA rating

HOWELL V. HOWELLU.S. SUPREME COURT

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VA Waiver means . . .

• Share of the F.S. is also reduced

• Without court approval

• Without consent of the F.S.

VA with a Vengeance

CRDP and CRSC – “The Evil Twins”

found at…

www.nclamp.gov > Publications > SILENT PARTNER

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CRDP to the Rescue

• CRDP = Concurrent Retirement &

Disability Pay

• Automatic if ≥50% disability rating

• Restoration of waived military retired

pay

• ?? – Where can you find it?? CRDP

Pg. 2 of RAS: “Based on information received from the VA, your CRDP amount is $___.”

CRDP

FORMER SPOUSE PROTECTION ACT DEDUCTIONS

PAYEE AMOUNT

MISCELLANEOUS DEBTS

DEBT TYPE MONTHLY DEDUCTION PRINCIPAL AMOUNT INTEREST AMOUNT ACCUMULATED INTEREST DEBT BALANCE

ARREARS OF PAY BENEFICIARY INFORMATION

YOU HAVE ELECTED ORDER OF PRECEDENCE.. THE FOLLOWING BENEFICIARIES ARE ON RECORD:NAME SHARE RELATIONSHIP

JANE P. DOE .00 WIFE

MESSAGE SECTION

BASED ON INFORMATION RECEIVED FROM THE VA. YOUR CROP AMOUNT IS $283.96.***

DFAS-CL 7220/148 (Rev 03-01)

Retiree AccountStatement

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Jane Green

Jane and Jack and the CRSC Attack

• Combat-Related Special Compensation

• 10 U.S.C. 1413a– Purple Heart, or --

– Armed conflict,

– Hazardous service

– Conditions simulating war, or

– Instrumentality of war CRSC

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Jane and Jack and the CRSC Attack

• Only for retirees with VA disability

pmts

• Represents the “combat-related” part

of VA disability compensation

• Must apply for it

• And…

CRSC

Jane and Jack and the CRSC Attack

• CRDP stops when you elect CRSC!

• “Back to the Old Days” – waiver of

amount of ret’d pay = to amt. of VA

disability pay

• Can wipe out the entire pension!CRSC

CRDPX“Where can I find info on CRSC?”

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CRSC statement is at secure “myPay” website for retirees.

CRSC Pay StatementSTATEMENT EFFECTIVE DATEAPR 21, 2006

PAYMENT DATEMAY 01, 2006

SSN123-45-6789

RETIREE’S NAME AND ADDRESS HOW TO CONTACT US

PLEASE REMEMBER TO NOTIFY DFAS OF YOUR ADDRESS CHANGESMAJOR JOHN Q. DOE, USAF (RET.)123 GREEN STREETAPEX, NC 27511-1234PAYMENT ADDRESSDIRECT DEPOSIT

DEFENSE FINANCE AND ACCOUNTING SERVICEUS MILITARY RETIRED PAYPO BOX 7130LONDON, KY 40742-7130COMMERCIAL (216) 522-6398TOLL-FREE 1-800-472-7098TOLL-FREE FAX 1-800-469-6559myPayhttps://myPay.dfas.mil 1-877-363-3677

PAYMENT INFORMATION ENTITLEMENT INFORMATION

CRSC Payment 377.00CRSC Debt Deduction 0CRSC Garnishment Deduction 0CRSC Net Pay 377.00

Retired Pay Before Deductions 2,746.00Retired Pay Offset by DVA Compensation 757.00CRSC Debt Balance 0Branch of Military Service AIR FORCEGarnishment Being Withheld NO

THE DVA OR YOUR BRANCH OF SERVICE PROVIDED THE FOLLOWING

CRSC SPECIAL MONTHLY COMPENSATION CODE 00UNEMPLOYABLE NODVA DISABILITY % 50COMBAT RELATED DISABILITY % 30PURPLE HEART % 00CRSC START DATE JAN 01, 2004SPECIAL MONTHLY COMPENSATION START DATE

REMARKS

This is your monthly CRSC statement. Please refer to myPay frequently asked questions for additional information about CRSC and this statement.

Before Any Waiver . . .

50 – 50 Division

$2,0

00

$1,0

00

$1,0

00

W H

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VA Waiver means . . .

Tax-Free VA Dis. Compensation$2

,000

$2,0

00

$1,0

00

$700

$700

$600

$1,0

00

W H HW

With 40% VA Rating

H

50 – 50 Division

Howell - Facts

• 1991 – divorce in AZ, 50-50 pens. division

• 1992 – H retired fm USAF

• 13 yrs later, diagnosis of VA disability

• 20% rating = $250/mo

• Military pension = $1,500/mo

• Reduction for ex-W = $125/mo

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Howell - Facts

• Ex-W moved for enforcement

• Judge ordered indemnification

• Upheld in AZ Ct. of App., Supreme Ct.

• Reversed by US Supreme Court

Howell - Ruling & Rationale

• USFSPA* exempted VA disability comp. from

division

• Mansell case** barred div’n of waived military ret.

pay as marital property upon divorce

• This case involves, in effect, div’n of waived mil.

ret. pay = INDEMNIFICATION BARRED

*10 U.S.C. 1408 **U.S. Sup. Ct. 1989

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Indemnification = D.O.A.?

Howell – Return to the Facts –What Were the Issues?

• No contractual indem. clause

• No prior court order for

indemnification

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REMEDIES FOR THE F.S.• Agreement to indemnify

• Insert in the settlement:

“If H does anything which reduces W’s share or amt. of the military pension, the H will promptly indemnify her as to any losses she suffers in consequence thereof.”

• Indemnification allowed: by contract

REMEDIES FOR THE F.S.

• If prior S/A or MSA [incorporated into div.

decree] w/ indemnification clause

- OR -

• If prior order requiring indemnification

• AND no appeal -

Indemnification allowed: by res judicata

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Res Judicata, Part One

• FN 5, Mansell v. Mansell:

“Whether the doctrine of res judicata, as

applied in California, should have barred

the reopening of pre-McCarty settlements

is a matter of state law over which we

have no jurisdiction.”

Res Judicata, Part Two

• Subsequent history of Major Mansell’s

case in courts of Calif. and above –

– Remanded

– Ruling again to divide the waived military

pension

– Aff’d in Calif. appellate courts based on res

judicata

– Second pet. for cert. by Major Mansell = DENIED

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Alternatives for the Judge

• Justice Breyer’s thoughts –

??

Alternatives for the Judge

• Justice Breyer’s thoughts –– “Take into acct the possibility of reduced

ret. pay in valuing the property”• HUH?

• What does this mean?

• HOW do you calculate the chance of later VA election when John Doe is still on active duty?

• Or ret’d but 13 yrs away from getting VA rating?

• “Show me the algorithm!”

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Alternatives for the Judge

• Justice Breyer’s thoughts –– “Well, there’s always alimony…”

• HUH? [again…]

• Since when is alimony the re-work shop for property division?

• What is the spouse waived alimony? Or is not eligible for it due to her own income?

• Can the court award thru spousal support the amtof pension share that the FS has been shorted?

• Going in the back door when front door barred…?

Alternatives for the Judge

• Justice Breyer’s thoughts –

??????

• a STAR TREK issue!

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A STAR TREK Analysis:

Justice Breyer: “Think of it as a valuation problem….”H

OW

EL

L V

. HO

WE

LL

A STAR TREK Analysis:Justice Breyer: “Think of it as a valuation problem….”

HO

WE

LL

V. H

OW

EL

L

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Justice Breyer: “Think of it as a valuation problem….”

A STAR TREK Analysis:

HO

WE

LL

V. H

OW

EL

L

“The lights are on, but nobody’s home.”

HO

WE

LL

V. H

OW

EL

L

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Alternatives [cont’d]

• Present value setoff – John Doe gets

the pension, Jane Doe gets the house!

• Unequal div’n of property to acct. for

award to F.S. of “unstable asset”

• Re-open the property division (if VA

dis. comp. taken after init. div’n)?

• Reservation of alimony ??

And so. . . ? ?

The “Take-Away”

Summary

“In conclusion…”

B.L.U.F.

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The Death of Indemnity?

The NEW Retirement

System!

January 1, 2018

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Blended Ret. System

• Setting the Stage…

Defining the Benefit

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Defining the BenefitACTIVE DUTY:Constant x years of service x HI-3

2.5% x years of service x HI-3

2.5% x 20 x $4,000 = $2,000/mo.

GUARD/RESERVE:

# points ÷ 360 = equiv. yrs. of svcRest of equation is same as above

On Dec 31, 2017…

≥ 12 Years < 12 Years Not in Service

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On Dec 31, 2017…

≥ 12 Years < 12 Years Not in Service

4 POINTS 4 ALL - Newbies & Opt-Ins…

(1) enhanced Thrift Savings Plan (TSP)

(2) a reduced defined benefit plan

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4 POINTS 4 ALL - Newbies & Opt-Ins…

(1) Enhanced Thrift Savings Plan (TSP)

(2) Reduced defined benefit plan

(3) mid-career incentive bonus (or continuation pay)

(4) option to receive immediate partial lump sum pmt

against the defined benefit upon retirement.

An enhanced TSP…

2017 2018 and after• SM can open a

TSP

• Uncle Sam

contributes

nothing

• TSP belongs to

SM

• TSP will be “issued” to SM.

• Uncle Sam contributes 1%

(after 60 days)

• Uncle Sam matches up to

3% (after 2 years)

• Uncle Sam matches ½ from

3 – 5%.

• TSP belongs to SM after 2

years of service.

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A reduced defined benefit plan

0.025 x total years x “HI-3 base pay”

0.020 x total years x “HI-3 base pay”

X 2.5% of monthly base pay = minimum

X up to 13% = maximum

Mid-Career Bonus [“Continuation Pay”]

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Advance on Ret’d PayOne-half One-quarter

Lump Sum Options!

25% lump or 50% lumpReduced retirementFull retirement restored at age 67

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Summary• Basic rules for pension div’n –

– Jurisdiction

– Pmts from govt

– Four clauses for div’n

• SBP [Survivor Benefit Plan]

• Frozen Benefit Rule

• VA waivers, CRDP, CRSC

• Howell v. Howell

• Blended Ret. System

“Who ya’ gonna call?”

Mark E. Sullivan: 919-832-8507www.ncfamilylaw.com

www.ambar.org/publications

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Help is never far away…

SC Bar, CLE Division

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SILENT PARTNER The Blended Retirement System and Divorce

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the

Military Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s

Committee on Legal Assistance for Military Personnel. There are many Silent Partner infoletters on military family

law issues. Just go to www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov >

For Lawyers. Please send any comments, corrections and suggestions to the address at the end of this document.

Introduction In the National Defense Authorization Act for 2016, Congress passed legislation to

modernize the retirement systems for the uniformed services.1 This involved implementing a

“blended” retirement system which combines a “defined contribution” component with a

“defined benefit” program. The new Blended Retirement System (BRS), effective January 1,

2018, applies to everyone who enters service on or after that date. Certain members who entered

the uniformed forces before January 1, 2018 will have a choice: to opt-in to the new system or to

remain “grandfathered” in the “legacy system” (i.e., the current military retirement system).

The Legacy Retirement System The legacy retirement system for the uniformed services is a defined benefit system.

Servicemembers (SMs) with 20 creditable years of service may apply for retired pay. When

active-duty SMs retire, they receive a monthly pension calculated by multiplying the average of

the SM’s highest three years of continuous pay (the retired pay base) by 2.5% times the years of

service (the retired pay multiplier). For example, assume that John Doe is an E-7 who served for

at least three years as an E-7 and has a total of 21 creditable years. He retires in 2016 and his

“high-3” (retired pay base) is $4,423.80. John’s retired pay multiplier is 21 years of service x 2.5

= 52.5%. This means that he would receive retired pay based on 52.5% of his high three basic

pay, or $2,322.50 per month.

The current Reserve Component (RC) retirement is based on a combination of satisfactory

years and points achieved each year. An RC member (that is, a member of the National Guard or

Reserves) earns 15 points each year for participation, one point each day for two weeks of annual

training and any other active-duty time served, and points for weekend drills, performing funeral

honors, and completing correspondence courses, depending on how many hours of work are

performed. RC members must earn 50 points annually to have a satisfactory year. Once the RC

member has 20 satisfactory years, he or she can apply for retirement. Although it may

commence earlier, RC retired pay generally begins at age 60.

The calculation of RC retired pay is a bit more complicated than that used for a “regular

retirement,” that is, one from active duty. Assume that Roberta Roe is an E-7 who has served for

1 “Uniformed services” means the Army, Navy, Air Force, Marine Corps and Coast Guard, plus the commissioned

corps of the Public Health Service and the National Oceanic and Atmospheric Administration.

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at least three years as an E-7 and served a total of 21 satisfactory years. She applies for

discharge in 2016 and she has a “high-3” pay rate of $4,423.80 for her retired pay base.2

Her retired pay multiplier is the number of points she earned during her career divided by

360, multiplied by 2.5%. In this case, assume that Roberta earned 365 points during her first

year of service − attending recruit training and her Military Occupational Specialty (MOS)

school while on active duty − and then she earned the minimum 50 points each year thereafter

for 20 years. Accordingly Roberta has 365 + 1,000 points or 1,365 retirement points. The

number of points divided by 360 equals 3.79 – this is the equivalent of active-duty time. This

number is then multiplied by 2.5% to get the retired pay multiplier, that is, the percentage of her

base pay that will establish the amount of the pension. In this case it’s 3.79 x 2.5 = 9.475%.

The last step is to determine the monthly pension payment. This is the product of the retired

pay base (shown above) and the retired pay multiplier just established: $4,423.80 x 9.475% =

$419.16 per month retired pay.

Enter the BRS! There are two elements in the BRS – a defined benefit program and a defined contribution

component. The first of these is the same as the current retirement system except that the

percentage contained in the retired pay multiplier will change from 2.5% to 2.0%. The defined

contribution portion will allow the member to participate in the Thrift Savings Plan (TSP), which

is similar to a civilian 401(k) plan, and the SM will receive matching contributions from the

government. Starting at 60 days of service,3 the government will create a TSP account for every

SM who participates in the BRS, depositing 1% of the SM’s base pay into the account. Service

members will be automatically enrolled in the TSP at the rate of 3% of their base pay, but they

will have the option to change this amount. At two years of service, the government will match

member contributions as follows:

SM Contributes DoD Contributes Auto DoD Matches SM+DoD Total 0% 1% 0% 1% 1% 1% 1% 3% 2% 1% 2% 5% 3% 1% 3% 7% 4% 1% 3.5% 8.5% 5% 1% 4% 10%

From two years of service forward, members are vested in the BRS and can keep their DoD

automatic contributions and matching amounts if they choose to separate from their uniformed

service.

Continuation Pay The BRS will also provide SMs with mid-career Continuation Pay between the beginning of

the eighth and the start of the twelfth year of service. The amount of Continuation Pay will range

2 If Roberta had applied for transfer to the Retired Reserve, her actual retired pay would be based on the current pay

of an E-7 at the time the pension payments started, rather than the payment shown in the text above. Unlike a

discharged SM, however, she would have been subject to recall to the Reserves or to active duty after her transfer. 3 SMs who “opt-in” to the BRS will receive 1% contributions to TSP and government matching of the contribution

amount that they select when they opt-in to the BRS on the first pay period following their opt-in election.

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from 2.5 to 13 times the amount of monthly base pay for active duty SMs and .5 to 6 times the

amount of monthly base pay for RC SMs. Members who accept Continuation Pay will be

required to serve for at least an additional three years. Lump Sum Option

The final new component of the BRS is a provision which allows SMs to take a lump-sum

payment upon becoming eligible to receive retired pay. SMs will have the option to take either

25% or 50% of their monthly pension payments between the date of retired pay eligibility (upon

retirement from active duty and, for RC members, usually at age 60) and the age of Social

Security payment eligibility when they retire from military service; as of this writing (2017), this

is at age 67. The lump sum will be adjusted by a “Discount Rate,” which will be determined by

combining the 10-year average of the Department of the Treasury High-Quality Market

Corporate Bond Spot Rate Yield Curve at a 23-year maturity plus an adjustment factor intended

to account for unique aspects of the military retirement program. The rate will be published

annually on June 1 and go into effect on the following January 1. When the SM reaches the age

for collection of Social Security, the pension payments will return to the full amount.

Opt-In Decision Those who enter the uniformed services on or after January 1, 2018 will be enrolled in the

BRS. Active-duty members entering service after January 1, 2006 but before January 1, 2018

and RC members with fewer than 4,320 points on December 31, 2017 can choose between

opting in to the new system and remaining in the legacy retirement system. Members with 12

years of service (for RC members this is calculated as 4,320 points or more on December 31,

2017) will remain in the legacy system. Those SMs who are eligible to opt-in to the BRS have all

of calendar year 2018 to decide whether to enroll in the new system. Anyone may access the on-

line training about the BRS through Military OneSource, http://www.militaryonesource.mil/.

Additional BRS information may be found at http://militarypay.defense.gov/BlendedRetirement/.

Impact of the BRS on Family Law Enrollment in the new retirement system is a significant change in retirement planning. It

will not only affect a member’s family; it also could affect, when applicable, the SM’s former

spouse. One reason is because, under the new system, the percentage in the retired pay

multiplier is reduced from 2.5% to 2.0%; thus for those who serve 20 years the pension is

reduced from 50% of the “high-3” base pay to 40%. For members who have already signed a

separation agreement or received a divorce decree, dissolution of marriage, property division

judgment or court-ordered property settlement providing a percentage of retired pay to a former

spouse, the choice to opt-in to the new retirement system will directly impact the amount of

retired pay which the former spouse receives. Additionally, members or military spouses who

file for divorce in cases where the SM is eligible to opt-in to the BRS will need to include

provisions in their separation agreements and settlements to address how this choice affects the

distribution of the marital or community-property share of the SM’s military retired pay. The

same issues will be present when the case is tried, not settled; the judge will need to be educated

on the options and their impact.

Another impact of the BRS on family law is the option to receive Continuation Pay at 8-12

years of service. If the member receives, say, $10,000 in Continuation Pay, is that marital or

community property? Part of the answer will depend on when it was received – before or after

176

the date of classification according to state law (e.g., the date of divorce, date of filing or date of

separation). But the bonus (for that’s what it really is) must also be analyzed through a different

lens as well, namely, the nature of the payment. Assume that the classification date is the date of

divorce. If the payment arrives at approximately the time of divorce, will it be considered

marital or community property because of its marital foundation (i.e., the years of marital

military service which were a necessary foundation for the bonus), or will it be seen as non-

marital property, since it is granted in exchange for a promise of future service?

Finally one has to analyze the lump-sum option for a cash amount of retired pay, taken upon

becoming eligible to receive retired pay. This option will lower the funds payable to the former

spouse. Can a court order bar the retiree from taking a lump sum? Probably not. Will the lump

sum be considered “disposable retired pay” under USFSPA, thus making it divisible through a

court order? No one knows – the rules have not been written yet. If the retiree takes this lump-

sum option, the use of an indemnification clause will be essential to try to recoup for the spouse

those funds which are lost (through reduced retired pay) when the member, upon retirement,

decides on some “cash in hand” at the rate of 25% or 50% of the present value of the retirement.

Keep in mind that the spouse or former spouse will not receive notice from the government

of election into the BRS by the military member. He or she won’t be notified about the choice of

a 25% or 50% lump sum payment upon retirement. How will the former spouse know about the

critical – but unilateral – choices which the member makes?

The impact of the two choices (i.e., opting into the BRS and electing to receive a lump sum)

will only become discoverable in most cases when the member retires. How will the former

spouse know when that occurs? If a pension division order has been submitted to the retired pay

center, then it is likely that the former spouse will know because of receipt of a share of retired

pay. That is not true, however, if there is a VA waiver equal to or greater than the amount of

retired pay. In that situation, the former spouse receives nothing, and there is no pension-share

payment sent to him or her. Nothing is received, as well, by the former spouse who has not yet

submitted an order to the retired pay center, perhaps thinking that the property settlement, in and

of itself, accomplished the division of retired pay.

This will also need to be specifically addressed in divorce decrees and property settlements

for SMs participating in the BRS. For advice on drafting divorce settlements for members and

their spouses who participate in the BRS, consult the upcoming Silent Partner, “Distribution of

Property Under the Blended Retirement System.”

(Rev. 08-21-2017)

* * * This SILENT PARTNER was prepared by COL Mark E. Sullivan (USA-Ret.). For revisions, comments or

corrections, contact him in Raleigh, N.C. - 919-832-8507, or at [email protected].

177

SILENT PARTNER All Clauses Considered: Writing the Frozen Benefit Rule

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the Military

Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s Committee on Legal

Assistance for Military Personnel. There are many Silent Partner infoletters on military family law issues. Just go to

www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov > For Lawyers. Please send any

comments, corrections and suggestions to the address at the end of this document. Introduction

Major changes in military pension division occurred in December 2016 when the President signed

the National Defense Authorization Act for Fiscal Year 2017 (NDAA 17). Section 641 of the Act

contained a major revision of how military pension division orders are written and will operate for those

not yet receiving retired pay. Rather than allowing the states to decide how to divide military retired

pay and what formula or methodology to use, Congress imposed a single uniform method of pension

division on all 50 states plus other federal jurisdictions (e.g., the District of Columbia, Guam, etc.),

employing a hypothetical scenario in which the military member retires on the date of divorce.1

Everyone who is not yet receiving retired pay is affected. This means the servicemember (SM) who

goes through divorce and property division while still serving in the uniformed services:

• Members of the armed forces, which includes Army, Navy, Air Force, Marine Corps and Coast

Guard;

• The commissioned corps of the Public Health Service and the National Oceanic and

Atmospheric Administration; and

• Those in the National Guard and Reserves who are not yet receiving retired pay (which usually

begins around age 60).

The statutory revision has no impact on divorces with property division after retired pay has started.

Understanding the Frozen Benefit Rule

A “rewrite” of the military pension division rules in the Uniformed Services Former Spouses’

Protection Act, or USFSPA,2 the new statute says that the “disposable retired pay” which is paid in

1 This ignores the fact that over forty states use the “time rule” to divide a defined benefit plan, which involves a marital

fraction composed of marital pension service divided by total pension service times final retired pay. Irrespective of state

laws, cases and rules, the federal law applies to those still serving whose divorces or property division orders are after

December 23, 2016, the date the law was enacted. 2 10 U.S.C. § 1408.

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pension shares by the retired pay center3 is that attributable to the “High Three” amount and years of

service of the military member at the time of the parties’ divorce.4 In effect, this means that the military

will only pay the ex-spouse a share of the military member’s retired pay as it hypothetically exists on the

day of divorce (i.e., if the court assumes that he or she had stopped serving and put in for retirement on

that date). The only increase is COLAs (cost-of-living adjustments) pursuant to 10 U.S.C. § 1401a (b)

which may occur between the time of the court order and the time of retirement.5

Can the parties agree to “opt out” of this straight-jacket approach? Congress says “NO.” There are

no exceptions for the parties’ agreement to vary from the new federal rule. Everyone must do it one

way, regardless of what the husband and wife decide they want the settlement to say.

“Hard Times” and the Hypothetical

How should the courts write a proper court order to implement the frozen benefit rule? Guidance on

military pension division rules and requirements was published at the end of June 2017 in the

3 For the Army, Navy, Air Force and Marine Corps, the retired pay center is DFAS (Defense Finance and Accounting

Service) in Cleveland, Ohio. Pension garnishments for the Coast Guard and the commissioned corps of the Public Health

Service and of the National Oceanic and Atmospheric Administration are handled by the Coast Guard Pay and Personnel

Center in Topeka, Kansas. 4 Although the statutory language refers to “the time of the order,” the Defense Finance and Accounting Service has

interpreted this as the date of the decree of divorce, dissolution, annulment or legal separation, as explained below. 5 According to Lexis Advance (last checked 3-26-17), here is new text for 10 U.S.C. § 1408 (a)(4) [additions/changes in

italics]: (A) The term "disposable retired pay" means the total monthly retired pay to which a member is entitled (as

determined pursuant to subparagraph (B) less amounts which--

(i) are owed by that member to the United States for previous overpayments of retired pay and for recoupments

required by law resulting from entitlement to retired pay;

(ii) are deducted from the retired pay of such member as a result of forfeitures of retired pay ordered by a court-

martial or as a result of a waiver of retired pay required by law in order to receive compensation under title 5 or

title 38;

(iii) in the case of a member entitled to retired pay under chapter 61 of this title [10 USCS §§ 1201 et seq.], are

equal to the amount of retired pay of the member under that chapter computed using the percentage of the

member's disability on the date when the member was retired (or the date on which the member's name was

placed on the temporary disability retired list); or

(iv) are deducted because of an election under chapter 73 of this title [10 USCS §§ 1431 et seq.] to provide an

annuity to a spouse or former spouse to whom payment of a portion of such member's retired pay is being made

pursuant to a court order under this section.

(B) For purposes of subparagraph (A), the total monthly retired pay to which a member is entitled shall be--

(i) the amount of basic pay payable to the member for the member's pay grade and years of service at the time

of the court order, as increased by

(ii) each cost-of-living adjustment that occurs under section 1401a(b) of this title [10 USCS § 1401a] between

the time of the court order and the time of the member's retirement using the adjustment provisions under that

section applicable to the member upon retirement.

[Note the error in the language at (B)(i) above. It says that, for purposes of this section, a member’s retired pay is his or her

basic pay according to pay grade and years of service at the time of the court order. In reality, retired pay is never one’s

basic pay; by law it is his “High Three” pay (average of highest three years of continuous compensation) times years of

creditable service times 2.5% in most cases. Presumably this will be corrected in a forthcoming amendment.]

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Department of Defense Financial Management Regulation.6 The “hypothetical clause” (as it is called by

the Defense Finance and Accounting Service, or DFAS) is the most difficult clause to prepare. For

those who entered military service on or after September 8, 1980, the current DoDFMR rule requires

that the court order contain the member’s years of creditable service and his “High Three” amount (i.e.,

the average of the highest three years of continuous compensation before the specified division date).7

• The court order must provide this information.8

• This means, in effect, that the attorneys must obtain this information, in order to avoid rejection

of the pension division order.

• And this, in turn, means that the attorney for the non-military spouse has to get this information

or else there will be no qualified order for division of the military pension.

Because not too many attorneys are conversant with drafting such an order, the cost of military divorce

will go up and counsel will start receiving rivers of rejection letters when pension orders are submitted

which don’t comply with the new rule.9

This Silent Partner will attempt to explain the writing of a clause for military pension division using

the instructions contained in Chapter 29 of Volume 7B of the DoDFMR. It will discuss what’s needed

from the standpoint of the member and the spouse or former spouse (FS). Essential reading is the Silent

Partner, “Fixing the Frozen Benefit Rule,” which outlines the terms and data needed to comply with the

new statute, where to find the information, strategies for the member and the spouse for compliance with

NDAA 17, and how to dodge the impact of the new rules.

For members entering the uniformed services on or after September 8, 1980, the required data for

the pension division document (e.g., military pension division order, dissolution decree, or property

settlement incorporated into a divorce judgment) are years of creditable service as well as the member’s

High Three figure. For Guard/Reserve members, the number of retirement points as of the divorce date

will replace the years of creditable service stated in the previous sentence. In some cases, an expert may

need to be employed to assemble the records and calculate the results. One thing is certain – either the

member must provide records for these calculations (or sign a release to allow the other side to obtain

this information) or else the court must order the federal government to supply the documents needed to

6 DoD 7000.14-R, Department of Defense Financial Management Regulation (DoDFMR), Military Pay Policy and

Procedures (DoDFMR). Retired pay is found in Vol. 7B, and Chapter 29 covers former-spouse payments. 7 DoDFMR, Vol. 7B, ch. 29, Sec. 290608. For members of the National Guard or Reserves, any order which contains a

fraction must be expressed in terms of retirement points, not months or years. 8 The order must be expressed as a fixed amount, a percentage, a formula or a hypothetical which is awarded to the FS. 9 A guide for attorneys on how to write acceptable military pension clauses may be found at the Silent Partner, “Guidance for

Lawyers: Military Pension Division,” and it includes the necessary elements and language for a proper hypothetical clause.

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state the years of creditable service and what the amount of High Three compensation would be. These

requirements are spelled out in the DoDFMR, Vol. 7B, Chapter 29, which says that the court order has

to state:

a) the “High-Three” amount of the member on the date of divorce (i.e., the average of the highest

three years of continuous compensation), which is $______; and

b) the member’s creditable service time as of the date of divorce, which is ____ years and ___

months (or in the case of members of the National Guard or Reserves, the creditable retirement points at

divorce, which is ______ points).10

Serving the Servicemember

When counsel is representing the SM, the language employed in the order, judgment or decree must

be anchored in terms which strictly adhere to the language of the NDAA 2017. This means that the

order will say that the amount to be divided is “disposable retired pay,” which is what the NDAA 17

redefined in December 2016. This approach for the order limits the FS to a smaller number for division

with the SM, perhaps about 60% of the previous amount to which she or he would have been entitled

under the “time rule.” The smaller the disposable retired pay (which is what is divided with the FS) the

smaller the amount which must be paid to the FS.

[Wording for the servicemember] The servicemember will pay as military pension

division to the former spouse a share of his “disposable retired pay” as defined in § 641,

National Defense Authorization Act for FY 2017, codified at 10 U.S.C. §1408(a)(4).

The share of the former spouse will be 50% of the marital fraction of the

servicemember’s disposable retired pay. The marital fraction is marital pension service11

divided by total pension service.12 The member’s marital pension service as of the date

of classification and valuation under state law is (complete one):

10 See “Fixing the Frozen Benefit Rule” for more information on these and how to calculate and verify the HighThree

amount. 11 The end-point for marital pension service is the date of classification and valuation of marital or community property under

state law. For example, New York’s date for valuation and classification is the date of commencement of the divorce case.

In California, a spouse’s share of community property stops accruing at the “final separation.” See, e.g., In re Marriage of

Bergman, 168 Cal. App. 3d 742, 214 Cal. Rptr. 661(Cal. Ct. App. 1985). The date of final separation is also the

classification and valuation date in North Carolina. N.C. Gen. Stat. § 50-20 (b)(1). In Nevada, community property stops

accruing on the divorce date. See, e.g., Forrest v. Forrest, 99 Nev. 602, 668 P.2d 275 (1983). In other states it may be the

date of divorce, the date of irretrievable breakdown of the marriage, or a date in the discretion of the judge. 12 Two points need to be made. First, the denominator which is mathematically correct would be described as “total pension

service as of divorce,” since divorce is the date when the pension is frozen, according to DFAS; the SM, however, may

want to stretch this out to read “total pension service,” which would mean in most cases an even smaller share for the FS.

Whether state rules would allow that argument is another question, since it involves the law and cases in 50 or more

jurisdictions. Secondly, marital pension service is measured in months except for members of the National Guard or

Reserves. According to DFAS, when a formula for pension division contains a fraction and the SM is in the Guard or

Reserves, the fraction must be stated in terms of retirement points.

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_____ retirement points (Guard/Reserves) ____ years and ____ months (all others)

The servicemember’s “High Three” amount (i.e., the average of the highest 36 months of

continuous compensation) is $________ as of the date of divorce.

The member’s total creditable time of service toward retirement as of the date of divorce

(expressed in retirement points for members of the Guard/Reserve) is (complete one):

____ retirement points (Guard/Reserves) ____ years and ____ months (all others)

The above pension share is the sole retired pay entitlement for the spouse/former spouse.

All remaining retired pay of the member will be the sole and separate property of the

servicemember, to which the spouse/former spouse will have no claim or entitlement.

Support for the Spouse

The revised law doesn’t forbid entry of a time rule order. It merely states that the retired pay center

(DFAS or the Coast Guard Pay and Personnel Center) will only honor “date-of-divorce division” for

those still serving. Recognizing this limitation on payments from the government, the court may still

enter a time rule order, noting that at the member’s retirement only a portion of the pension-share

payment for the FS will come from the pay center. The court’s order would provide that the member is

still responsible for the rest and will indemnify the FS for any difference between the two amounts.

The “savings clause” in the USFSPA, found at 10 U.S.C. § 1408 (e)(6), allows the courts to employ

state enforcement remedies for any amounts which may not be payable through the retired pay center.13

That section states:

(6) Nothing in this section shall be construed to relieve a member of liability for the

payment of alimony, child support, or other payments required by a court order on the

grounds that payments made out of disposable retired pay under this section have been

made in the maximum amount permitted under paragraph (1) or subparagraph (B) of

paragraph (4). Any such unsatisfied obligation of a member may be enforced by any

means available under law other than the means provided under this section in any case

in which the maximum amount permitted under paragraph (1) [e.g., 50% of disposable

retired pay] has been paid….

Numerous court decisions have held that orders which require the retiree to pay more than 50% of

disposable retired pay are not void or invalid; they are simply not enforceable through garnishment from

the retired pay center for amounts in excess of 50%.14

Avoid using “disposable retired pay” in the order to describe what is divided. Disposable retired

13 See also Brett R. Turner, EQUITABLE DISTRIBUTION OF PROPERTY (3rd Ed. & 2016-2017 Supp.), Sec. 6.4. 14 For a list of citations, see the Silent Partner, “Fixing the Frozen Benefit Rule.”

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pay, or DRP, means the restrictive definition in the frozen benefit rule (i.e., retired pay figured on the

High Three at the date of divorce) less all of the other specified deductions, such as the VA waiver and

moneys owed to the federal government. The best way to word a pension clause is to provide for

division of total retired pay less only the Survivor Benefit Plan (SBP) premium attributable to coverage

of the former spouse. Regardless of the language used, DFAS will construe orders dividing “gross

retired pay,” “total retired pay,” or any similar language as dividing DRP,15 but the language suggested

here will be consistent with the use of indemnification if the FS’s share is reduced later.

[Wording for the spouse/former spouse] The servicemember is responsible for full

payment of the funds due to the spouse/former spouse under the terms of this document.

That share is 50% of the marital fraction of the servicemember’s retired pay, less only the

premium deducted for any Survivor Benefit Plan coverage for the former spouse. Note

that this limitation is not for administration by the retired pay center, which must comply

with federal law as to disposable retired pay, but rather for recognition of the rights and

duties of the parties. “Retired pay” means the actual gross retired pay distributed to the

retiree. The marital fraction is marital pension service divided by total pension service.16

The member’s marital pension service as of the date of classification and valuation under

state law is (complete one):

_____ retirement points (Guard/Reserves) ____ years and ____ months (all others)

The servicemember’s “High Three” amount (i.e., the average of the highest 36 months of

continuous compensation) is $________ as of the date of divorce.

The member’s total creditable time of service as of the date of divorce toward retirement

(expressed in retirement points for members of the Guard/Reserve) is (complete one):

_____ retirement points (Guard/Reserves) ____ years and ____ months (all others)

Federal law limits what the retired pay center can distribute to the former spouse as a

share of military retired pay, pursuant to § 641, National Defense Authorization Act for

FY 2017, codified at 10 U.S.C. § 1408(a)(4). The member will pay the former spouse the

share set out herein and, pursuant to 10 U.S.C. § 1408(e)(6), will indemnify the former

spouse for any loss or damages resulting from failure to pay as stated above. As to any

differential between what is due herein and what the retired pay center disburses, the

parties will decide on an appropriate method for payment (e.g., consent order for alimony

garnishment through the retired pay center, inter-bank transfer, allotment, or personal

check) within 30 days after the first garnishment payment to the former spouse. If the

15 DoDFMR, Vol. 7B, ch. 29, Sec. 290601. 16 See Notes 11 and 12 supra as to marital pension service and total pension service. The denominator which is

mathematically correct when final retired pay is divided would be described as “total pension service,” meaning that the

pay is measured as of the end of the member’s career. However, since divorce is the date when the pension is frozen by the

retired pay center, the spouse may want to shrink the denominator so that it reads “total pension service as of the date of

divorce,” which would mean in most cases a larger share for the FS. Whether state rules would allow that argument is

another question, since it involves the law and cases in 50 or more jurisdictions.

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parties cannot agree then the court will make the determination. The court reserves

jurisdiction regarding enforcement of the terms herein for military pension division.

Timing and the Separation Agreement: Deal Now, Divorce Now

Sometimes the terms for pension division are set out in a separation agreement, property settlement

agreement or marital settlement agreement. Thereafter the settlement is submitted to the court for

incorporation into the divorce decree.

In states such as California and Florida, the divorce or dissolution may be granted in close proximity

to the execution of the separation agreement. Since the dissolution is based upon no-fault grounds and

there is no required period of separation in those states, this means that the required data shown above

may be included in the agreement since it is unlikely to change if the divorce follows soon after the

agreement is signed.

Deal Now, Divorce Delayed

A different scenario, however can face the SM or spouse in a state such as North Carolina, where

grounds for divorce involve a separation period of one year (with the intent that the separation be

permanent), or in another state where a waiting period is involved. In such jurisdictions, the settlement

may be executed shortly after the parties separate, and yet the divorce might be granted a year later. The

same situation would occur if the military member were deployed shortly after the signing of the

agreement, thus delaying the filing for divorce.

If the granting of a divorce judgment is not in close proximity to the execution of the settlement,

then counsel must give consideration to whether to include the data points which DFAS requires (i.e.,

High Three amount and years of service or retirement points at date of divorce). If these are not likely

to change between the execution of the separation agreement, then they may be inserted in the

agreement. However, when there is a chance that the data points will be different at the time of divorce,

the agreement should make reference to the subsequent divorce and announce that the data will be

submitted to the court at that time for inclusion into the divorce decree. A clause such as this may

suffice:

Federal law requires that the High Three amount and years of service for the husband, Major

Richard Roe, currently on active duty with the U.S. Marine Corps, be submitted to the retired

pay center (in this case, the Defense Finance and Accounting Service, or DFAS) as of the date of

divorce. Since that information may change between the date of execution of this document and

the date of the parties’ divorce, the parties agree that Major Doe must submit verification of this

information to the wife, Roberta Roe, at the time that either of them files for a judgment of

absolute divorce in this state or any other jurisdiction. They further agree that this information

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will be included in the divorce judgment, so that the wife can apply to DFAS for division of

military retired pay.

Final Notes

The preparation of a military pension division clause or order should be done only after reading the

available rules and Section 641 of NDAA 17, as well as existing state law regarding the division of

military pensions and defined benefit plans. Be sure to understand the law and the cases, and contact an

expert in military pension division whenever possible, even an attorney from another state.

* * * (Rev. 7/24/17)

This SILENT PARTNER was prepared by COL Mark E. Sullivan (USA-Ret.). For revisions, comments or corrections, contact

him in Raleigh, N.C. - 919-832-8507, or at [email protected].

185

SILENT PARTNER

MILITARY PENSION DIVISION: THE “EVIL TWINS” – CRDP AND CRSC

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the

Military Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s

Committee on Legal Assistance for Military Personnel. There are many Silent Partner infoletters on military family

law issues. Just go to www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov >

For Lawyers. Please send any comments, corrections and suggestions to the address at the end of this document.

Introduction The waiver of military retired pay in exchange for VA disability compensation is covered in Military

Pension Division: The Servicemember's Strategy. In a nutshell, here’s how the system used to work for

retirees.

Veterans who have one or more service-connected disabilities, wounds, illnesses or conditions can

apply to the VA (Department of Veterans Affairs) for tax-free disability compensation. Until 2004, the

law allowed retirees to elect tax-free disability compensation from the VA only if they gave up the same

amount of retired pay. Taking this dollar-for-dollar reduction was always beneficial to the military

retiree, since it yielded a net increase in income because of the non-taxable aspect of disability

compensation.

However it is taken, this election would usually wreak havoc when the retiree’s pension is subject to a

garnishment order for part of “disposable retired pay” in favor of a former spouse. As soon as the

election took place at the retired pay center (Defense Finance and Accounting Service for Army, Navy,

Air Force and Marine Corps), the former spouse would see her share of disposable retired pay decrease,

sometimes substantially. For example, assume that John Doe retired from the Army and he had

disposable retired pay (without disability) of $1,500 per month. If his service-connected disability were

evaluated as equivalent to $1,000 per month in VA payments, he could waive the same amount of taxable

longevity pension in order to receive this amount tax-free. His monthly benefit would still total $1,500,

but only $500 of this would be subject to taxes.

In addition, only this $500 which remains of his military pension would be subject to division with

Mary Doe, his ex-wife. The Uniformed Services Former Spouses’ Protection Act (USFSPA), found at 10

U.S.C. §1408, excludes VA disability compensation from the definition of “disposable retired pay.” So if

the military pension division order had given Mary 40% of John’s disposable retired pay, her pre-waiver

share would have been $600 a month (40% X $1,500). But her post-waiver amount would be only $200

(40% X $500). Especially when rent or mortgage payments depend on the continued receipt of a stable,

predictable amount of divided military retired pay, such a VA waiver by the military retiree can be

catastrophic.

Congressional Developments Since 2003 – Back to the Beginning

In 2003, Congress passed legislation taking effect January 1, 2004 to allow concurrent receipt of both

forms of payments – retired pay and disability benefits – for certain eligible retirees. The restoration of

retired pay is known as Concurrent Retirement and Disability Pay (CRDP). It is found at 10 U.S.C.

§1414. The implementing rules are found at Chapter 64, Volume 7B of the DoDFMR (Department of

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Defense Financial Management Regulation). The Coast Guard, which is also subject to USFSPA for

pension division, usually uses the DFAS rules in dividing pensions.

Also beginning in 2003, Congress made a new form of special compensation available to a limited

number of retirees. The benefits and definitions were expanded substantially in 2004. Called Combat-

Related Special Compensation (CRSC), these payments may now, under the 2004 revised rules, be made

to those retirees with a disability of at least 10% directly related to the award of the Purple Heart

decoration, or else a combat-related disability rated at least 10% (such as hazardous duty or training for

combat). CRSC is found at 10 U.S.C. §1413a, and the CRSC rules are in Chapter 63, Volume 7B of the

DoDFMR.

Both of these affect the division of military retired pay. Both are complex and misunderstood – if not

unknown – by civilian practitioners as well as many judge advocates. Let’s see how they work.

CRDP Explained For those who have at least 20 years of qualifying military service and a VA disability rating of at

least 50%, CRDP means that full retired pay accompanies full VA payments. There is no reduction for

VA payments (although there was initially a ten-year phased elimination of the VA offset, ending

12/31/2013). Put in positive terms, this means that the retiree will get every dollar of retired pay that was

formerly waived for VA disability compensation. The disability does not have to be combat-related.

CRDP is the return of waived pension payments, so it has the attributes of those pension payments. It is

taxable compensation. It also is divisible with a former spouse under a military pension division order.

Verifying Receipt of CRDP How will you know if John Doe is getting CRDP? Since John is an Army retiree, his retired pay

statement is from DFAS. Just read the comment at the “MESSAGE SECTION” on page 2 of his Retiree

Account Statement (RAS), Form DFAS-CL 7220/148 (see ATCH 1 at the end of this Silent Partner for an

example). It will look like this:

MESSAGE SECTION BASED ON INFORMATION RECEIVED FROM THE VA, YOUR CRDP AMOUNT IS $____.

The RAS is posted at a secure website for uniformed services retirees (the website is

https://mypay.dfas.mil for those paid through DFAS) each month. If the retiree will not voluntarily

produce the RAS, counsel may resort to formal discovery procedures if the matter is in litigation. DFAS

will honor a request for documents so long as it is in the form of a court order or a subpoena signed by a

judge. Send the order or subpoena, with the individual’s full name and Social Security Number (SSN),

to:

Defense Finance and Accounting Service

DFAS- Cleveland Center

Records Retrieval (Code HAC)

1240 East 9th Street, Room 2679

Cleveland, OH 44199-2055

Fax 216-522-6530

There is no requirement that the subpoena or order be sent by certified mail, although that is

recommended. An example of the RAS extract is at ATCH 2.

Don’t Take “NO” for an Answer

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Sometimes the attorney for the retiree will disavow any knowledge of the existence of an RAS, or the

retiree will claim that it was lost, misplaced, or “floated away in that big flood last month.” As noted

above, all Defense Department retirees are eligible for a free “myPay” account at the DFAS website

(https://mypay.dfas.mil). There is a link to “myPay” right on the initial webpage of DFAS, www.dfas.mil

with instructions on how to create an account. Once the account is set up, all John Doe needs to do to

obtain his current RAS is to enter his “LogIn ID” and password, go to the screen marked “Your Military

Retiree Pay Account,” and select “Retiree Account Statement (RAS).” The late Mike McCarthy of

Phoenix, a retired Air Force Reserve brigadier general, used to brag that he could usually get a court to

order both attorneys and the retiree to use a computer right there in the courtroom to access the current or

past RAS from the myPay website.

When in Doubt, ASK!

Another method of finding out the retiree’s deductions is to ask DFAS. A little-known notice in the

Federal Register makes this possible. Effective July 13, 2000, DFAS announced at 65 FR 43298 that it

would disclose this information to a former spouse (FS):

In addition to those disclosures generally permitted under 5 U.S.C. 552a(b) of the

Privacy Act, these records or information contained therein may specifically be disclosed

outside the DoD as a routine use pursuant to 5 U.S.C. 552a(b)(3) as follows:

To former spouses, who receive payments under 10 U.S.C. 1408, for purposes of

providing information on how their payment was calculated to include what items were

deducted from the member's gross pay and the dollar amount for each deduction.

While it may be difficult to obtain sometimes if the person at DFAS responding to the written

request is a “new hire” who doesn’t know about this rule, diligence and courtesy will get the former

spouse through to someone in authority who will be able to assist. Be sure to include in the written

request from the FS full identifying information on the retiree (name and SSN), the SSN for the former

spouse and – if appropriate – an authorization for DFAS to provide the information to the attorney for the

FS. The request might look like this:

Defense Finance and Accounting Service

DFAS- Cleveland Center

Records Retrieval (Code HAC)

1240 East 9th Street, Room 2679

Cleveland, OH 44199-2055

Fax 216-522-6530

Pursuant to the Privacy Act Routine Use set out at 65 Fed Register 43298, I hereby

request that you provide to me information on the current gross retired pay, current deductions

and dollar amount for each deduction used in calculating my share of the pension in regard to

my former husband, John Q. Doe, SSN 987-77-6543. My former spouse payments were

calculated under 10 USC 1408. [OPTIONAL: I authorize you to provide this information to my

attorney, Lucinda Lopez, Lopez and Pasquale, LLP, 123 Green Street, Apex, NC 27566]

____/s/____

Mary P. Doe

SSN 234-56-7899

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The response time may be several weeks or longer. To check on the status of a request, call 216-522-

5046 and be sure to have the retiree’s SSN available. The expected answer, when it arrives, will usually

look like the letter at ATCH 3 at the end of this Silent Partner.

CRDP Rules for the Disability Retiree Those who are retired for disability (Chapter 61 of Title 10, U.S. Code) may be entitled to CRDP if

they have at least 20 years of service qualifying for regular or Guard/Reserve retirement. CRDP cannot

exceed the amount of retired pay to which the individual would have been entitled if he had retired based

upon years of service (i.e., longevity retirement). Additionally, any disability retired pay that is in excess

of retired pay to which John Doe would be entitled for longevity retired pay remains subject to the VA

offset and may not be restored under the CRDP program. 10 U.S.C. §1414(b)(1).1

A Few More Rules Mary Doe, the former spouse, should have been receiving payments of pension division from the

retired pay center (in this case DFAS), since her ex-husband’s disability rating was less than 100% and he

was still receiving some retired pay. In this situation, no new application is needed since her pension

division order is “in the system” at DFAS. She should begin receiving increased pension payments from

DFAS due to the increased pension that John Doe is now receiving. A new application for garnishment

of retired pay (with DFAS, this is DD Form 2293) will be needed if Mary had been receiving nothing

since the VA disability pay wiped out completely the retired pay.

Garnishment for pension division through the retired pay center is only for current pension payments.

There is no authority for DFAS to garnish for pension division arrears.

CRDP goes a long way toward fixing the unfairness of unilateral changes in military pension division

orders by retirees who, after the divorce, obtain VA disability compensation and thus reduce the share of

the former spouse. It will not, however, eliminate the problem entirely. Since it exempts those

individuals whose disability rating is less than 50%, the problem will remain to some extent and may be

addressed by means of the other tools and options covered in Military Pension Division: The Spouse’s

Strategy.

CRSC Explained Combat-Related Special Compensation (CRSC) is a benefit provided by Congress for those who

have a combat-related disability of at least 10% under certain conditions. A disability is considered to be

combat-related under 10 U.S.C. §1413a (e) if it –

(1) is attributable to an injury for which the member was awarded the Purple Heart; or

(2) was incurred (as determined under criteria prescribed by the Secretary of Defense)—

(A) as a direct result of armed conflict; or

(B) while engaged in hazardous service; or

(C) in the performance of duty under conditions simulating war; or

(D) through an instrumentality of war.

These qualifications include, by way of example, injury or illness resulting from actual combat,

simulations of war (e.g., gas mask training, field training exercises, direct-fire training and “confidence

courses”), hazardous duty (e.g., diving or parachuting), and instrumentalities of war (e.g., tanks, artillery,

1 For a detailed explanation of the complex rules regarding CRDP and CRSC for the disability retiree, see Charles

A. Henning, “Concurrent Receipt: Background and Issues for Congress,” Congressional Research Service (2009)

(#7-5700). This pamphles can be located on the Internet by inserting into any search engine: “Congressional

Research Service” and either “7-5700” or the publication’s title.

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machine guns, military helicopters or planes). These conditions are defined in the CRSC regulations in

the DoDFMR. There is further general information on CRSC at the Army Human Resources Command

website, www.hrc.army.mil. Just type “CRSC” into the Search field. Since “combat-related” is service-

specific, the application for CRSC payments is sent to the retiree’s branch of service, not to the

Department of Defense.

CRSC is not longevity retired pay; it is an additional form of compensation for certain members of

the armed forces. 10 U.S.C. §1413a (g) states that “[p]ayments under this section are not retired pay.”

Thus payments are not divisible as property. They are, however, subject to garnishment for family

support.

The CRSC rates are based on the VA tables, and they increase with the number of a retiree’s

dependents (spouse, spouse and child, etc.). Thus, to use a March 2014 example, the rate for a 10%

disability, no dependents, is about $131 a month, and the no-dependents rate for a 20% disability rating is

about $259 per month. The amount goes up to a total (for 2014) of about $3,390 for spouse, child and

two parents (reflecting a 100% disability rating), and each additional child brings additional funds

depending on his or her age.

CRSC Twists and Turns Once a CRSC application is approved, the retired pay center (usually DFAS) does the calculations

and the decision-making for the retiree. Since one cannot receive both CRDP and CRSC, DFAS

automatically makes the election for whichever is most financially advantageous, in that it yields the

highest net cash flow. DFAS doesn’t take into account that the retiree may have a property division

garnishment in effect. If CRDP is more favorable in gross dollars, then that is what’s chosen. This

means, for example, that if CRSC in a particular case were $500 and CRDP for the same year were $501,

then CRDP would be chosen for the retiree, even though CRDP is taxable and subject to a garnishment

division with the ex-spouse.

The potential hardships for former spouses due to CRSC elections are remarkable. Using 2006

dollars, Mike McCarthy liked to use these as teaching points:

First example: Assume an Air Force tech sergeant with 20 years of creditable service;

100% VA disability rating, all of it combat-related, and the former spouse is to receive

43% of the disposable retired pay as property division. He receives $2,979 VA disability

compensation and waives ALL of his $1,299 gross military retired pay. In return, he

receives $1,299 in CRSC payments. Thus he gets $4,278 per month tax-free. His ex-wife

gets her share, 43%, of the pension, but the pension at this point is ZERO. She gets

nothing; she has lost $558 per month.

Another scenario? Sure. Assume same facts except that the CRSC disability rating is

40%. The retiree gets $2,979 VA disability compensation but he must waive all of his

$1,299 pension, and he gets $1,191 CRSC. Thus he gets $4,170 per month tax-free;

while the ex-wife still gets NIL from disposable retired pay – there is none.

As a further illustration of this, assume a full colonel with 100% VA and 100% CRSC

disability rating, with a 43% award to former spouse. His military pension is $6,630

before VA waiver of $2,979, so his real "disposable" pension is $3,651. He also gets the

maximum amount of CRSC, $2,979. His former wife gets 43% of only $3,651, which

equals $1,570, rather than 43% of the gross $6,630, or $2,850. She loses $1,280. He

gets the balance of the pension ($2,081), plus the two disability benefits ($5,958) for a

total of $8,039.

CRSC payments are retroactive. The individual is entitled to CRSC back to the date of filing of the

VA claim or of the enabling legislation, January 1, 2003, whichever is later. This retroactivity will cause

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problems for both parties. If John Doe has been getting CRDP and elects CRSC, there will be a one-time

retroactive payment to him, and the money received under CRDP for that same period covered by the

CRSC retroactive payment will be taken back. The CRDP pay-back will be subtracted from the

retroactive CRSC payment that he receives. That means that taxable income for prior years – duly

reported on federal and state tax returns – has been taken back from the taxpayer, resulting in problems

for his tax preparer on how to treat this.

But what about the former spouse? If the retiree’s former spouse has been receiving a share of the

pension as property division, the share paid from CRDP must also be collected back from her. There are

two possible results.

First, if the CRSC election results in no further pension garnishment payments to the former spouse,

then DFAS will initiate a debt collection action against her or him, since there would no longer be any

continuing pension garnishment payments from which to deduct the CRDP payments made to her. The

former spouse may petition for a waiver of the indebtedness. This is done on DD Form 2789,

“Waiver/Remission of Indebtedness Application.” The mailing instructions are on the form.

On the other hand, if the CRSC election does not remove all the pension share garnishment, then the

former spouse will still be subject to a collection action by DFAS. DFAS will recoup the “overpaid”

funds from her, resulting in decreased future payments until the indebtedness is fully paid; this is

ordinarily done over a 36-month period. An example of an actual client’s overpayment letter (with names

and identifying information changed) is at ATCH 4 at the end of this Silent Partner. This former spouse

may also petition for waiver of this indebtedness.

CRSC Final Points

Here are some final points about CRSC:

• The CRSC payment cannot exceed the amount of the military retired pay waived for VA disability

compensation.

• Unlike ordinary retired pay (including CRDP), CRSC is non-taxable – it is disability compensation,

not retired pay.

• CRSC is available for support determinations and for garnishment for alimony and child support.

This is also true of CRDP.

• The statute includes Guard and Reserve personnel who have at least 20 qualifying years for

retirement purposes.

• It also includes those who are retired for disability (“military disability retired pay”) under Chapter 61

of Title 10, U.S. Code (see below).

Bumps in the Road and CRDP-CRSC Chart Note that the CRSC amount is not always the same as the VA amount. The VA disability rating is

based on those wounds, conditions or illnesses which are service-connected, whereas the combat-related

conditions may be a subset of the VA-rated disabilities. A servicemember could be rated at 60% by the

VA, and yet receive only 10% or 20% as his rating from the CRSC board, since only some of his

disabilities are combat-related.

Let’s use an example. If John Doe retires for longevity after 20+ years of service and receives a VA

rating of 60%, then he may elect to receive VA disability compensation of $X, and this doesn’t reduce his

retired pay since he’s “in the CRDP zone,” that is, he has a disability rating of 50% or greater, so he

receives CRDP to replace the retired pay that would otherwise be waived due to receipt of VA disability

pay. If he applies for CRSC, which will wipe out his CRDP and result in a reduction of his retired pay

(since he’s back to the old rule of dollar-for-dollar waiver of retired pay when getting VA pay), he will

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receive a “double payment” (that is, payment of the same amount twice) if his CRSC rating is the same as

his VA rating. Put another way, this would mean that all of his VA conditions are combat-related. He

would get less in CRSC if only some of the VA conditions were related to combat.

A simplified comparison between CRDP and CRSC is shown on this chart:

CRDP and CRSC – A Comparison CRDP CRSC

Type of disability required Service-connected Combat-related

Considered longevity retired pay Yes No

Divisible as property Yes No

Minimum disability rating required 50% 10%

Taxable Yes No

Retroactive payment No Yes†

Increases with number of dependents No Yes‡

Available for support determinations,

garnishments

Yes Yes

†Payment is retroactive to the date of filing of the VA claim.

‡If CRSC rating is 40% or more.

CRSC and the Disability Retiree

Those who receive MDRP (military disability retired pay) face a potential reduction if their retired

pay is based on the percentage of their disability. For a general explanation of MDRP and longevity

retired pay, see the Silent Partner, “Military Pension Division: The Servicemember’s Strategy.” The rules

for CRSC, found at Chapter 63 of the DoDFMR, also explain this more fully. Shown below are the rules

for those disability retirees with 20 or more years of creditable service. The rules for those who have less

than 20 years are set out in the DoDFMR, Vol. 7B, Chapter 63 at Paragraph 630803, but are not explained

below. This issue is obviously very complicated!

If John Doe is a recipient of MDRP (that is, he was retired because he was found to be unfit for duty

due to physical or mental disability under Chapter 61 of Title 10, U.S. Code), then his disability retired

pay will be based on the higher of two amounts – his retired pay calculated according to years of service,

and his retired pay calculated according to his percentage of disability.

Before January 1, 2013, the maximum CRSC allowed for John was reduced by the amount, if any, by

which his gross retired pay exceeded the pay he would have received if he had been retired for “years of

service,” that is, a “longevity retirement.”2 Note also that the amount of John’s VA disability

2 For retired pay before January 1, 2013, the following rule applied: If John’s MDRP was calculated according to the

percentage of disability (which would normally be the case if he had relatively few years of service), then his CRSC

would have been reduced by the amount by which his retired pay actually received exceeded his retired pay as

calculated according to his years of service. Thus if at the time of evaluation and pension determination, John’s

years of service yielded MDRP of $2,000, and his percentage of disability yielded MDRP of $3,000, John would be

paid the $3,000 (since by law the Defense Department must pay him the higher of the two amounts). But any CRSC

which he might receive in the future would be reduced by $1,000, which is the difference between the years-of-

service retired pay calculation and the percentage-of-disability calculation. See DoDFMR Vol. 7B, Chapter 63,

Paragraph 630803. A.1.

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compensation would be higher than the amount of CRSC, even if all of the VA conditions were combat-

related, since there is no reduction for VA payments as there is for CRSC under these circumstances.3

On or after January 1, 2013, different rules apply. The MDRP for John is governed by the following:

The maximum CRSC is limited to the amount which, when added to the rest of his retired pay after any

VA offset, would not be greater than the amount of pay to which he would have been entitled if he had

retired based on longevity.4

CRDP and CRSC – the Election Eligible retirees can elect either CRDP or CRSC, under 10 U.S.C. §1414 (d)(1). The election may be

made once a year during the January open season, pursuant to 10 U.S.C. §1414(d)(2). This means that

John Doe can alternate between CRDP and CRSC yearly. The “open season” is usually in January of

each year.

Conceivably – if John Doe alternated annually between the two forms of payment – Mary could get

her share of the CRDP in 2013, then be told by DFAS that no CRDP funds were available in 2014 when

John switched over to CRSC. Then in 2015 he could change back to CRDP.

DFAS advises that it is treating the initial election of CRSC as a termination of former spouse

payments if there is no other disposable pay available for the former spouse. This requires a new DD

Form 2293 (but not the entire set of original documents submitted with the original application). Thus if

John later switched back to CRDP, Mary would have to reapply to re-start the payments. DFAS does not

say how Mary would know of this switch, since it will not independently inform her of the change. And

John certainly won’t tell her!

If, however, John still had disposable retired pay available after his CRSC election, Mary would

continue to receive her share (at a reduced rate). If he later switched back to CRDP, the payment to Mary

would increase automatically.

CRDP and CRSC – Procedures, Pay Notice Here is an overview of how the VA, CRDP, and CRSC procedures work. John Doe retires from the

Army. He is divorced and the property division order requires him to pay Mary Doe, his ex-wife, 50% of

his disposable retired pay (DRP). After retirement, he goes to the nearest VA hospital for a physical

evaluation. Several months after the physical (it could be up to a year, depending on backlogs), he gets a

findings and ratings letter from VA. This correspondence states that he is rated X% disabled, due to

hearing loss, back problems, and carpal tunnel syndrome. All of these disabilities are determined to be

service-connected, but the back problem stems from a parachute jumping accident, and the hearing loss

came from a career of being in airplanes for airborne operations. X represents a figure greater than 50%

in this example.

The letter informs him that the X% disability rating qualifies him for non-taxable VA disability

compensation of $800 a month. To elect this, he must waive the same amount of his retired pay, as

outlined above, if the rating is less than 50%; there is no waiver if the rating is 50% or more.

John Applies for CRSC After he gets his VA letter, John decides to apply for CRSC. First of all, he gets out his VA findings

and ratings letter, and he looks for types of disabilities which will qualify for CRSC. These would be

conditions or disabilities for which he was awarded the Purple Heart or those which were incurred as

direct result of armed conflict, hazardous duty, an instrumentality of war, or conditions simulating war.

3 The rules are more complex than the general discussion here. See the pamphlet referenced at note 1 above; of

particular interest in explaining the interplay of CRSC and disability retired pay are the examples found at Appendix

C. See also the rules and examples at Paragraph 630803 of Chapter 63, Volume 7B of the DoDFMR. 4 See DoDFMR Vol. 7B, Chapter 63, Paragraph 630803.B.1.

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Since applications are service-specific, John sends in his application form, DD Form 2860, to the

Army. He must apply to be considered for CRSC; it is not automatic, like CRDP. A board will decide

his case, and he sends in copies of his physicals, his medical records (active duty military, VA and private

health care provider), plus statements from him and, if available, from witnesses or experts.

Several months later he receives a letter from the Army. It contains findings regarding his claims as

to combat-related injuries or disabilities (e.g., “Of your X% service-connected disability rating, Y% is

combat-related and qualifies for CRSC.”).

DFAS Makes the Choice Soon after the letter confirming his CRSC eligibility, John’s CRSC payments begin. The CRSC

payment amounts come from the VA disability tables, and they vary according to the number of

dependents that one has. As mentioned above, DFAS makes the choice for John – CRSC or CRDP –

based on which one yields the larger total gross payment. Thus if the CRSC amount is $800 per month

(as against a present total CRDP payment $900 monthly), DFAS will leave the CRDP payment

unchanged, regardless of the fact that the $900 is taxable and divisible with his ex-wife). John can change

this election annually in the January open season if he wishes. If DFAS chooses CRDP, then there will be

no change on John’s RAS. The comment at the MESSAGE section on page 2 remains the same as

before.

If, however, CRSC payments were $1,000 per month, then this is better financially for him (in the

eyes of DFAS) and DFAS will select that option, issuing her a CRSC Monthly Statement. An example of

a CRSC statement, not tied to this scenario, is as follows:

CRSC Pay Statement STATEMENT EFFECTIVE DATE APR 21, 2013

PAYMENT DATE MAY 01, 2013

SSN 123-45-6789

RETIREE’S NAME AND ADDRESS HOW TO CONTACT US

PLEASE REMEMBER TO NOTIFY DFAS OF YOUR ADDRESS CHANGES [NAME APPEARS HERE]

123 GREEN STREET

APEX, NC 27511-1234

PAYMENT ADDRESS DIRECT DEPOSIT

DEFENSE FINANCE AND ACCOUNTING SERVICE US MILITARY RETIRED PAY PO BOX 7130 LONDON, KY 40742-7130 COMMERCIAL (216) 522-6398 TOLL-FREE 1-800-472-7098 TOLL-FREE FAX 1-800-469-6559 myPay https://myPay.dfas.mil 1-877-363-3677

PAYMENT INFORMATION ENTITLEMENT INFORMATION

CRSC Payment 377.00

CRSC Debt Deduction 0

CRSC Garnishment Deduction 0

CRSC Net Pay 377.00

Retired Pay Before Deductions 2,746.00

Retired Pay Offset by DVA Compensation 757.00

CRSC Debt Balance 0

Branch of Military Service AIR FORCE

Garnishment Being Withheld NO

THE DVA OR YOUR BRANCH OF SERVICE PROVIDED THE FOLLOWING

CRSC SPECIAL MONTHLY COMPENSATION CODE 00

UNEMPLOYABLE NO

DVA DISABILITY % 50

COMBAT RELATED DISABILITY % 30

PURPLE HEART % 00

CRSC START DATE JAN 01, 2012

SPECIAL MONTHLY COMPENSATION START DATE

REMARKS This is your monthly CRSC statement. Please refer to myPay frequently asked questions

for additional information about CRSC and this statement.

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The new CRSC statement will be posted on-line. John Doe, our Army retiree, can access it through

the secure DFAS website, https://mypay.dfas.mil.

DFAS will also issue John a new RAS. It will contain new retired pay figures, and the amount for

retired pay will be reduced from the previous month’s amount because CRDP has disappeared. The

comment in the MESSAGE SECTION on page 2 also will be gone, as shown below:

MESSAGE SECTION

Sherlock Holmes at Work

This absence of the CRDP message is the key to understanding when CRSC is present. Suppose that

Mary’s attorney discovers that there is a large offset (or “VA waiver”) shown on John Doe’s RAS. In this

case, “large” would be over $800, since $822 is the rate (as of 12/1/13) for a veteran with no dependents

who has a 50% VA disability rating. In the absence of a CRSC statement, Mary’s attorney can perform

some deductive reasoning and, even without the help of Dr. Watson, can still make an educated guess as

to John’s receipt of CRSC. All the attorney needs to do is look at the MESSAGE SECTION on the RAS.

“No message” combined with a large VA waiver means that:

A) John has a VA-rated disability

B) He made the election to receive VA disability pay

C) While this would ordinarily mean that he would have to waive part of his pension, the advent of

CRDP means that he is entitled to his pension and his VA payment for VA ratings of 50% or

more

D) That, in turn, would mean “no VA waiver” shown on the RAS (as of 1/1/14)

E) When there IS a VA waiver, it must mean that we’re back to the “old days” of dollar-for-dollar

waiver of pension money for VA money, which means there is no payment of CRDP, which in

turn means that John has been approved for CRSC, which is the only way to wipe out CRDP.

In such a case, Mary’s attorney can be a sleuth and figure out what John’s VA rating actually is

(without even seeing his VA findings-and-rating letter in her possession). All she has to do is to find the

amount of the monetary offset due to the VA waiver and then locate that number on the VA disability

compensation tables (easily found by typing “VA disability compensation tables” into any internet search

engine).

The Impact of a “CRSC Attack”

To understand some of the consequences of the CRSC election, remember that John cannot get

CRDP if he is receiving CRSC at the same time. This does not mean a dollar-for-dollar waiver of CRDP

for CRSC. It means he cannot receive any CRDP if he receives even $1 of CRSC.

So the payments for John go up, while those for his ex-wife will go down. In fact, Mary Doe will see

even more bad news due to CRSC and retroactivity. Since John has received CRDP back to the date of

his VA election, which has been shared through DFAS with Mary for months (or years) before John is

accepted for CRSC, DFAS now must take back all of the prior CRDP payments, and this means

collection from Mary as well. So Mary will see an even larger reduction in her pension division checks.

DFAS will collect these CRDP payments back over a 36-month period.

The consequence for John is that he will have to check with his CPA or tax preparer about an

adjustment on the current tax returns that he files, since he will want to report an adjustment for the “pay-

back” for CRDP. The current year’s CRDP income and pay-back will be adjusted in the Form 1099 that

he receives; this portion of his reported income for the current year will just be zeroed out, since he

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received it but then paid it back in the current year. His only reportable income for the current year would

be his unreduced remaining monthly pension share. He will also need to ask if he should amend his prior

years’ tax returns.

Why “The Evil Twins”?

As shown above, CRSC can have a devastating impact on CRDP payments. The receipt of even $1

of CRSC wipes out any CRDP, and this is without notice to the former spouse. Furthermore, John can

elect to alternate between CRSC and CRDP once a year, a whipsaw tactic that will totally confuse and

exhaust Mary and her lawyer.

Practical Pointers – Attorney for the Non-Military Spouse

First of all, it is essential that the non-military spouse (and, for that matter, the SM/retiree) obtain an

attorney who knows this area of the law. As shown above, booby traps and pitfalls are everywhere. The

spouse should either obtain a lawyer who knows the area from past experience or, if possible, hire an

attorney who is a Guard or Reserve JAG officer, a former JAG officer or a retired JAG officer. Jackey D.

Nichols, the former Chief of the Claims Division, Office of the Staff Judge Advocate, Ft. Dix, NJ, says,

“One of the biggest tragedies I see is when a client going through a divorce picks an attorney based on

price vs. one who knows all the unique issues associated with a military couple's divorce.” If the current

divorce attorney doesn’t know the law, he or she should certainly associate co-counsel for this particular

piece of the divorce case. Since there are several different court interpretations in this complex area – and

sometimes no judicial precedent at all – it is recommended that counsel research the laws of the

jurisdiction involved as to the impact of retirement pay amounts waived because of these choices outlined

above.

Next, the lawyer representing the servicemember’s spouse must recognize that he or she can’t predict

much of anything before the SM’s retirement. You could ask whether the SM is an active-duty trooper or

a member of the Guard or Reserve. Since most of the creditable service of Guard/Reserve personnel is

made up of weekend drill and two weeks of annual training, or “summer camp,” you could predict that

these Reserve Component SMs are less likely to suffer from disabling conditions arising from combat,

hazardous duty or other qualifying causes. But remember that even Guard and Reserve members could

be injured in the operation of a plane, helicopter or weapons system, which would likely qualify for

CRSC, while on a regularly scheduled field exercise or during a six-month mobilization in the Middle

East.

If you are representing the spouse of an active-duty SM, you can make some educated guesses as to

whether there might be a combat-related disability or injury by assessing whether the SM might be a

“Front-Line Felicia” or a “Backfill Bill.” Is the servicemember a paratrooper or a Ranger, or perhaps a

garrison trooper who sits at a desk all day?

Be sure to consider the job assignment or military occupational specialty as well as the unit to which

Felicia or Bill belongs. If Felicia is a supply sergeant, does that mean she’s unlikely to suffer combat-

related injury from her military service? Suppose she is, during training missions, also a jumpmaster in

charge of parachute drops from the aircraft. Just because Bill is a Navy nurse doesn’t mean that he’s in

the clear. What if his assignment is with Navy Seal Team 6, jumping out of helicopters and swimming to

the objective?

Be sure to ask lots of questions of your client. Does the military spouse presently demonstrate any

injuries or disabilities? Has he been in the hospital for anything related to military service? What is the

state of his health?

If you are trying to negotiate a settlement, draft your settlement document with an indemnification

clause. Be sure that you include language that states that the military spouse will repay your client any

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moneys that are removed from her share of total pay (other than the SBP premium) in arriving at

Disposable Retired Pay due to any action of the retiree. Such an indemnification clause might read:

The military retired pay of respondent shall be apportioned between the parties, with the petitioner receiving 39.375% of same, without regard to any reductions or setoffs due to disability compensation or any other reason (except the premium for her coverage under the Survivor Benefit Plan). If the respondent shall do anything – actively or passively – to reduce the share of amount of petitioner, then he shall indemnify and reimburse her for any such loss, including associated costs, expenses, interest, attorney’s fees and consequential damages.

On the other hand, the military member might be wary of “indemnification language” or division of

the gross retired pay, in which case a weaker set of words might be useful or necessary if they will –

under state law – provide sufficient protection for the nonmilitary party:

Petitioner shall receive 39.375% of respondent’s retired pay, which is at present based solely on 22 years of creditable service without any reductions (except the premium for her coverage under the Survivor Benefit Plan). The respondent shall do nothing to reduce petitioner’s share or interfere with her receipt of same.

This clause attempts to identify the number of years of service as the sole measure of determining

respondent’s compensation in retirement. Even better would be a sentence which attempts to forecast the

likely longevity retired pay of the respondent so that the judge would have a benchmark to use in case the

member does something in the future to diminish the share of the spouse. Ideally, the settlement

agreement would also have a general violation clause, which is standard in most marital settlement

agreements, stating that any breach of the agreement by a party entitles the other to payment of damages,

costs, expenses and attorney’s fees.

If the member is already retired, try this for the “strong language” clause:

Respondent is currently receiving gross military retired pay of $2,000 a month, with a deduction of $130 for SBP premium to cover his former spouse. If the respondent does anything to reduce the share or amount of petitioner as to his retired pay, then he will immediately indemnify and reimburse her for any such loss, including associated costs, expenses, attorney’s fees and consequential damages.

If a more diluted form of language is needed for the second sentence in the above paragraph, try this:

The respondent will do nothing to reduce petitioner’s share or interfere with her receipt of same.

Another possibility is to hold alimony open. Consider reserving the issue of alimony or setting

alimony at $1 per year, to allow the court to make an adjustment in this area if the anticipated share of

retired pay is diminished by the retiree’s actions in electing CRSC over CRDP.

If the case goes to trial, make sure you draft the court order or are allowed input. The decree should, if

possible, specify that the SM/retiree will indemnify the former spouse if he does anything to reduce her

share, along the lines of the above “agreement language.” If your state law and cases do not allow this, or

if the judge refuses this language, try to have the following inserted in the decree:

The parties shall comply with the terms of this order in good faith, and they will do nothing to interfere with the terms provided by the court herein.

Breach of the good faith requirement, by election of CRSC, would allow the court to impose sanctions,

assess damages, use the contempt power, or apply other remedies in favor of the wronged spouse.

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Practical Pointers – Attorney for the Servicemember/Retiree There are only two things that the attorney for the SM or retiree should say. The first is: “Do the

right thing.” This means treating the former spouse fairly and not destroying the returning share of retired

pay (CRDP) which she should be receiving, or else reimbursing the FS for the cost of the CRSC which is

paid to the retiree. CRDP is the means of reconciling accounts for servicemembers and spouses in light

of the VA disability compensation and the retired pay waiver. CRDP means everyone gets treated fairly,

retirees get paid disability on top of retired pay, and former spouses receive their share of a pension that

formerly was diminished because of the waiver. Leaving that intact is one option for the retiree. CRSC

compensation is also a consideration; sharing the CRSC payment, which involves tax-free disability

funds, is another fair way to resolve the problem.

The second piece of advice would be, “Get out your checkbook.” This means that there will be, in all

likelihood, a long, hard fight over the issue of CRDP if CRSC is elected. Since CRSC destroys CRDP,

the retiree should expect to see serious litigation over this. As in the area of VA disability and the retired

pay waiver, many cases will wind up in the appellate courts. And, predictably, most courts will follow the

trail blazed by VA disability litigation, holding that a retiree cannot unilaterally reduce the former

spouse’s share or amount of returning retired pay (CRDP) by selecting CRSC. The remedies will vary –

indemnification, damages, compensatory alimony, or complete revision of the property division. The

result will be the same in most state courts. They will side with the former spouse and the prior

judgment, decree or agreement, especially if it contains an indemnification clause.

Resources Mark E. Sullivan, The Military Divorce Handbook (ABA Family Law Section, 2nd Ed. 2011), Chapter 8,

“Pension and Property Division.”

Mark E. Sullivan and Charles R. Raphun, “Dividing Military Retired Pay: Disability Payments and the

Puzzle of the Parachute Pension,” Journal of the American Academy of Matrimonial Lawyers, 2011, Vol.

24, No. 1

Cases: Sharp v. Sharp, 314 S.W.3d 22 (Tex. App. 2009); Jackson v. Jackson, 319 S.W.3d 76 (Tex. App.

2010); Brouillette v. Brouillette, 51 So. 3d 898 (La. Ct. App. 2010); Bandini v. Bandini, 935 N.E.2d 253

(Ind. Ct. App. 2010); Megee v. Carmine, 290 Mich. App. 551, 802 N.W.2d 669 (2010); Provencio v.

Leding, 2011 Ark. App. 53, No. CA10-312, 2011 Ark. App. LEXIS 74; and Hillard v. Hillard, 733 S.E.

2d 176 (N.C. App. 2012).

(Rev. 11/22/15)

* * *

This SILENT PARTNER was prepared by COL Mark E. Sullivan (USA-Ret.). For revisions, comments or

corrections, contact him in Raleigh, N.C. - 919-832-8507, or at [email protected].

(Note: Four attachments follow this page)

198

ATCH 1 RETIREE ACCOUNT STATEMENT STATEMENT EFFECTIVE DATE DEC 16, 2005

NEW PAY DUE AS OF FEB 01, 2006

SSN 123 – 45 – 6789

PLEASE REMEMBER TO NOTIFY DFAS IF YOUR ADDRESS CHANGES Major John Q. Doe, USAF (Ret.) 123 Green St Apex, NC 27511-1234

DFAS-CL POINTS OF CONTACT DEFENSE FINANCE AND ACCONTING SERVICE US MILITARY RETIREMENT PAY PO BOX 7130 LONDON KY 40742-7130 COMMERCIAL (216) 522-5955 TOLL FREE 1-800-321-1080 TOLL FREE FAX 1-800-469-6559 myPAY https://myPay.dfas.mil 1-877-363-3677

PAY ITEM DESCRIPTION ITEM OLD NEW ITEM OLD NEW GROSS PAY

VA WAIVER

SBP COSTS

TAXABLE INCOME

2,746.00

591.30

179.28

1,975.42

2,746.00

473.04

179.28

2,093.68

FITW

ALLOTMENTS/BONDS

NET PAY

191.31

40.00

1,744.11

209.05

40.00

1,844.63

PAYMENT ADDRESS YEAR TO DATE SUMMARY (FOR INFORMATION ONLY) DIRECT DEPOSIT TAXABLE INCOME: 1,975.42

FEDERAL INCOME TAX WITHHELD: 191.31

TAXES FEDERAL WITHHOLDING STATUS: SINGLE

TOTAL EXEMPTIONS: .01

FEDERAL INCOME TAX WITHHELD: 209.05

SURVIVOR BENEFIT PLAN (SBP) COVERAGE SBP COVERAGE TYPE: SPOUSE AND CHILD(REN) ANNUITY BASE AMOUNT: 2750.50

SPOUSE COST: 176.78 55% ANNUITY AMOUNT: 1,512.77

CHILD COST: 50 40% ANNUITY AMOUNT: 1,100.20

SPOUSE DOB: 12 DEC 1945

CHILD DOB: 13 MAR 1996 THE ANNUITY PAYABLE IS 55% OF YOUR ANNUITY BASE AMOUNT UNTIL YOUR SPOUSE

REACHES AGE 62. AT AGE 62, THE ANNUITY MAY BE REDUCED DUE TO SOCIAL SECURITY OFFSET, OR

UNDER THE TWO-TIER FORMULA. THAT REDUCTION MAY RESULT IN AN ANNUITY THAT RANGES BETWEEN

40% ($1100.20) AND 55% (1512.77) OF THE ANNUITY BASE AMOUNT. THE COMBINATION OF THE

SBP ANNUITY AND THE SOCIAL SECURITY BENEFITS WILL PROVIDE TOTAL PAYMENTS FROM DFAS AND

THE SOCIAL SECURITY ADMINISTRATION OF AT LEAST 55% OF YOUR BASE AMOUNT. THE ACTUAL

ANNUITY PAYABLE IS DEPENDENT ON FACTORS IN EFFECT WHEN THE ANNUITY IS ESTABLISHED.

DFAS-CL 7220/148 (Rev 03-01)

199

RETIRED SERVICEMAN FAMILY PROTECTION PLAN (RSFPP) COVERAGE RSFPP COVERAGE TYPE ANNUITY PAYABLE RSFPP COST

ALLOTMENTS AND BONDS ALLOTMENT TYPE PAYEE AMOUNT BOND FACE VALUE SERIES DEDUCTION INSURANCE VGLI 40.00

TAX LEVY DEDUCTIONS DATE OF LEVY MONTHLY AMOUNT BALANCE

GARNISHMENT DEDUCTIONS PAYEE GARNISHMENT AMOUNT COMPLETION DATE

FORMER SPOUSE PROTECTION ACT DEDUCTIONS PAYEE AMOUNT

MISCELLANEOUS DEBTS DEBT TYPE MONTHLY DEDUCTION PRINCIPAL AMOUNT INTEREST AMOUNT ACCUMULATED INTEREST DEBT BALANCE

ARREARS OF PAY BENEFICIARY INFORMATION YOU HAVE ELECTED ORDER OF PRECEDENCE.. THE FOLLOWING BENEFICIARIES ARE ON RECORD: NAME SHARE RELATIONSHIP JANE P. DOE .00 WIFE

MESSAGE SECTION BASED ON INFORMATION RECEIVED FROM THE VA, YOUR CRDP AMOUNT IS $283.96. ***

DFAS-CL 7220/148 (Rev 03-01)

200

ATCH 2 DEFENSE FINANCE AND ACCOUNTING SERVICE

CLEVELAND CENTER

P. O. BOX 7130

LONDON, KY 40741-7130

This letter is in response to your request for information from the retired pay account of the member listed below.

MAJ John Q. Doe, USAF (Retired) Social Security Number 123-45-6789

Payment Year 2006

Payment Date 1-Jan 1-Feb 1-Mar 1-Apr 1-May 1-June 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec

Gross Pay

$0.00 $0.00 $0.00 $0.00 $2,593.00 $2,593.00 $2,593.00 $2,593.00 $2,593.00 $2,593.00 $2,593.00 $2,593.00

Misc. Credit

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

FCE/DC

Deduction

FCE Pay Cap

VA Waiver $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $83.00

Taxable

Income $0.00 $0.00 $0.00 $0.00 $2,415.37 $2,415.37 $2,415.37 $2,415.37 $2,415.37 $2,415.37 $2,415.37 $2,332.37

FITW

$0.00 $0.00 $0.00 $0.00 $201.05 $201.05 $201.05 $201.05 $201.05 $201.05 $201.05 $188.60

Add’l FITW

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

SITW $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Witholding

Stats

0 0 0 0 0 0 0 0 0 0 0 0

Allotments $0.00 $0.00 $0.00 $0.00 $1,600.00 $1,600.00 $,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00

SBP $0.00 $0.00 $0.00 $0.00 $177.63 $177.63 $177.63 $177.63 $177.63 $177.63 $177.63 $177.63

RSFPP

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Tax Levy

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Garnishment $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Former

Spouse

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Misc.

Deduction

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $600.00 $600.00 $100.00

Retired Pay

Deduction

$0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Net Pay

$0.00 $0.00 $0.00 $0.00 $614.32 $614.32 $614.32 $614.32 $614.32 $14.32 $14.32 $443.77

Comments: ____________________________________________________________________________________________________

Sincerely,

Retired and Annuity Pay Operations

201

ATCH 3

DEFENSE FINANCE AND ACCOUNTING SERVICE 1240 East Ninth Street

Cleveland, Ohio 44199

(DFAS-DCC/CL) November 20, 2013

Lucinda Lopez, Esquire

Lopez and Pasquale, LLP

123 Green Street

Apex, NC 27566

Dear Ms. Lopez:

This letter acknowledges the request made by your client, Mary P. Doe, under the Routine Use published in the

Federal Register for a calculation of her payment under the Uniformed Services Former Spouse’s Protection Act from the

military retired pay account of MSG John Q. Doe, USAF (Retired).

The monthly Former Spouse payment is calculated as follows:

Gross Pay $1,838.00

Less VA Waiver -673.92

Disposable Pay $1,164.08

Award x 43%

Former Spouse Pmt: $ 500.55

These documents contain Personal Data covered by the Privacy Act of 1974. Please ensure this information is

protected from unauthorized access and/or disclosure.

If I can be of further assistance, you may contact me at the above address.

Sincerely,

Mickey L. Brown

Freedom of Information Act/Privacy Act

Office of Corporate Communications and

Legislative Liaison

202

ATCH 4 DEFENSE FINANCE AND ACCOUNTING SERVICE

Retired and Annuity Pay

4197

December 28, 2013

Mr. Jack Green

123 Main Street

Apex, NC 12345

Dear Mr. Green,

A review of your former spouse pay account indicates that you have been overpaid in the amount of $5170.74.

According to our pay records, you have been overpaid in the amount of $5170.74 from May 1, 2013 through

October 31, 2013 @ $861.79 per month x 6 months. Your former spouse portion of the retiree’s Concurrent Disability Pay

is being recouped for the payment of Combat Related Special Compensation retroactive through the same period. We will

be deducting $143.63 per month until the debt if fully recovered.

If you have already paid this debt or believe it is invalid, please contact Defense Finance and Accounting Service,

U.S. Military Retirement Pay, at the address indicated at the close of this correspondence. Under 37 U.S. Code 1007(c) you

have the opportunity (1) to either inspect and copy or to request and receive a copy of government records related to the

debt and (2) for review of the decision related to the debt.

Collection action on this total debt amount of $5170.74, will begin with your payment dated January 1, 2014 at a

monthly rate of $143.63 and will continue until the total amount as shown above is collected in full. You will receive a

Former Spouse Account Statement showing the reduction in your monthly entitlement amount.

If this method of repayment will create a financial hardship, forward the Defense Finance and Accounting Service,

U.S. Military Retirement Pay, at the address indicated at the close of this correspondence, a request for a more lenient

repayment plan, specifying the amount you wish to be deducted each month. Please note that the total debt if $5170.74

cannot take longer than 36 months total to collect.

In certain circumstances, the law provides for partial or full waiver of debts which result from erroneous payments.

You may request an application for waiver by contacting the Defense and Finance Accounting Service, U.S. Military

Retirement Pay, at the address indicated at the close of this correspondence.

However, submission of a waiver application does not automatically guarantee forgiveness of your debt or

suspend the requirement to continue collection action. If you choose to apply for a waiver, you must enclose a copy of this

correspondence with your application.

We are interested in working with you to resolve this debt. Should you have any further questions or requests to

any of the above, please contact me at Defense Finance and Accounting Service; U.S. Military Retirement Pay; P. O. Box

7130; London, KY 40742-7130; or call toll free 1-800-321-1080, commercial (216) 204-2404.

Sincerely,

Louis Roe, Military Pay Technician

Retired and Annuity Pay

203

SILENT PARTNER The Death of Indemnification

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the

Military Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s

Committee on Legal Assistance for Military Personnel. There are many Silent Partner infoletters on military family

law issues. Just go to www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov >

For Lawyers. Please send any comments, corrections and suggestions to the address at the end of this document.

On May 15, 2017 the U.S. Supreme Court announced its unanimous decision in Howell v.

Howell, a case that arrived at the Court on certiorari from the Arizona Supreme Court. The

Court decided that a trial judge may not order a military retiree to reimburse his or her former

spouse (FS) for moneys lost when the retiree elects to receive disability compensation from the

Department of Veterans Affairs (VA), an action which can result in a dollar-for-dollar decrease

in retired pay. Here is a summary of what happened and its impact on the military retiree and the

FS.

Q. What did the court decide and how did it arrive at the outcome? A. To understand what the decision says and does, we need to take a look at the facts. In this

case the parties divorced in Arizona in 1991, and the court ordered that Mrs. Howell was to

receive 50% of the military retired pay. The husband, John Howell, retired in 1992 from the Air

Force.

Thirteen years later – in about 2005 – Mr. Howell was told by the VA that he had a shoulder

injury which was service-connected. This meant that he could apply for VA disability

compensation for the injury. His VA rating was 20%, and that meant that he would receive

about $250/mo. from the VA.

But that also meant that Mr. Howell, in making the election for VA payments, chose to forfeit

the same amount of his pension to get those tax-free VA funds. The waiver is stated clearly on

the application for VA disability compensation; it is, in fact, called the “VA waiver.” It requires

a forfeiture of an equal amount of retired pay for retirees whose rating is less than 50% and for

those who are receiving Combat-Related Special Compensation.

Q. What did Mr. Howell do? A. He decided to go ahead with the VA waiver. He did so without the permission of the court,

and without his ex-wife’s consent.

That resulted in Mrs. Howell’s receiving about $125 a month less of the pension. The full

pension of Mr. Howell was about $1500 per month.

Mrs. Howell petitioned the trial court in Arizona to order enforcement of the original order for

pension division, and to require the ex-husband to make up the payments which were lost due to

his VA waiver. The trial court approved and ordered pay-back by Mr. Howell, and this was

upheld by the Supreme Court of Arizona. Mr. Howell petitioned for review by the U.S. Supreme

Court.

Q. What did the Supreme Court decide about the decision of the Arizona Supreme Court?

204

A. The U.S. Supreme Court reversed the Arizona decision and held that, under the Uniformed

Services Former Spouses’ Protection Act, the judge may not order pay-back to a former spouse

of funds which she or he loses because the military retiree has elected to receive VA disability

compensation and to forfeit an equal amount of his retired pay. In effect, it sounded the death

knell for courts requiring reimbursement for former spouses whose share or amount of military

retired pay has been decreased due to election of a “VA waiver.”

Q. So what’s the big deal – was this a surprise? A. It was indeed. Of the state courts which have ruled on this, all but a handful have held that it

is unfair and inequitable for retirees – after the property settlement is done – to make a VA

election which causes a reduction of the share or amount of retired pay that the former spouse

receives. Even the United States Solicitor General viewed the issue, upon oral argument before

the Supreme Court, as one which was properly decided by the Arizona Supreme Court.

It is also surprising since it allows parties to litigation to make unilateral decisions, without the

approval of the judge or the consent of the former spouse, which essentially defeat the right of a

former spouse to receive the amount of retired pay awarded by the court, and which overrule the

judge’s considered and sometimes delicate balancing of the interests of the parties in the

distribution of property. By making a VA election for disability compensation, the retiree

effectively circumvents the ruling by the trial court in setting what the former spouse will

receive. And all of this is after the court has either approved the parties’ settlement or else held a

trial to make a fair, just and equitable division of marital or community property, taking into

account all of the facts and factors then present.

Q. Does this decision mean that the former spouse – the one who has been injured – can now go back into court and demand a rehearing and a new division of property? After all, what he/she was awarded is now reduced in value or – in extreme cases – worth nothing at all! A. We don’t know at this point. The answers, when they arrive, will vary from state to state. In

virtually all states, the rule is that property division is fixed and final, not subject to revisions and

changes “down the road.” Will the nation’s divorce court judges be able to go back and amend

the property division judgments which were rendered months or years ago to set the scales at a

fair division once again? Or will res judicata bar the litigation of issues which could have been

raised on appeal, when no appeal was taken?

Q. What remedies might be available to a spouse who gets a reduced share of the pension due to a VA waiver? A. Compensatory spousal support is possible remedial measure which could be used, and it was

reviewed and approved in In re Marriage of Jennings,1 a Washington Supreme Court decision.

There the wife was awarded $813 in the property division decree as her share of the husband’s

military retirement. The husband’s subsequent VA waiver brought her payments down to only

$136 per month. When this occurred, she filed a motion asking the court to vacate the decree,

modify it to provide her with spousal support payments equal to half of husband’s disability

1 In re Marriage of Jennings, 138 Wash. 2d 612, 980 P.2d 1248 (1999); see also Longanecker v. Longanecker, 782

So. 2d 406 (Fla. Dist. Ct. App. 2001). But see In re Marriage of Cassinelli, 4 Cal. App. 5th 1285, 210 Cal. Rptr. 3d

311 (Calif. Ct. App. 2016) (holding that the trial court could not use spousal support as a replacement for money lost

to the former spouse because of a VA waiver).

205

payments, or clarify the decree to require the husband to pay her no less than $813 per month.2

Based on the “extraordinary circumstances” presented, the court entered an order providing the

wife with compensatory spousal support to make up for the loss caused by the VA waiver. The

Supreme Court approved the use of “compensatory spousal maintenance” that would not end if

the ex-wife remarried.3

Compensatory spousal support also was considered in a Missouri case, Strassner v. Strassner,4

which pointed out that the record on appeal did not clearly demonstrate that the pension division

and maintenance terms were interdependent; therefore, the issue needed to be remanded to

determine what amount of adjusted maintenance was appropriate if these two terms were indeed

interdependent. In Longo v. Longo, a Nebraska case, the trial court granted the wife alimony of

$1 per year, modifiable only upon a potential reduction to the husband’s future military pension

because of a future disability offset.5

Another remedial approach is to have the court revisit the property distribution in light of the

SM’s VA election to redetermine what property is allocated to whom. This was approved in

McMahan v. McMahan,6 a Florida case in which the trial judge awarded the wife a share of the

husband’s disability benefits. The Florida Court of Appeals determined that this violated the

Mansell rule but held that, because the husband and wife anticipated when they executed their

agreement that it would be honored by the courts, the case would be remanded for

reconsideration of the entire equitable distribution scheme.7

Q. Where can I find some answers to how to protect the former spouse? A. The clearest answers involve the issues of contractual indemnification and res judicata (“the

law of the case”); they are in a 2004 article by Brett R. Turner of the National Legal Research

Group, State Court Treatment of Military and Veteran's Disability Benefits: A 2004 Update,

which can be found at Appendix 8-F to Chapter 8 of Sullivan, THE MILITARY DIVORCE

HANDBOOK (American Bar Association, 2nd Ed. 2011). Turner is also the author of the 3-volume

series, EQUITABLE DISTRIBUTION OF PROPERTY, which is the nationwide gold standard when it

comes to issues of property division.8

Q. How will this decision impact retirees and servicemembers from here on?

2 Jennings, 138 Wash. 2d at 617–618. 3 Id. at 626. But see In re Marriage of Perkins v. Perkins, 107 Wn. App. 313, 26 P.3d 989 (Wash. Ct. App. 2001)

(no dollar-for-dollar award of VA amount as alimony; remanded so that VA disability compensation may be

considered as a factor, or as income for a determination of alimony; excellent summary of case law). 4 895 S.W.2d 614 (Mo. Ct. App. 1995). 5 Longo v. Longo, 266 Neb. 171, 663 N.W.2d 604 (2003). 6 McMahan v. McMahan, 567 So. 2d 976 (Fla. Dist. Ct. App. 1990). 7 Id. at 979–980; see also Guerrero v. Guerrero, 362 P.3d 432 (Alas. 2015) (Judge refused to issue military pension

division order. The parties (with no attorney on either side) had signed property division settlement and it was

incorporated into divorce decree. Trial court stated that husband was receiving only military disability retired pay

and VA disability compensation, neither one being divisible. Affirmed by Alaska Supreme Court, but property

division was reopened because of exceptional circumstances, due to the parties’ assumption that wife was entitled to

some portion of husband's military retirement. Husband retired from the military with no disposable military retired

pay.); White v. White, 152 N.C. App. 588, 568 S.E.2d 283 (2002), aff’d, 357 N.C. 153, 579 S.E.2d 248 (2003);

Torwich v. Torwich, 660 A.2d 1214, 282 N.J. Super. 524 (1995). 8 See also 2 Brett R. Turner, Equitable Distribution of Property, §§ 6:9-6:11 (3rd Ed. 2005 & 2016-2017 Supp.).

206

A. The decision in the Howell case means that retirees may elect VA disability compensation

“without a price tag,” that is, without fear that a judge may later order a pay-back of moneys lost

by the former spouse because of a VA waiver.

Q. Will retirees be flooding the courts with applications for relief and requests to re-open prior indemnification orders which are years or decades old? Are the courts going to be inundated with such requests? A. That remains to be seen. In general, the “law of the case” is one way in which courts deal

with issues that are newly decided but which could be seen as overturning prior principles of

law. The doctrine of res judicata generally bars a later attack on the previous order if there was

no appeal taken which resulted in reversal of the trial court’s decision. Thus even those

decisions which are wrong on the law – if not appealed – can result in valid and binding

decisions which are subject to the contempt power of the court. That is exactly what happened to

Major Gerald Mansell in the famous Mansell v. Mansell decision9 cited by Justice Stephen

Breyer in the Howell decision. The U.S. Supreme Court held that his pension could not be

divided upon divorce because of the language of the Uniformed Services Former Spouses’

Protection Act regarding VA waivers. Upon remand to the California courts, however, the

original order was upheld, since the state appellate courts found that the decision against Major

Mansell was based on res judicata, not upon a division of the pension at trial in violation of the

USFSPA. When Major Mansell took the case back up to the U.S. Supreme Court, the certiorari

petition was denied.10 Thus the doctrine of res judicata (sometimes called “the law of the case”)

may be an avenue of relief for the injured former spouse.

Q. What impact will the Howell decision have on former spouses whose pension shares or amounts are reduced by a VA waiver? A. There are several “take-away” lessons for former spouses and their attorneys.

First of all, the Howell decision magnifies the importance of a reimbursement clause in the

property settlement. About 95% of cases involving the division of marital or community

property are settled. The Howell case was decided based on an order by the trial court in the

absence of a contractual reimbursement clause. It’s one thing to argue about a judge’s power to

require, under principles of fairness and equity, a duty to indemnify. It’s another matter entirely

to require a litigant to perform what he has promised in a contract. Unless and until the Court

makes a different ruling, the indemnification clause in a settlement or a separation agreement

ought to provide some protection. It is always a good practice for the former spouse’s attorney

to include language for an indemnification clause in the property settlement, language which

requires the retiree to pay back or reimburse the former spouse for any reduction in the share or

amount of retired pay that is divided.

This indemnification phrasing can be done with a straightforward pay-back requirement, such as:

“If the Defendant does anything which reduces the share of amount of retired pay which the

Plaintiff receives, he will immediately reimburse and indemnify her for such a reduction.”

In some cases reimbursement requirements might involve a clause specifying alimony, spousal

support or maintenance to make up the difference. Such a clause could then be enforced through

9 490 U.S. 581 (1989). 10 For an explanation of the Mansell case, contractual indemnification and res judicata, see Selitsch v. Selitsch, 492

S.W.3d 677 (Tenn. App. 2015).

207

a garnishment from the retired pay center. But the judge may not order a dollar-for-dollar make-

up with alimony; that is too transparent. It would not be upheld on appeal, since it would clearly

be going through the back door when the front door is barred.

In many cases, the attorney may want to hold open or “reserve” the issue of alimony to allow for

a possible future VA waiver, and to make sure that the former spouse is protected.

Attorneys who represent the former spouse may also decide to forego sharing the pension in

favor of a “present value set-off,” that is, the valuation of the retiree’s pension, the award to him

or her of the present value of the marital or community share of the pension, and the award to the

former spouse of other property acquired during the marriage – if any exists – of equal value.

Q. Where do we go from here? Is it possible to change this outcome? A. That doesn’t lie in the hands of the courts. Now that the Supreme Court has spoken, the only

course for lower courts is to uphold the ruling. Rather, the future lies in the hands of Congress.

Since Congress passed the Uniformed Services Former Spouses’ Protection Act in 1982, which

is the statute interpreted by the Supreme Court, only an amendment to the Act by Congress can

reverse this outcome. (Rev. 5/23/17)

* * *

This SILENT PARTNER was prepared by COL Mark E. Sullivan (USA-Ret.). For revisions, comments or

corrections, contact him in Raleigh, N.C. - 919-832-8507, or at [email protected].

208

SILENT PARTNER Defending Against SBP in Divorce

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the

Military Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s

Committee on Legal Assistance for Military Personnel. There are many Silent Partner infoletters on military family

law issues. Just go to www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov >

For Lawyers. Please send any comments, corrections and suggestions to the address at the end of this document.

Introduction

In many military divorce cases, the servicemember (SM) or retiree does not want the former

spouse to have SBP coverage. The reasons vary, depending on the facts, finances and circumstances of

the case.

• It might involve the cost of the Survivor Benefit Plan – former spouse coverage costs 6.5% of the

selected base amount in active-duty cases. It is approximately 10% of the base in the case of a

member of the RC (Reserve Component, or Guard/Reserve).

• The reason might involve the belief that the former spouse (FS) isn’t entitled to it, due to the short

term of the marriage, the financial self-sufficiency of the FS, or the circumstances leading up to

separation and divorce.

• Or the reason might be a disagreement over the benefit (55% of the base amount) in comparison

to the pension share of the former spouse (almost always less than 50% of the pension).

In the sections below, we try to help John Doe, a SM or retiree, from providing coverage under the

Survivor Benefit Plan (SBP) for Mary Doe, his soon-to-be ex-wife. Here are the strategies.

I. “Don't Shout – Leave It Out"

If no one says anything about SBP, then it will be lost at divorce. While a spouse is covered

automatically before and after the SM's retirement (in active duty cases), former spouses are not. The

divorce terminates SBP coverage.

There are several cases holding that “silence is golden” in a settlement, and the FS doesn’t get a

survivor annuity if the agreement doesn’t mention it.1 These cases show the importance of stating that the

1 Two non-military cases from New York are McCoy v. Feinman, 99 N.Y.2d 295, 755 N.Y.S.2d 693, 785 N.E.2d 714 (2002)

(malpractice case) and Kazel v. Kazel, 3 N.Y.3d 331, 786 N.Y.S.2d 420, 819 N.E.2d 1036 (2004). There are several military

cases involving the survivor Benefit Plan. These include Padot v. Padot, 891 So. 2d 1079 (Fla. Dist. Ct. App. 2004); In re

Marriage of Lipkin, 208 Ill. App. 3d 214, 566 N.E.2d 972 (App. Ct. 1991) (court specified that SBP is a separate and distinct

property interest); and In the Interest of A.E.R., 2006 WL 349695 (Tex. App.–Fort Worth) (not reported) (settlement failed to

mention SBP, and court held that SBP is an additional benefit other than the bargained-for receipt of a percentage of the ex-

husband’s retired pay). In Williams v. Williams, 37 So.3d 1171, 2010 Miss. LEXIS 315 (2010), an agreement stating that the

wife was to have “all survivors’ benefits otherwise accorded to her by law…” did not mean, according to the appellate court,

that she was entitled to Survivor Benefit Plan coverage, since SBP is a personal choice, and it is not mandated by law. The

chancellor erred in requiring SBP coverage for wife since the agreement of the parties did not entitle wife to coverage. In

Creech v. Creech, 2010 Ky. App. Unpub. LEXIS 194, the parties had agreed to the wife getting 50% of the marital share of

pension. The agreement was not reduced to writing but was dictated into the record. Later the wife filed a motion later to get

SBP, the judge denied her motion and the Court of Appeals upheld the judge’s order, stating that the wife cannot get what she

failed to mention in her settlement. In Morris v. Morris, 2011 Iowa App. LEXIS 736, the appellate court found that “half of

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former spouse is entitled to SBP coverage clearly and promptly. In In re Marriage of Hayes v. Hayes,2

the Oregon Court of Appeals confronted a pension division settlement containing a generally worded

clause that gave the wife half of the marital share of the pension of the husband. It was silent as to SBP,

death benefits, or a survivor annuity. The Court stated:

Wife, meanwhile, contends that, under the terms of the dissolution judgment, the trial

court retained jurisdiction “of the division of the retirement benefits described herein so it

can make any modifications to this judgment which may be necessary to accomplish the

goals stated herein relating to the division of said benefits.” In her view, “the inclusion of

a survivor benefit in the DRO does nothing more than ensure that Wife receives her

appropriate marital share of his retirement, regardless of the possible death of [husband].”

Wife’s argument notwithstanding, nothing in the language of the 1998 judgment

suggests that the court retained authority to award wife survivor benefits. Rather, the

judgment provides that the court retained jurisdiction to effect the “division of the

retirement benefits.” Moreover, there is no indication in the record that the parties ever

contemplated that wife, as part of the dissolution proceeding, would receive a death

benefit—a property interest discrete from her interest in husband’s military retired pay.

Thus, to the extent that the DRO [domestic relations order] awarded wife benefits that

were not part of the original property division, it erred. . . . For that reason, we reverse and

remand with instructions to delete that provision of the DRO.3

Make sure that the settlement "closes the door" on any other benefits or entitlements for Mary

Doe, so that she doesn't come back later claiming, "We meant for that to be in our settlement too!" There

are several appellate cases in which the omission of SBP coverage has not impaired the former spouse’s

attempts to demand survivor annuity coverage later on. When writing the settlement, speak broadly of

“all military retirement benefits” instead of just “retired pay,” which leaves one wondering what else

might there be to divide. Closing the door to other benefits means stating that “This is all she wrote” –

there’s nothing else to distribute. A sample clause might read,

This is the full, final and entire distribution of John Doe’s retirement benefits that the parties have made. It covers all benefits and, whether within or outside this settlement, there is nothing else to divide or which they intend to divide or allocate.

Making sure that the settlement is silent regarding SBP is not enough. Use the “belt and suspenders”

approach to ensure that the door is not only closed, but also locked and bolted.

II. "Get a Life" (Life Insurance, That Is)

Another approach is to offer to let Mary get a life insurance policy on John Doe to replace the

SBP.4 The advantages of life insurance, as an alternative death benefit, are -

husband’s military retirement” doesn’t mean SBP coverage; in this case, the husband provided life insurance of $350,000 in

the settlement, which didn’t mention SBP. The ex-wife also lost out in Kuba v. Kuba, 2013 Mo. App. LEXIS 745, a case

involving a 2008 divorce decree, followed three years later by a motion made by the former spouse to include the Survivor

Benefit Plan in an order dividing military retired pay which had already been submitted in 2008 to DFAS. The trial court

denied relief to her, and the appellate court affirmed that decision. 2 228 Or. App. 555, 2009 208 P. 3d 1046 (Ct. App. 2009)

3 228 Or. App. at 567-568, 2009 208 P. 3d at 22–23 [citations omitted]. See also Potts v. Potts, 142 Md. App. 448, 790 A.2d 703

(Ct. Spec. App. 2002) and Dziamko v. Chuhaj, 2010 Md. App. LEXIS 94. 4 Gurnell v. Gurnell, 2011 Cal. App. Unpub. LEXIS 6643 (judge required ex-husband to provide $100,000 term life insurance

for FS at her cost, appellate court affirmed).

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> It gives Mary a lump sum in hand at the time John dies (unlike SBP, which is doled out month-by-

month by DFAS (the Defense Finance and Accounting Service);

> It is non-taxable (unlike monthly SBP payments); and

> It isn't affected by the remarriage of the FS (compared to SBP, which is suspended if Mary Doe

remarries before age 55).

The issue which remains is "Who pays for it?" Traditionally, the argument for John would be

that Mary needs to pay, since it is solely for her benefit. The SBP is worthless for a SM (servicemember)

or retiree. John has to be dead for it to come into existence, so why should he want it? Why should he

have to pay for it or for life insurance, its substitute? The life insurance should be funded by monthly

payments by Mary Doe; all John needs to do is show up for a physical.

If Mary rejects this and insists on John's paying, then make sure that his payments are tax-

deductible. This is possible, even if the obligation is not called "alimony," so long as:

> the parties are not living in the same household;

> the obligation is pursuant to a written instrument;

> it is not designated as child support; and

> payments do not last beyond the death of the payee.

Such payments are deductible by the payor under Section 215 of the Internal Revenue Code, and they are

included in the taxable income of the recipient under IRC Section 61 and/or 71.

III. Put a Price Tag on It

When the former spouse, having been given these settlement options, rejects them all and

demands SBP coverage, John's strategy starts with valuation of the asset.5 Under the law of most states,

every asset acquired, or partially acquired, during the marriage is marital or community property. Get an

expert witness to "price the SBP" so that Mary Doe is charged with that value is the grand scheme of

things, as part of the division of their marital or community property items.6 If Mary is faced with the

cost of this benefit, which may be $50,000, $100,000 or even more, she may be forced to rethink that

simple approach of "I demand it." She will have to start thinking about a new issue: "If you want to buy

it, then you'll be charged with the price on the tag" for the present value. In other words, "There's no such

thing as a free lunch."7

Failure to value the SBP can be a fatal flaw. Some courts have held that the lack of a value

placed on a marital asset means that the asset cannot be divided.8 The burden is on the party who wants

to include the asset in the marital estate or the community for division by the court.

IV. Put a Price Tag on It – An Example

5 IRMO Lipkin, 566 N.E. 972 (Ill. App. ’91) (survivor annuity is a distinct property interest within the pension plan, it needs to

be distributed at divorce; it has a determinable value, computed by using life expectancy tables). 6 Burt v. Burt, 799 P. 2d 1166 (Utah App. 1990) (court may fix value of government survivor annuity and consider that sum in

distribution scheme). 7 See, e.g., In re Marriage of Forney, Ore. App. 405, 244 P. 2d 849 (2010) (court ruled that the Survivor Benefit Plan, even

though earned by pre-marriage service, had to be valued; the trial judge had disregarded a value placed on it of $84,000 by the

husband’s expert). 8 See, e.g., Grasty v. Grasty, 125 N.C. App. 736, 482 S.E.2d 752 (1997), disc. rev. den. 487 S.E.2d 545, 346 N.C. 278 (1997).

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A 1998 Pennsylvania case, Palladino v. Palladino, shows the importance of insisting on valuation

of the survivor annuity in a pension division case. In a divorce case, the Common Pleas Court judge

found that the wife had requested that the husband elect survivor annuity (SA) coverage to continue

payments to her if he died before she did. The Husband’s expert valued the survivor annuity at about

$57,000, and he also testified that the value of the pension with the SA was about $93,000, and the value

without the SA was about $108,000.

The court found that the survivor annuity, which derived from the husband's pension, has a value

independent of the pension's value. Since the wife elected to get the survivor annuity, she needed to be

charged with the value of the annuity in equitable distribution. The monthly cost of the survivor annuity

was about $84.

The court decided that $57,000 was the proper value of the survivor annuity, and this ought to be

charged to the wife, based on the value of a single-premium annuity to purchase the equivalent survivor

annuity payable to the wife. The judge refused to value the survivor annuity as the difference between the

value of the pension WITH the survivor annuity and the pension WITHOUT the annuity - a differential of

roughly $15,000. The judge found that the survivor annuity was marital property and charged the wife

with its value ($57,000).

The Superior Court, in an opinion by Judge Patrick R. Tamilla, affirmed the trial court's decision.

This meant that the wife did not get any of the husband’s pension. She only received the survivor

annuity, which she had requested.

Of significance to the trial judge many have been the fact that the wife was younger - by many

years - than the husband, thus improving greatly the chances of her getting payments under the survivor

annuity option. Thus the husband received a fair distribution (not a windfall) regarding his pension; he

kept the entire amount of his retired pay, simply because his ex-wife insisted on getting the survivor

annuity. His monthly pension was cut by around $80 monthly, but the wife was not entitled to receive

any of his pension during his life. Since the trial court's decision was appealed to - and affirmed by - the

Superior Court of Pennsylvania and it was not appealed further, this case represents the state of the law

(as of 1998) in Pennsylvania. 9

V. Give the Judge an Education

Make sure that the judge knows “the facts of life” when counsel for the FS tries to claim that this

is a mandatory and integral part of the military retirement program. John Doe’s attorney will want to

make the following argument when faced with a claim for SBP as an afterthought or an entitlement by the

former spouse:

• The Survivor Benefit Plan is not a pension. A pension is earned by the employee for services

rendered during his or her career, and it is a form of deferred compensation. SBP is not

compensation, and it was never earned by the former spouse.

• Instead, the Survivor Benefit Plan is an annuity. It may – or may not – be chosen at the time of

retirement or allocated at dissolution, depending on the intentions and plans of either or both of

the parties.

• SBP doesn’t come automatically with the military pension. It must be elected, or—when the

matter is before the court—adjudicated through a court order.

• The Survivor Benefit Plan is not even found in those sections of Title 10, U.S. Code, which deal

with regular and non-regular (i.e., Guard/Reserve) retirement, or the section dealing with military

pension division (the Uniformed Services Former Spouses’ Protection Act), 10 U.S.C. § 1408. It

is located in an entirely different section. The provisions for SBP are found at 10 U.S.C. § 1447-

1455.

9 Palladino v. Palladino, 713 A.2d 676 (Pa. Super. 1998).

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• It cannot be said that Congress intended for spouses and former spouses to receive SBP coverage

as part of the division of servicemembers’ military pensions, since the USFSPA is not a

substantive law allocating rights to the parties in a divorce proceeding. Rather, it is an enabling

act, making provision for the courts of the states to divide—or not divide—military pensions as

they see fit. It contains no reservation of rights and no set of spousal entitlements.

Too few judges understand that SBP is a survivor annuity which is optional. It may be elected or waived.

It is usually purchased when the non-military spouse wants to continue payments after the SM/retiree

dies. The SBP sections of the U.S. Code were enacted at different times over the years, and they were

intended to be useful options for the military member who is planning for death and dependents, not a

requirement for the SM/retiree. It is not an obligation, it is an option.

VI. Shift the Premium

Another way of "raising the price tag" for SBP is to argue to the judge (or to opposing counsel

during negotiations) that Mary Doe should pay ALL of the premium associated with the SBP.10 As it is,

the cost of SBP is taken out of John's retired paycheck before the division of the pension between the

parties. This effectively means that the premium, 6.5% of the selected base amount in retirements from

active duty, is shared between the parties in the same ratio as the underlying pension, such as 50-50 or 70-

30. Mary can and should be ordered to pay the full cost of the premium.

This premium-shifting can be done by requiring her to reimburse John every month for the SBP

cost. Of course, this is not likely to be attractive to John. He may feel that she will stop paying him or

just forget about the reimbursements at some point. Yet DFAS will not honor an order that attempts to

allocate the costs of SBP to one party or the other. So it must be done using a "back-door" approach.

The alternate approach for a transfer of payments to Mary must be done with a reduction in her

percentage of the pension. Although the math is more complicated than presented here, the calculations

result in a reduction of about 4% from the former spouse's share of the military pension in a retirement

from active duty. Thus if Mary were originally entitled to 40% of John's retired pay, based on a 50%

presumptive share, years of marital pension service, and total military pension service, her "adjusted

share" of the pension might be about 36%. It is important to note that the math can only be accomplished

when John has already retired. The most that can be done pre-retirement is a description of what will

occur when John retires and all the numbers are finally known. At that point, Mary’s share of the pension

will be adjusted to effectuate payment of the entire premium out of her share by lowering the share from a

“nominal amount” (what it would be without the premium shift) to an “adjusted amount,” (the new

percentage after the premium is taken out of her share).11

Virtually no state has a statute which articulates the requirements for payment of the cost of a

survivor annuity. In fact, few states have rules in case law specifying the payment duties between the

parties. In those states which do have rules, the results are inconsistent; some judges order the husband to

pay in full, some order the wife to pay, and some order the division to be 50-50. For these reasons, John's

10 Conaway v. Conaway, 899 S.W. 2d 574 (Mo. App. ’95) (former spouse is entitled to a share of survivor annuity at her own

cost to ensure against future contingencies and protect her interest in marital portion of pension); In re Marriage of Moore,

251 Ill. App. 3d 41, 621 N.E. 2d 239 (Ill. App. 3rd Dist. 1993) (federal civil service case, appellate court upheld trial judge’s

ruling that awarded survivor annuity to wife, requiring her to compensate husband for the cost, approximately $100/mo.); In

re Marriage of Sonne, Calif. Ct. of Appeals (6th Dist.), June 2010 (wife was awarded entire survivor annuity from husband’s

employment and ordered to pay entire cost); Bienvenue v. Bienvenue, 72 P. 3d 531 (Haw. App. 2003) (judge ruled that wife

would reimburse retiree for SBP cost; neither term was in the parties’ settlement and Court of Appeals approved wife’s

advancing cost of SBP to husband); Rykken v. Rykken, 2012 Neb. App. LEXIS 17 (former spouse was ordered to pay retiree

$270/mo. SBP premium from her share of the pension). 11 Weiss v. Weiss, 702 S.W. 2d 948 (Mo. App. 1986) (husband was ordered to provide wife with federal civil service survivor

annuity, but court reduced her share of his pension from 44% to 38.4% so she would bear entire cost of coverage).

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attorney needs to be prepared (for the mediation, the pretrial conference or the trial) with research into

state law and with arguments from fairness and equity to require the transfer to Mary of the full

responsibility for payment of SBP costs. The motto to use, in effect, is that you have to "pay to play."

VII. Other Strategies Some courts recognize the inherent unfairness of awarding the entire annuity when there has only

been a short marriage. This approach, asking the court to decline to award SBP when the marriage is

relatively short, may be effective in avoiding division of John Doe’s SBP.12

When a party fails to ask for SBP, sometimes the courts will bar award of the annuity, stating that

it must be brought to the court’s attention so that the judge can put a value on it and consider the survivor

annuity award in the entire scheme of property division.13 This means that counsel for the member or

retiree must be alert at the pleadings stage of the case to spot this issue.

This SILENT PARTNER was prepared by COL Mark E. Sullivan (USA-Ret.). For revisions, comments or

corrections, contact him in Raleigh, N.C. - 919-832-8507, or at [email protected].

12 Pierce v. Pierce, 42 So. 3d 658 (Miss. App. 2010) (case remanded due to insufficient findings to justify SBP award in short-

term marriage). 13 IRMO Griffith, 2013 Iowa App. LEXIS 370 (Non-military case in which the majority of pension was acquired before the

parties’ marriage. The wife did not petition court for allocation of survivor annuity, and the appellate court agreed with the

trial judge that equity does not require allocation of the survivor annuity to the wife). Wallace v. Wallace, 2007 Ariz. App.

Unpub. LEXIS 1121 (Divorce petition filed before H’s retirement, but decree granted after it. Parties were married 22 years,

former spouse filed motion 11 months after divorce for allocation of SBP to her, since it was omitted from decree. Judge

rejected her claim that it was community property. Court of Appeals stated that, since former spouse did not raise SBP issue

during divorce proceedings, judge could not evaluate the effect of ordering SBP, and cost of SBP, on overall division of

property.

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SILENT PARTNER Docs for Division

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the

Military Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s

Committee on Legal Assistance for Military Personnel. There are many Silent Partner infoletters on military family

law issues. Just go to www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov >

For Lawyers. Please send any comments, corrections and suggestions to the address at the end of this document.

◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊

Introduction

When you’re doing a military divorce case and it comes time to deal with the military retirement

benefits, you should know in advance what documents need to be reviewed. This rule applies whether

you’re the attorney for the servicemember (SM) or retiree, or you represent the spouse or former spouse.

You need to have a certain number of “docs” in order to understand the process, the current or

prospective retired pay of the member or retiree, and what benefits are available or at risk for the

spouse/former spouse.

Active Duty and Reserve Service

When the individual (“John Doe” in this example) is currently on active duty, you’ll need the Thrift

Savings Plan statement (see below) and the Leave and Earnings Statement, or LES. The latter provides

information on the pay grade of John, his date of initial entry into service, his current pay, his Social

Security number and other data which will help in preparation of a military pension division order. The

specifics which the LES gives include the following:

1) NAME: The member’s name in last, first, middle initial format.

2) SOC. SEC. NO.: The member’s Social Security Number.

3) GRADE: The member’s current pay grade.

4) PAY DATE: The date the member entered active duty for pay purposes in YYMMDD

format. This is synonymous with the Pay Entry Base Date (PEBD).

5) YRS SVC: In two digits, the actual years of creditable service.

6) ETS: The Expiration Term of Service in YYMMDD format. This is synonymous with the

Expiration of Active Obligated Service (EAOS).

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The LES is issued electronically twice a month to active military personnel. The first LES shows

all pay and entitlements for the month. The second LES of the month will not have all required

information; if the SM elects to be paid twice a month, the second LES will only show the amount paid

along with the basic information. Practitioners should request more than just one LES to ensure they

receive all the information.

RC personnel (the RC stands for Reserve Component, which means National Guard and Reserve)

will have an annual form called RPAS, or Retirement Points Annual Statement, which shows how many

retirement points they have accumulated in that year and in previous years. The RPAS should, but does

not always, reflect periods spent on active duty, both annual training, and prior active duty service.

Practitioners sometimes get confused when SMs have service in both the active and reserve component.

SMs can obtain this from their branch of service – it’s not a public record. You can also get valuable

information on what rank the RC member is, when he or she entered military service, and what the

monthly pay is for periods of active duty (such as the Annual Training that each RC member serves once

a year) by obtaining his or her most recent LES.

Active-Duty Retirement

If John Doe has already retired from active duty from the armed forces (Army, Navy, Air Force,

Marine Corps or Coast Guard), here are the documents which should be available for analysis. They may

be obtained either from the retiree or from the federal government:

1) Letter from DFAS showing expected amount of pay and calculations

2) All Retiree Account Statements (RAS) issued since date of retirement

3) Retirement orders

4) All disability rating decision letters from the Department of Veterans Affairs (VA)

5) DD Form 214, (Member Service Record, issued upon discharge). If SM was on active duty in the

National Guard, he or she will have an NGB 22, not a DD Form 214

6) Survivor Benefit Plan (SBP) Election Statement for Former Spouse Coverage, DD

Form 2656-1

7) Data of Payment for Retired Personnel, DD Form 2656

8) Forms 1099-R

9) Thrift Savings Plan statements

Letter from DFAS. Several months before John Doe retires, he’ll get a letter from the retired pay center

that shows him exactly how his retired pay is computed, how many years of creditable service were

counted, and what amounts are deducted from his total retired pay (such as taxes and SBP premium).

Don’t expect to find VA waiver information here; John hasn’t gotten that if he has not yet retired.

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Retiree Account Statement. This is the retiree’s “pay statement.” It is issued electronically and a new

one is generated on a monthly basis, and always when there is any change in regard to one’s retired pay –

whether it’s reduced tax withholding, a change in allotments, or an increase in the VA waiver. Every

retiree can access the RAS by using the secure website of the retired pay center. For DFAS (Defense

Finance and Accounting Service), which handles all of the armed services except the Coast Guard, the

“MYPAY” secure website address is https://mypay.dfas.mil. Signing up for service is easy. Once John

Doe is signed up and is looking at the web page, all that is needed is his login ID and password. It takes

less than a minute to log in, select the form involved, click on “Printer-Friendly Version,” and then print

it. See ATCH 1 for an example.

You can find on the RAS the total amount of monthly retired pay, any mandatory deductions from it

(e.g., VA waiver, Survivor Benefit Plan premium) to arrive at taxable retired pay, and the taxes which are

withheld from retired pay. It will also show the type of SBP election and the birthdate of the beneficiary.

The RAS also shows voluntary allotments and any waiver of retired pay that exists due to receipt of

disability compensation from the Department of Veterans Affairs. If the individual cannot or will not

produce it, then obtain it from the retired pay center using a release signed by the individual (see ATCH 2

below) or, if he’s uncooperative, a court order or subpoena signed by a judge.

Retirement Orders. This is a document, usually one sheet of paper, which specifies the facts regarding

retirement. It might state, for example, that Major John Q. Doe, SSN 123-45-6789, was retired from the

U.S. Army on May 31, 2012. Retirements always take place on the last day of the month, and the first

payment arrives a little over a month later – in this case, on July 1, 2012. That’s because you have to

survive for the month in order to be entitled to retired pay for it. This document is helpful in tracking

down retroactive payments. If the individual retired on 5/31/12 and started receiving retired pay on

7/1/12, then you will be able to determine how many months (or years) he’s been collecting it without

sharing any portion with your client, Mrs. John Doe!

VA Disability Rating Decision Letters. Upon retirement, John Doe can use his final military physical

exam to apply for VA disability compensation, or he can visit the nearest VA hospital for a physical to

start the process. As a result of his physical exam, he may be notified by the Department of Veterans

Affairs that he has one or more service-connected disabilities (wounds, illnesses or other medical

conditions). The notification is in the form of a letter. The decision letter from the regional VA office

tells his disability rating. If it’s less than 50%, then there’s a dollar-for-dollar reduction in John Doe’s

retired pay, which means a similar lowering of the share apportioned to Mrs. Doe by the court. This will

show up on the RAS as a “VA Waiver,” which is entered as a deduction from John Doe’s total retired pay

before you get to “taxable income.” If he’s receiving CRSC (Combat-Related Special Compensation),

then all VA compensation is deducted from his retired pay, regardless of his disability rating.

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DD Form 214. This is the discharge certificate for John Doe. It shows all dates of his service for his

entire career.

DD Form 2656-1. This form is used for election of coverage under the Survivor Benefit Plan (SBP), and

it shows what the SM/retiree has chosen. If the divorce is about to occur or has already been granted, this

should reflect former spouse coverage so as to protect the flow of funds for Jane Doe, the ex-wife, after

the death of the SM/retiree. If John Doe dies first, Jane can receive 55% of his retired pay for the rest of

her life if she has “former spouse coverage” and does not remarry before age 55. A former spouse

election must be made by John on this form and it must be sent to the retired pay center within one year of

the divorce.

DD Form 2656. This form covers the information which the retired pay center, usually DFAS, needs to

process continuous payments of retired pay and former spouse payments from the pension.

Form 1099-R. This is the retiree’s equivalent of a W-2 form. The retired pay center issues this at the end

of January of each year, covering retired pay for the previous year. John can get this from the secure

DFAS website. If he’s not signed up, it comes by mail (just like a W-2 form).

Thrift Savings Plan (TSP) statements. This tax-deferred retirement account is similar to a 401(k) plan.

Individuals who participate get a “Thrift Savings Plan Participant Statement,” which can either be an

Annual Account Summary or a Quarterly Account Summary. On the bottom of the second page on the

right side will be found “Form TSP-8” and you can tell if it’s a uniformed services TSP statement (i.e., a

military TSP as opposed to a federal civil service TSP statement) by checking on the first page under the

account number and individual’s date of birth. You should find “Retirement Coverage: Active Duty.”

Guard or Reserve Retirement

When John Doe has served in the National Guard or the Reserves, then you’re dealing with an “RC

retirement.” As mentioned above, RC stands for “Reserve Component,” which means Guard or Reserve

service leading to retired pay.

Be careful in using the verb “retire” when referring to RC personnel, since it can have two meanings.

One meaning is when John begins to receive retired pay. This is “pay status” for him; it’s usually at age

60. Another meaning is the point in time when John stops drilling and applies for retirement. Once this

occurs, he’s in what is called the “gray area,” since the ID cards for these former RC personnel used to be

gray.

If John Doe is or was an RC member, then you have a different list to cover. You can get the forms

from John Doe through discovery. You can also get them from the appropriate federal or (in the case of

National Guard members) state government office. Here are the documents which should be available:

1) Retirement Point Statement(s)

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2) Notice of Eligibility (NOE or “20-Year Letter”), sent upon attainment of 20 creditable years of

Guard or Reserve service

3) Reserve Component Survivor Benefit Plan (RCSBP) Election Certificate, DD Form 2656-5

4) Application for retirement

5) Retirement orders

6) All disability rating decision letters from the Department of Veterans Affairs (VA)

7) Thrift Savings Plan statements

RPAS statements - These are issued once a year by the Guard/Reserves. They show how many AD

(active duty), ADT (active duty for training) and IDT (inactive duty for training) points have been

accumulated for the year by John Doe. An explanation on how this works is way beyond the scope of this

article. Go to https://www.hrc.army.mil/tagd/retirement%20points%20accounting%20system%20rpas

For an overview, or visit the Human Resources Command (HRC) of the Army at www.hrc.army.mil, type

“AR 140-185” into the search window, then click on “Retirement Points Accounting System.” The

explanation is applicable for all Guard/Reserve cases. If you want to estimate John Doe’s retired pay

based on the number of points he acquired (and other factors), go to the above HRC website and type into

the search window “retirement points calculator.”

HRC no longer mails the annual or revised AHRC Form 249-2-E to Reserve soldiers. Soldiers

must visit the “My Record Portal” at the secure HRC website to view and print their own personal copy

of the annual points statement, AHRC Form 249-2-E. For additional assistance, soldiers may contact the

Human Resource Service Center at 1-888-276-9472. HRC does not maintain a record of National Guard

Retirement points. National Guard soldiers maintain their own personal copy of NGB 23, and they

submit it along with their retired pay packet when applying for retired pay to ensure that the NGB 23 is

placed in their records.

If John Doe is in the Army National Guard or the Army Reserve, AR 140-185 governs the

awarding and crediting of retirement points for him; similar rules, instructions or regulations apply to the

other branches of service. Additionally, Department of Defense Instructions 1215.7 and 1215.9, as well

as Department of Defense Financial Management Regulation Volume 7A, Chapter 1, and AR 140-1

provide retirement point regulatory guidance for the military services.

National Guard soldiers have their retirement points recorded in a separate retirement point

accounting system. Upon retirement, NG soldier points are not automatically fed into RPAS. NGB Form

23 is used as a record of the NG duty performed by a soldier. Before a former or retired member of the

National Guard can start to draw retired pay, he or she must submit a retired pay certification packet

219

(including a summary of all retirement points earned while in the NG) to the HRC Retired Pay Office.

Upon certification of retired pay, HRC forwards the certification to DFAS.

NOE – The “20-Year Letter,” as this form letter is commonly called by those in the Guard or Reserve,

signifies the milestone of 20 creditable years of service. In addition, it requests a decision on what a

married SM will do regarding a survivor annuity, known as the Survivor Benefit Plan (see below).

DD Form 2656-5 – This form is where John Doe makes the decision on his survivor annuity. There are

three options for Survivor Benefit Plan coverage for married RC members: Option A - John can choose

deferred decision (meaning he wants to wait until he attains pay status to decide); Option B - John can

select deferred coverage (payments to Jane would start at “pay status,” usually age 60); or Option C -

John can select immediate coverage. The first two options require Jane Doe’s written consent.

Application for Retirement – This is John’s request to stop drilling and be transferred to the Retired

Reserve. It means that he will no longer be accumulating points toward retirement. Unless John decides

to take a discharge (which is infrequent), which would mean that he’s not subject to recall and his pay

grade and years of service are frozen, he’ll be paid – upon attainment of pay status – according to his pay

grade at that time, not at the time he applies for retirement.

Retirement Orders – See above under “Active-Duty Retirement.”

Disability Rating Decision Letters – See above.

Thrift Savings Plan (TSP) statements – See above.

(Note: If John is already in pay status, then you would want to obtain the RAS and Form 1099-R, as with

an active-duty retiree).

Military Disability Retirement

The information for active-duty retirement above applies as well to the individual who is given a

disability retirement. This means that the military has found him or her to be physically or mentally unfit

for future service. With a disability rating of 30% or above, the individual will be given a disability

retirement and paid military disability retired pay (MDRP). You’ll need:

TDRL Orders – These orders place John Doe on the Temporary Disability Retirement List (TDRL) for

further examination and evaluation, to determine whether he should be retired or returned to active duty.

PEB Report – This report from the Physical Evaluation Board determines that John Doe cannot be

returned to active duty and should be given military disability retirement.

PDRL Orders – The orders placing John on the Permanent Disability Retired List are PDRL orders.

MDRP is non-taxable if it’s based on combat-related reasons.

220

Concluding Comments

Forget your umbrella? Don’t let the “paper tiger” rain on your parade! All these documents can be your

next “Excedrin headache!” If you don’t do this type of case often, you should consider associating co-

counsel or a consultant. The “sidekick” you hire might be a Guard or Reserve judge advocate.

Sometimes you’ll want to reach out to a military retiree who used to be a JAG officer. Wherever you go,

remember that the duty to obtain competent co-counsel is an ethical requirement. A consultant for your

next military case will:

• Know the statutes (the Uniformed Services Former Spouses’ Protection Act, or USFSPA, found

at 10 U.S.C. 1408; the Survivor Benefit Plan, found at 10 U.S.C. 1447-1455; military disability

retirement, found at Chapter 61 of Title 10; and the numerous other military retirement sections in

the U.S. Code);

• Understand the rules (the DODFMR, or Department of Defense Financial Management

Regulation, and the parallel regulations for Coast Guard, Public Health Service and National

Oceanographic and Atmospheric Administration, or NOAA);

• Know the law in other states (some states have NO cases or statutes on such issues as who pays

for SBP, what the SBP benefit level is, and division of accrued leave; knowing what other states

are doing in these areas can provide useful guidance for your trial judge);

• Have examples (samples of such documents as the Leave and Earnings Statement, the Retiree

Account Statement or the TSP Quarterly Statement, so you can provide these to the other side

when the opposing party professes ignorance about what document you’re talking about); and

• Know the ropes (have contact points within DFAS and other federal agencies who can answer

questions).

* * * This SILENT PARTNER was prepared by COL Mark E. Sullivan (USA-Ret.). For revisions, comments or

corrections, contact him in Raleigh, N.C. - 919-832-8507, or at [email protected].

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ATCH 1 – Retiree Account Statement (first page)

RETIREE ACCOUNT STATEMENT

STATEMENT EFFECTIVE DATE

DEC 16, 2005

NEW PAY DUE AS OF

FEB 01, 2006

SSN

123-45-6789

PLEASE REMEMBER TO NOTIFY DFAS IF YOUR ADDRESS CHANGES

Major John Q. Doe, USAF (Ret.)

123 Green St.

Apex, NC 27511-1234

DFAS-CL POINTS OF CONTACT

DEFENSE FINANCE AND ACCONTING SERVICE

US MILITARY RETIREMENT PAY

PO BOX 7130

LONDON KY 40742-7130

COMMERCIAL (216) 522-5955

TOLL FREE 1-800-321-1080

TOLL FREE FAX 1-800-469-6559

myPAY

https://myPay.dfas.mil

1-877-363-3677

PAY ITEM DESCRIPTION

ITEM OLD NEW ITEM OLD NEW

GROSS PAY

VA WAIVER

SBP COSTS

TAXABLE

INCOME

2,746.00

591.30

179.28

1,975.42

2,746.00

473.04

179.28

2,093.68

FITW

ALLOTMENTS/BONDS

NET PAY

191.31

40.00

1,744.11

209.05

40.00

1,844.63

PAYMENT ADDRESS YEAR TO DATE SUMMARY (FOR INFORMATION ONLY)

DIRECT DEPOSIT TAXABLE INCOME: 1,975.42

FEDERAL INCOME TAX WITHHELD: 191.31

TAXES

FEDERAL WITHHOLDING STATUS: SINGLE

TOTAL EXEMPTIONS: 01

FEDERAL INCOME TAX WITHHELD: 209.05

SURVIVOR BENEFIT PLAN (SBP) COVERAGE

SBP COVERAGE TYPE: SPOUSE AND CHILD(REN) ANNUITY BASE AMOUNT: 2750.50

SPOUSE COST: 176.78 55% ANNUITY AMOUNT: 1,512.77

CHILD COST: 50 40% ANNUITY AMOUNT: 1,100.20

SPOUSE DOB: 12 DEC 1945

CHILD DOB: 13 MAR 1996

THE ANNUITY PAYABLE IS 55% OF YOUR ANNUITY BASE AMOUNT UNTIL YOUR SPOUSE

REACHES AGE 62. AT AGE 62, THE ANNUITY MAY BE REDUCED DUE TO SOCIAL SECURITY OFFSET, OR

UNDER THE TWO-TIER FORMULA. THAT REDUCTION MAY RESULT IN AN ANNUITY THAT RANGES BETWEEN

40% ($1100.20) AND 55% (1512.77) OF THE ANNUITY BASE AMOUNT. THE COMBINATION OF THE

SBP ANNUITY AND THE SOCIAL SECURITY BENEFITS WILL PROVIDE TOTAL PAYMENTS FROM DFAS AND

THE SOCIAL SECURITY ADMINISTRATION OF AT LEAST 55% OF YOUR BASE AMOUNT. THE ACTUAL

ANNUITY PAYABLE IS DEPENDENT ON FACTORS IN EFFECT WHEN THE ANNUITY IS ESTABLISHED.

222

ATCH 2 – Release

PRIVACY ACT RELEASE FORM

DATA REQUIRED BY THE PRIVACY ACT OF 1974 (5 U.S.C. 552A). AUTHORITY:

Title 5 U.S.C. 552, Title 5 U.S.C. 552a, Title 5 U.S.C. 551, DoD 5400-7-R, and DoD 5200.1-R.

PURPOSE: To obtain and maintain information upon which to base a reply or inquiry.

ROUTINE USES: Data may be provided under any of the DoD “Blanket Routine Uses”

published at http://privacy.defense.gov/notices/. Disclosure: Voluntary; however, if you fail to

provide all the requested information DFAS may not be able to fulfill your request in a timely

manner.

I authorize the federal government, and any agency or department thereof, to release the

following documents to [ATTY NAME, ADDRESS]:

[list documents here]___________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

Date____________________

Signature _________________________________ Social Security Number _____________

Printed Name_________________________________

Address _____________________________________

City _______________________________ State ______________ Zip Code _____________

Home Telephone ___________________ Work Telephone _______________________

Date of Birth __________________________________

223

SILENT PARTNER The Big Freeze: Finding the Facts

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the

Military Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s

Committee on Legal Assistance for Military Personnel. There are many Silent Partner infoletters on military family

law issues. Just go to www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov >

For Lawyers. Please send any comments, corrections and suggestions to the address at the end of this document.

Frozen Benefit Basics The military pension division case is tough enough to handle most of the time. It becomes

even more complicated, however, when the uniformed services pension to be divided is

governed by the Frozen Benefit Rule. The new, required method of military pension division

involves a hypothetical amount of retired pay, calculated as of the SM had retired on the date of

the decree of divorce, dissolution, annulment or legal separation (hereafter divorce*). Details

regarding the Rule may be found in several Silent Partner info-letters located at the website of

the military committee of the N.C. State Bar, www.nclamp.gov > For Lawyers.1 The text below

explains how to obtain specific information about the data points required in a pension division

document2 and the amount of “disposable retired pay” which is subject to division.3

The Rule was effective on December 23, 2016 in an amendment to the Uniformed Services

Former Spouses’ Protection Act. It states that the pension to be divided - for servicemembers

who are not receiving retired pay on a divorce* date after 12/23/16 - will be a hypothetical

amount calculated as if the member had retired on the day of divorce.4

Data Required Specific data from the records of the servicemember (SM) are required for the pension

division document if it is to be accepted and honored at the retired pay center5 for garnishment of

the military pension as property division. These are:

• The SM’s retired pay base, also known as the “High-3” amount6 (i.e., the actual dollar

1 You can also find explanations and information at the DFAS website, www.dfas.mil > Garnishment > Notice of

Statutory Change, and there is also sample order language to use in complying with the Rule. 2 The pension division document is a decree of divorce, dissolution, legal separation or annulment, or a settlement

agreement incorporated therein. 10 U.S.C. § 1408(a)(2). 3 “Disposable retired pay” is that pay which may be divided between the parties in a divorce or separation case. 10

U.S.C. § 1408(a)(4). 4 The terms of the amendment are found at 10 U.S.C. § 1408(a)(4)(B) and at ¶ 2908 of Chapter 29, Vol. 7B of the

Dept. of Defense Financial Management Regulation. 5 Retired pay orders for the Army, Navy, Air Force, Marine Corps, as well as the National Guard and Reserves (known

as the RC, or Reserve Component), are processed by the Defense Finance and Accounting Service (DFAS), located in

Cleveland, Ohio. Pension orders for members of the U.S. Coast Guard and Coast Guard Reserve are sent to the

USCG Pay and Personnel Center (http://www.uscg.mil/ppc/), located in Topeka, Kansas. Orders for the

commissioned corps of the Public Health Service and the National Oceanic and Atmospheric Administration are

also serviced by the Coast Guard PPC. 6 The retired pay base for those entering military service before 8 September 1980 is the individual’s final pay, but

there are almost none of these SMs still serving today. The “High-3” amount is the highest three years of pay at

224

figure); and

• The SM’s years of creditable service.7

Counsel for the Servicemember When the attorney represents the SM, information about Sergeant John Doe’s years of

creditable service can usually be provided by John himself. In a pinch, it may be accessed from

the Pay Date and DIEMS data shown on his Leave and Earnings Statement.8

Military members still serving can usually find their “High-3” amount at the on-line secure

personnel portal for their branch of service (e.g., Human Resources Command for the Army).

Otherwise it may be necessary to request information from government officials who have

access to the individual’s military records, especially the ones involving military pay. John’s

attorney might consider a communication to John that looks like this:

John: I need you to get letter from the base finance office showing your "High-

3" at date of divorce. That means the highest 36 months of base pay. It's

usually the 36-month period leading up to the specified date for valuation

under state law [which is the divorce date here in the state of East Carolina].

The letter from finance might look like this:

LETTERHEAD, 359th Finance Office, Joint Base Andrews

To: John Q. Doe, Staff Sergeant, U.S. Air Force, xxx-xx-1234

From: Major Ed P. Wilson, Finance Office Commander

Date: August 2, 2018

You asked this office to prepare information on your "High-3" pay as of

February 28, 2015, the date of your divorce in Raeford County, East Carolina.

The "High-3" pay of a servicemember is the highest three years (36 months) of

compensation. 10 U.S. Code 1407(c).

I have reviewed your records, and the highest 36 months of compensation

would be the three-year period ending 28 February 2015 in your case. The

figures are:

March 1-December 31,

2012

$___

January - December

2013

$___

January - December

2014

$___

January 1 - February

28, 2015

$___

Total of the above $___

the time of retirement (or, in the case of the Frozen Benefit Rule, the time of hypothetical retirement). 10 U.S.C. §

1407(c). 7 See DoDFMR, Vol. 7B, Ch. 29, ¶290803. In the case of a member of the Reserves or National Guard, the years of

creditable service is replaced with “total number of retirement points” as of the date of the decree of divorce*. 8 For details, see the Silent Partner info-letter, Military Pension Division and the “Big Freeze”: Nuts and Bolts.

225

Average of the above $___

The final figure (“Average of the above”) is your High-3 Pay as of 28 Feb.

2015.

If the base finance office cannot help, the military member can try Customer Service at DFAS

(or the equivalent office at the Coast Guard Pay and Personnel Center) or whatever other office

manages his pay.

Note that John Doe or his attorney will have to specify what period of time is involved. The

pay center will not give him the number or the underlying data responding to a request for “my

High-3 pay.” Even though the pay center has the information, the officials there may reply that

the computers have not been programmed to provide the data. So John may need to phrase his

request in terms such as, “My base pay for each month between June 1, 2015 and June 1, 2018,”

if that is his highest 36 months of pay. Once that information is obtained, getting the monthly

average on a handheld calculator is pretty simple.

In lieu of obtaining the documents and data from the pay center, John can prepare a

spreadsheet, such as a chart in Excel. Such a document - based upon military pay tables found at

www.dfas.mil for present and past years, as well as his dates of promotion, if any - will show his

rank and his pay for the applicable 36-month period.9

For RC (Reserve Component) personnel (that is, those in the Reserves or the National

Guard), the issue is finding out how many retirement points exist on the date of divorce. This

usually means that the SM has to get on-line and go to the secure personnel portal for his branch

of service, such as Human Resources Command at Ft. Knox, Kentucky for Army Reservists, or

the Naval Reserve Personnel Center, Millington, Tennessee for sailors in the Naval Reserve.

Once the annual points statement is obtained, there might need to be some interpolation to figure

out the approximate number of points X months ago when the divorce occurred. Or the attorney

might need to extrapolate to come up with a good faith estimate on what the points total would

be Y months from now when the divorce is scheduled to occur.

When Representing the Spouse… If you represent spouse, you’ll need to try to get information from the other side. Sometimes

opposing counsel is cooperative. When that’s the case, one can obtain information by writing a

message or a letter that asks the SM to provide the following:

INFORMATION -

*Which were the highest three years (36 months) of your pay as of the date of divorce?

*What was the total amount paid in those 36 months?

*What is your DIEMS (Date of Initial Entry into Military Service)? Note: This is usually shown

on the right side of the SM’s LES.

*What is your Pay Date? Note: This is shown on the top of the SM’s LES.

*If applicable, state any periods reflecting a break in your military service.

9 An example of an Excel chart is at ATCH 3 of the Silent Partner cited in the previous footnote.

226

*What total years and months of creditable service did you have as of the date of divorce? Note:

For RC personnel, this would ask for total retirement points in place of “years and months of

creditable service.”

*What was your “High-3” pay (i.e., the monthly average of your highest 36 months of

compensation, or base pay) as of the date of divorce?

*What is the date of your last promotion?

DOCUMENTS -

*Your most recent leave and earnings statement (LES).

*LES’s which include your highest 36 months of pay as of the divorce date (or else official pay

data or an extract of pay data from military finance center, either DFAS or the Coast Guard Pay

and Personnel Center).

*W-2 Forms for the tax years that include your highest 36 months of pay.

When the other side resists, consider a release and consent form. An example is found at the

end of the Silent Partner infoletter, “Docs for Division.” Another option is to pursue discovery

by means of interrogatories and document requests. When all else fails and the case involves

DFAS as the pay center, try to obtain the documents by using a court order or subpoena signed

by the judge. With the Coast Guard, sometimes a phone call, letter or e-mail to the Pay and

Personnel Center in Topeka, KS will produce useful information.

(Rev. 1/27/19)

* * * This SILENT PARTNER was prepared by COL Mark E. Sullivan (USA-Ret.). For revisions, comments or

corrections, contact him in Raleigh, N.C. - 919-832-8507, or at [email protected].

227

SILENT PARTNER Fixing the Frozen Benefit Rule

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the Military

Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s Committee on Legal

Assistance for Military Personnel. There are many Silent Partner infoletters on military family law issues. Just go to

www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov > For Lawyers. Please send any

comments, corrections and suggestions to the address at the end of this document. What’s All the Hubbub, Bub?

The National Defense Authorization Act for Fiscal Year 2017 (NDAA 17) contained a major

revision of how military pension division orders are written and will operate. Instead of allowing the

states to decide how to divide military retired pay and what formula or methodology to use, Congress

imposed a single uniform method of pension division on all the states, a hypothetical scenario in which

the military member retires on the date of divorce. Despite the fact that more than forty states employ

the “time rule” to divide a defined benefit plan, all states – as of December 23, 2016, the date the law

was enacted – will have to use this new method for dividing a military pension.

The new rule applies to those still serving – the servicemember (SM) who goes through divorce and

property division while still on active duty in the uniformed services (Army, Navy, Air Force, Marine

Corps and Coast Guard, plus the commissioned corps of the Public Health Service and the National

Oceanic and Atmospheric Administration). It also applies to those in the National Guard and Reserves

who are not yet receiving retired pay. It has no impact on those who obtain a divorce and property

division after retirement.

How the Frozen Benefit Rule Works

The new military pension division rule is a “rewrite” of the terms for military pension division found

in the Uniformed Services Former Spouses’ Protection Act, or USFSPA.1 The rewrite requires that the

military retired pay to be divided will be that attributable to the rank and years of service of the military

member at the time of the parties’ divorce.2 This is so even though the servicemember may rise in rank

and years of service afterwards, resulting in a larger pension to be divided, which would then be

discounted by using the “marital fraction” to apply pension division to only the benefit which was

1 10 U.S.C. § 1408. 2 Although the statutory language refers to “the time of the order,” the Defense Finance and Accounting Service has

interpreted this as the date of the decree of divorce, dissolution, annulment or legal separation, as explained below. See

DoD 7000.14-R, Department of Defense Financial Management Regulation (DoDFMR), Military Pay Policy and

Procedures – Retired Pay, Vol. 7B, ch. 29, ¶ 290204.

228

acquired during the marriage. The only adjustment will be cost-of-living adjustments that occur under

10 U.S.C. § 1401a (b) between the time of the court order and the time of retirement.3

The NDAA 17 rewrite makes no exceptions for the parties’ agreement to vary from the new federal

rule. Everyone must do it one way, regardless of what the husband and wife decide they want the

settlement to say.

How Hard Can This Be?

“Frozen benefit division” is known as a hypothetical clause at the retired pay centers.4 It is the most

difficult to draft of the pension division clauses available. A government lawyer familiar with the

processing of military pension orders put it this way: “… over 90% of the hypothetical orders we

receive now are ambiguously written and consequently rejected. Attorneys who do not regularly

practice military family law do not understand military pension division or the nature of … military

retired pay. This legislative change will geometrically compound the problem.”

But now everyone will have to know how to do it. Since few lawyers know how to write such an

order without a handful of Excedrin, this means the cost of military divorce will go up once again, with

3 According to Lexis Advance (last checked 3-26-17), here is new text for 10 U.S.C. § 1408 (a)(4) [additions/changes in

italics]: (A) The term "disposable retired pay" means the total monthly retired pay to which a member is entitled (as

determined pursuant to subparagraph (B) less amounts which--

(i) are owed by that member to the United States for previous overpayments of retired pay and for recoupments

required by law resulting from entitlement to retired pay;

(ii) are deducted from the retired pay of such member as a result of forfeitures of retired pay ordered by a court-

martial or as a result of a waiver of retired pay required by law in order to receive compensation under title 5 or

title 38;

(iii) in the case of a member entitled to retired pay under chapter 61 of this title [10 USCS §§ 1201 et seq.], are

equal to the amount of retired pay of the member under that chapter computed using the percentage of the

member's disability on the date when the member was retired (or the date on which the member's name was

placed on the temporary disability retired list); or

(iv) are deducted because of an election under chapter 73 of this title [10 USCS §§ 1431 et seq.] to provide an

annuity to a spouse or former spouse to whom payment of a portion of such member's retired pay is being made

pursuant to a court order under this section.

(B) For purposes of subparagraph (A), the total monthly retired pay to which a member is entitled shall be--

(i) the amount of basic pay payable to the member for the member's pay grade and years of service at the time

of the court order, as increased by

(ii) each cost-of-living adjustment that occurs under section 1401a(b) of this title [10 USCS § 1401a] between

the time of the court order and the time of the member's retirement using the adjustment provisions under that

section applicable to the member upon retirement.

[Note the error in the language at (B)(i) above. It says that, for purposes of this section, a member’s retired pay is his or her

basic pay according to pay grade and years of service at the time of the court order. In reality, retired pay is never one’s

basic pay; by law it is his “High Three” pay (average of highest three years of continuous compensation) times years of

creditable service times 2.5% in most cases. Presumably this will be corrected in a forthcoming amendment.] 4 For the Army, Navy, Air Force and Marine Corps, the retired pay center is DFAS (Defense Finance and Accounting

Service) in Cleveland, Ohio. Pension garnishments for the Coast Guard and the commissioned corps of the Public Health

Service and of the National Oceanic and Atmospheric Administration are handled by the Coast Guard Pay and Personnel

Center in Topeka, Kansas.

229

rivers of rejection letters flowing back to attorneys who submit their pension orders to the retired pay

center in the hope of approval.5

Then it’s back to the drawing board for another attempt, or else the local attorney will have to farm it

out to some expert who can do it properly – if there’s enough information available to figure it out. The

required data include the servicemember’s rank and years of creditable service, as well as his or her

“High Three” figure (i.e., the average of the highest 36 months of continuous compensation). An expert

will need to be located, assuming there is enough money is left to pay this draftsman for the work.

Past Efforts, Future Promotions

Most courts already give consideration to how the efforts of the SM and the spouse during the

marriage should be apportioned in regard to future promotions. The time rule is based on the “marital

foundation theory,” which recognizes that the individual’s final retired pay is based on a foundation of

marital effort (e.g., a servicemember would never have attained the rank of sergeant major, with 30

years of service, if it hadn’t been for the efforts expended during the marriage up to the rank of sergeant

first class over 20 years, when the parties divorced).6 That’s one reason why a large majority of states

have adopted the time rule for dividing every type of pension – it provides the fairest approach to

division of this asset, whether the pension is state or federal, private or public. And it accounts for the

postponement of the benefit (i.e., the spouse’s inability to obtain immediate payments in most states) by

allowing for the growth in the pension over time.

That approach goes out the window under this new NDAA 17 rule. The share of the former spouse

(FS) is artificially fixed, frozen like a fly in amber. And then the payments are postponed until the SM

chooses to put in for retirement, so a second shrinkage is imposed on the pension share of the FS.

Since the new frozen benefit rule was written by Congress, which knows next to nothing about the

division of property and pensions in divorce, there will be plenty of problems applying it in most state

courts. And the harmful impact won’t be limited to spouses; members and retirees will feel the pain as

well. Consider this example:

• Husband and Wife agree to divide the husband’s retired pay exactly according to the frozen

benefit rule. At the time Husband is a major in the Marine Corps with over 16 years of service.

5 A guide for attorneys on how to write acceptable military pension clauses may be found at the Silent Partner, “Guidance for

Lawyers: Military Pension Division,” and it includes the necessary elements and language for a proper hypothetical clause. 6 The majority rule provides for a fair share by dividing the actual retired pay of the member/retiree, not some hypothetical

number, and then it reduces it to give the member/retiree credit for the final years of military service after the divorce.

230

• Their property settlement language tracks the new statute by stating that the disposable retired

pay to be divided by court order is that of Husband, based on his years of service and rank at the

time of the court order, that is, “major over 16.” It even calculates the hypothetical retired pay.

• Both sign it, and they have their signatures notarized.

• They do not, however get divorced immediately. Due to a deployment and an overseas

assignment for Husband, filing for divorce does not take top priority for him. As for Wife, she

needs to maintain medical coverage as a dependent spouse so she is not eager to pursue the

dissolution either. Five years pass before one of them files. By that time Husband is a

lieutenant colonel over 20, not a major over 16.

• When the divorce is granted, with the settlement incorporated into it, it is submitted to the

retired pay center. And the center rejects it, since the rank and years of service at the time of the

divorce is not “major over 16” but “lieutenant colonel over 20.” The latter is what must be

stated in the order or decree, not the agreed terms.7

Breathing Room and Time to Adjust

How much time was allowed for states to revise their laws to accommodate this new rule? None.

There was no “breathing room” allowed, no decent interval set out to let the majority of the states write

up, propose and enact laws consistent with the “new rule.” Counsel for the FS will need to alert the

court to this problem and show that a warped formula will occur if the denominator of the marital

fraction is not revised, to avoid imposition of a double discount on the FS.

Here’s how the double discount works: First of all, the benefit to be divided with the FS is frozen at

the rank, years of service and retired pay base at the date of divorce. In addition, since state laws have

not been rewritten to revise the “marital fraction,” the fraction will still be calculated in 90% of the

states based on years of marital pension service divided by total pension service years (marital service

years ÷ total service years), rather than years of marital pension service years divided by service years

up to the date of the divorce.

It is essential to stop the clock for the denominator at divorce since the benefit is also fixed at that

date. Anything else would doubly dilute the pension benefit granted to the spouse. This was recognized

7 The same result would obtain if the parties didn’t specify exactly the components required for a hypothetical clause,

including the years of creditable service, rank, and retired pay base of the member based on his “High Three” years of pay

(see text below); the order would be rejected by the center, which would withhold acceptance until the proper information

was inserted.

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in a 2014 Texas case, Douglas v. Douglas,8 which held that the denominator in a “hypothetical clause”

is the months of creditable service during marriage up to the date of divorce, rather than the date of

retirement. The Texas Court of Appeals stated that accepting the husband’s proposition – that the

denominator should be total years of service – would impermissibly dilute the ex-wife’s share acquired

during the parties’ marriage.

The new law is effective and binding on the states upon enactment (i.e., 12/23/2016). Although the

method of dividing pensions, as well as the date of valuation and classification of marital or community

property,9 has always been a matter of state law, that will change in the military case. Since no time has

been allowed for state legislatures to adjust to the change and rewrite state laws, lawyers will need to

make adjustments “on the fly” to deal with military pension division cases which are presently on the

docket or which come to trial before the state legislature can act.

Setting up the Example

An illustration may help to paint the problems and suggest solutions more clearly. We’ll use in

these examples a divorce case involving the civilian former spouse, John Doe, and his ex-wife, Navy

Commander Mary Doe. They are litigating in a time rule state, one which has not made any changes

regarding the marital fraction used in dividing a military pension.

Strategy for the Servicemember

There’s no easy day for attorneys handling either side of the pension division case under these new

rules. But the SM’s lawyer will always have the less difficult task. The new law was tailor-made for

the servicemember, by freezing his or her retirement benefit. In addition, the SM has control over all

the evidence and testimony needed for court or in settlement.

The active-duty SM needs to provide her attorney with proof of the “High Three” figure (i.e., the

average of her highest 36 months of continuous compensation) at the time of the divorce.10 That will

8 Douglas v. Douglas, 2014 Tex. App. LEXIS 12398, citing Berry v. Berry, 647 S.W.2d 945, 946-47 (Tex. 1983). See also

Dziamko v. Chuhaj, 193 Md. App. 98, 996 A.2d 893, 903 (2010) (explanation of results from denominator of marital

fraction ending upon divorce vs. one which ends upon retirement). 9 For example, in New York, the valuation and classification date is the date of commencement of the divorce case. In

California, a spouse’s share of community property stops accruing at the “final separation.” See, e.g., In re Marriage of

Bergman, 168 Cal. App. 3d 742, 214 Cal. Rptr. 661(Cal. Ct. App. 1985). The date of final separation is also the

classification and valuation date in North Carolina. N.C. Gen. Stat. § 50-20 (b)(1). In Nevada, community property stops

accruing on the divorce date. See, e.g., Forrest v. Forrest, 99 Nev. 602, 668 P.2d 275 (1983). In other states it may be the

date of divorce, the date of irretrievable breakdown of the marriage, or a date in the discretion of the judge. 10 The other element for determination of retired pay is the “retired pay multiplier,” which is 2.5% times years of creditable

service (in an active-duty case). In a Reserve or National Guard case, the court order must also provide the applicable

number of retirement points.

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usually be the most recent three years. The High Three amount can be calculated from Mary’s pay

records. The document showing her pay is called the LES, or Leave and Earnings Statement. She can

get help in obtaining the data through her finance office, and she should be able to retrieve about a

year’s worth of LES’s from the Defense Finance and Accounting service (DFAS) secure pay portal

(https://mypay.dfas.mil)11 or from her own secure portal online for pay and personnel information (e.g.,

“My Navy Portal” for sailors, “Army Knowledge Online” for soldiers). Mary can also obtain a pay

transcript from DFAS summarizing the last three years of base pay.

Mary’s attorney will place the numbers for these 36 months of base pay on a spreadsheet, and Mary

will authenticate the pay in her trial testimony. The spreadsheet should be offered to the court as a

summary of the written records which have been verified by Mary, and Mary must also be able to testify

that the spreadsheet is indeed an accurate transcription of her pay records, even if she did not prepare the

spreadsheet. If the records were obtained from the pay center (DFAS in this case), then Mary may need

to obtain a declaration from the business records custodian.12

Once the evidence has been admitted, the court will require a court order for dividing the pension.

The attorney for the prevailing party is often tagged with the task of preparing the military pension

division order, or MPDO, unless all the necessary language is placed in the divorce decree, or in a

property settlement incorporated into the decree.13 If “outside assistance” from a lawyer experienced in

writing such pension orders is needed, this should be done as early as possible, preferably at the start of

the case.

Whenever possible, the SM needs to request bifurcation of the divorce from the claim for equitable

distribution or division of community property.14 The earlier that the SM gets the court to pronounce

the dissolution of the marriage, the lower his or her “High Three” figure base will be, which means the

lower the dollar amount for pension division with the spouse.

Strategy for the Former Spouse

When operating under the new rules, the former spouse needs to realize that, in the words of the

11 Members of the Army, Navy, Air Force and Marine Corps have access to the DFAS secure website mentioned above;

Coast Guard members have access to the USCG on-line pay portal, “Global Pay.” 12 Under federal law, notary seals are not required for instruments which must be verified for federal purposes; instead, the

federal government uses an unsworn declaration, made under penalty of perjury. 28 U.S.C. § 1746. 13 For the necessary terms for the MPDO, see the Silent Partner, “Getting Military Pension Orders Honored by the Retired

Pay Center.” See Note 5 supra for guidance on how to write the specific pension division clause. 14 See Brett R. Turner, EQUITABLE DISTRIBUTION OF PROPERTY (3rd Ed. & 2016-2017 Supp.), Sec. 3.2. In those states which

have adopted the Federal Rules of Civil Procedure, the issue of separate trials under Rule 42 (b) deals with bifurcation of

claims into separate hearings.

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Rolling Stones’ 1964 hit, “Time Is on My Side.” The longer it takes to obtain the divorce, the higher the

servicemember’s rank, years of service and “High Three” will be. Should the SM move to bifurcate the

hearing into “divorce now, property division later,” the FS should oppose the request by arguing that

judicial economy and efficiency will be impaired, state law frowns upon severance of the issues and a

multiplicity of hearings (if that is accurate) and that Congress has joined inextricably the divorce and the

division of a military pension by requiring the setting of the retired pay base (the “High Three”) at the

time of divorce.15

Discovery and Documents

Once the divorce case has started, the FS ought to propound discovery immediately, asking – among

other things – for verification of when the highest three years of continuous compensation were for the

SM, and for information on what the “High Three” is so that the court can calculate this essential

element of military pension division. The latter inquiry can be posed in interrogatories and also in

document requests. If the SM is less than forthcoming in the responses, the FS can argue for putting off

the divorce until the SM begins to cooperate in responding to discovery. Counsel for the FS, John Doe,

may be able to use principles of equity and the “clean hands doctrine” to argue that the SM must be in

compliance with the rules and orders of the court – including full, prompt and honest answers to

discovery – to be able to move for affirmative relief herself, in the form of a hearing on the application

for a divorce judgment.

As to documents and evidence in trial, the above approach for Mary Doe’s case would also be what

John and his attorney would use most of the time. For an effective trial presentation, John’s lawyer will

need to get and submit the above information if the court is to do a proper hypothetical clause for the

Doe case in light of the new frozen benefit rule. While the records might be obtained from Mary

through discovery, a written consent signed by Mary (for transmission to the retired pay center) may be

necessary if she won’t produce the data on her own, or perhaps a court order or a judge-signed subpoena

sent to DFAS if she is obstinate. It could take weeks or months to obtain this information from the

source.

Restoring the Balance

To attempt to find the flaws and wiggle through the loopholes in the new rule, the lawyer for John

Doe (the ex-husband of CDR Mary Doe) faces a daunting task, and it doesn’t simply involve the

15 For an excellent summary of arguments against bifurcation of the divorce and the property division, along with case

citations for state appellate decisions, see Brett R. Turner, EQUITABLE DISTRIBUTION OF PROPERTY (3rd Ed. & 2016-2017

Supp.), Sec. 3.2.

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assembly of numbers for the court to use in ruling on a hypothetical award. The strategy for John is

more of a global approach to the entire process, and it might involve half a dozen possibilities,

depending on the state court rules for pension division, opposing counsel (or pro se litigant), the

particular judge involved, the phase of the moon and other factors!

The goal of the FS, John Doe, is to “restore the equilibrium” in pension division. He needs what he

would have received before the new rule was passed: a division of the amount of retired pay which

Mary gets at retirement. At best, he wants to employ an approach which will yield a result that is

numerically the same as that produced by the time rule if that were still available. His “Plan B” would

be to obtain other payments or benefits which would help him obtain what he sees as a fairer division of

Mary’s retired pay and benefits, or of the marital or community property in general.

As to John’s possible strategies, note that these are not labelled “One Size Fits All.” While some

states may prohibit or restrict a particular approach, the summary below is written to set out the entire

spectrum of possible strategies, not to advocate one specific method for a particular case or state.

The Pension Division Rules from DFAS

The new rules were just published at the end of June 2017 in Volume 7B, Chapter 29 of the

Department of Defense Financial Management Regulation (DoDFMR).16 It is clear that DFAS has

settled on the “date of divorce” as the target for when the High Three must be fixed. Under 10 U.S.C. §

1408 (a)(2),

…"court order" means a final decree of divorce, dissolution, annulment, or legal separation

issued by a court, or a court ordered, ratified, or approved property settlement incident to such

a decree (including a final decree modifying the terms of a previously issued decree of divorce,

dissolution, annulment, or legal separation, or a court ordered, ratified, or approved property

settlement incident to such previously issued decree)….

DFAS removed everything from this sentence except “final decree of divorce, dissolution, annulment, or

legal separation issued by a court” and used that to specify the High Three date. Regardless of what

potential pension benefit is earned later in the servicemember’s career, it is the High Three as of the date

of divorce which DFAS interprets as being “the time of the order” as specified in Section 641 of NDAA

17. For those military members who entered service on or after September 8, 1980, the following

information must be provided to the retired pay center in the decree, order or incorporated settlement:

1. A fixed amount, a percentage, a formula or a hypothetical which is awarded to the FS;

16 See ¶ 290204 for the definition of “court order,” ¶ 2908 for an entire revised section as to the new rules, and Figure 29-2

for a sample court order with language to meet the requirements of the Frozen Benefit Rule.

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2. The SM’s High Three amount at the time of divorce (i.e., the actual dollar figure); and

3. The SM’s years of creditable service at divorce or, for a member of the Guard or Reserves, the

creditable retirement points at divorce.

Outline of Time-Rule Strategies

Spousal Support Settlement. When the parties are in agreement, a consent order for alimony,

maintenance or spousal support is one way to obtain time-rule payments from the military pension

without the limitations of the frozen benefit rule. An alimony garnishment is based on “remuneration

from employment.” It is not tied to DRP, or disposable retired pay; thus the new rule and its definition

of DRP do not apply to permanent alimony payments which start at retirement and function as a division

of retired pay.17

Here are a few other pointers about the use of permanent spousal support to mimic pension division

as property:

• Note that there is no “10/10 rule” for alimony payments from the retired pay center, as is the

requirement when the pension is divided as property (i.e., property division payments from the

retired pay center may only be made if there are at least 10 years of creditable service concurrent

with at least 10 years of marriage).18

• Make sure that the FS payments do not end at remarriage or cohabitation (since pension-share

payments would not end at either of these two events) and are not subject to modification.

• Admittedly, spousal support is usually effective immediately (not at a future date). In addition it

usually consists of a fixed dollar amount, not a formula such as:

50% X120 𝑚𝑜𝑛𝑡ℎ𝑠 𝑜𝑓 𝑚𝑎𝑟𝑖𝑡𝑎𝑙 𝑝𝑒𝑛𝑠𝑖𝑜𝑛 𝑠𝑒𝑟𝑣𝑖𝑐𝑒

𝑡𝑜𝑡𝑎𝑙 𝑚𝑜𝑛𝑡ℎ𝑠 𝑜𝑓 𝑐𝑟𝑒𝑑𝑖𝑡𝑎𝑏𝑙𝑒 𝑠𝑒𝑟𝑣𝑖𝑐𝑒 X final retired pay.

There is no reason, however, why the retired pay center should refuse to accept a formula for the

spousal support, rather than a specific set dollar figure.19

• A consent order for permanent spousal support should suffice to obtain the payments to the FS

17 The rules for collecting alimony, child support or both from an individual’s military retired pay are found at 42 U.S.C. §

659 and 5 C.F.R. Part 581. The money from which family support may be withheld is termed “remuneration for

employment.” This includes military retired pay (5 C.F.R. 581.103(c)), and even military disability retired pay (5 C.F.R.

581.103 (b)(13)); see also DoDFMR Vol. 7B, ch. 27, para. 270101.A. It is advisable to mention the above citations to the

DoDFMR in the permanent alimony order so as to avoid confusion by those who are processing the order. Counsel may

also want to include these citations in the order itself. 18 10 U.S.C. § 1408 (d)(2). 19 The application form for payments from military retired pay is DD Form 2293.

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upon retirement of the SM, and the tax consequences will be the same, namely, the FS is taxed

on the payments and they are excluded from the income of the payor/retiree.

A Spoonful of Alimony. John’s attorney could argue for division of the pension under the new rule,

with the remaining amount made up by alimony to be decided upon Mary Doe’s retirement, in order to

get the equivalent of a “time rule” order. If John is awarded alimony while Mary is still serving, the

alimony should not end automatically upon Mary’s retirement; John’s attorney needs to review carefully

the results of dividing Mary’s retired pay to decide whether some alimony should be continued to

equalize the parties’ positions. The terms of the alimony order might make the amount adjustable

depending on economic and financial factors at the time of Mary’s retirement, including any reduction

of the retired pay to which John would be entitled under the time rule due to the “frozen benefit rule,” or

any reduction because Mary elects VA disability compensation and that reduces John’s amount due to a

“VA waiver” under 10 U.S.C. § 1408 (a)(4) and 38 U.S.C. § 5304-5305. Note that the order regarding

spousal support as a “stand-in” for pension division must clearly state that the support does not end at

the remarriage or cohabitation of the recipient spouse, since true pension division orders do not change

upon either event.

Using the Time Rule Formula Anyway. The revised law doesn’t say that a court may not enter a time-

rule order. It merely states that the retired pay center (DFAS or the Coast Guard Pay and Personnel

Center) will only honor “date-of-divorce division” for those still serving. Recognizing this limitation on

payments from the pay center, the court may still enter a time rule order, noting that at Mary’s

retirement only a portion of the pension-share payment for John Doe will come from DFAS. The

court’s order would provide that Mary will still be responsible for the rest and will indemnify John for

any difference between the two amounts.

There is a parallel to the remedy often used in “VA waiver” cases in which the FS gets less than

intended. When the retiree elects VA disability compensation, the result is often a dollar-for-dollar

reduction in retired pay. The duty to indemnify is a common solution for this “VA waiver” and the

former spouse’s receipt of a lower amount due to operation of the law.20 Why shouldn’t it work for

cases in which the “operation of law” involves an amendment to USFSPA, the “frozen benefit rule”?

As will be explained below, 10 U.S.C. § 1408 (e)(6), the “savings clause” in USFSPA, allows the courts

to employ state enforcement remedies for any amounts which may not be payable through the retired

20 But see Howell v. Howell, 137 S.Ct. 1400 (2017) on the issue of indemnification by court order, and also the Silent

Partner, “The Death of Indemnification.”

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pay center.21

Be sure not to use “disposable retired pay” in the order to describe what is divided. Disposable

retired pay, or DRP, means the restrictive definition in the frozen benefit rule (i.e., the retired pay base

at the date of divorce) less all of the other specified deductions, such as the VA waiver and moneys

owed to the federal government. The best way to word a pension clause is to provide for division of

total retired pay less only the SBP premium attributable to coverage of the former spouse. Regardless of

the language used, DFAS will construe orders dividing retired pay as dividing “disposable retired

pay.”22

Put Off the Divorce. Delay of the divorce will gain time for the FS, and time is money. The longer the

divorce is postponed, the higher the retired pay base (i.e., the “High Three”) of the SM. Intervening

months and years will yield “step increases” (i.e., pay increases which occur every two years),

Congressional pay raises and possibly promotions. Who could object to this approach? The expected

naysayers for this strategy are two types of attorneys whom we’ll call “Naïve Ned” and “Ethical Ethyl.”

Naïve Ned says, “It can’t be done! How can you postpone the divorce for more than a couple of

weeks on the outside, once the case has been filed?” Sadly, Ned hasn’t had much experience in the big,

wide world outside his office walls.

Many legitimate tactics exist for slowing down the wheels of litigation. Rather than accepting

service of process, Ned could politely tell his opponent that the client will not allow him to sign an

acceptance, and that regular service of process must be employed. When the client is finally served,

Ned can ask for an extension of time for filing an answer. If there is a flaw in the pleadings, Ned may

file a motion to dismiss. If there are questions regarding grounds for the divorce or the validity of the

plaintiff’s claim of domicile, then Ned can initiate discovery. With these and other tactics, an attorney

in Syracuse, New York (for whom the author was a consultant) was able to drag out and delay a divorce

decree from 2010 (when the case was filed) until 2014. And all the while the client, a retired Army

colonel, was begging him to speed it up and get the divorce granted!

Ethical Ethyl takes a different approach. “While it may be possible to postpone the divorce, there

are serious concerns under the Rules of Professional Conduct. It’s never right to delay the litigation.

Counsel has an ethical duty to move forward toward completion, not drag his feet. Slowing down the

process with the goal of delay is simply unethical!” Unfortunately, Ethyl hasn’t read the Rules very

21 See also Brett R. Turner, EQUITABLE DISTRIBUTION OF PROPERTY (3rd Ed. & 2016-2017 Supp.), Sec. 6.4. 22 DoDFMR, Vol. 7B, ch. 29, Sec. 290601.

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closely.

While delay for its own sake is improper, delay which results from the legitimate use of objections,

discovery, motions and other tactics is not inappropriate or a violation of the Rules of Professional

Conduct. The Rules prohibit “unreasonable delay” or “improper delay.” They do not bar the use of

legitimate devices, such as discovery, to obtain needed information, even though the employment of

discovery and the unresponsiveness of the other side may lead to lengthy delays in the legal process.

In a 1998 divorce and property division case, the author embarked on a campaign of discovery to

ascertain whether the plaintiff, a soldier, was a legitimate resident of North Carolina. Domicile is an

essential element of divorce, and the defendant was a maid at a motel in coastal Georgia, so it could not

be her domicile which was at stake. The plaintiff was in New York. Using sequential discovery (i.e.,

interrogatories followed some weeks later by document requests, and then followed by requests for

admissions, rather than simultaneous service of all of these on the plaintiff), the author beamed in

amusement when the plaintiff – instead of answering the discovery immediately – decided to obtain an

extension of time for response by 30 days, following that with his objections and motion for protective

order. In due course the author filed a motion to compel. A hearing was eventually calendared on the

objections, motion for protective order and motion to compel. The latter motion was granted, and the

clock just kept on ticking. The plaintiff eventually fired his first lawyer and hired a new one to get the

case moving faster. Legitimately using these discovery tactics, the author was able to get the granting of

a divorce postponed for 18 months, thus allowing the client to obtain a share of the SM-husband’s

retired pay (which otherwise would have been lost due to a change in state law).

If you get the file when the divorce has already been granted (after 12/23/16), don’t give up. Check

to see if the divorce is valid. A faulty dissolution might be set aside by the court, giving the FS a larger

potential pension to divide.23 Imitating Sherlock Holmes may pay dividends in terms of flushing out a

flawed divorce, so get out that magnifying glass!

How to “Even Out” the Pension Division

The next five methods are not true adjustments to the pension division to make it numerically the

same as that which results from the time rule. They will, however, help in ameliorating the result of the

“frozen benefit division” for John Doe (the ex-husband of Commander Mary Doe).

Unequal Share of Pension. In states where the court has a degree of flexibility in how much of a marital

23 A guide to scrutinizing the validity of divorces is found at the Silent Partner, “‘Lost’ Military Pensions: The Ten

Commandments.”

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or community property asset to award the non-employee spouse, John’s attorney can ask the court to

award a share to him that is larger than the usual “50% of the marital share” portion. Thus the order

could be framed in terms of “70% of the marital share of Mary Doe’s military retired pay,” which would

leave John with a larger share than he could receive through frozen benefit analysis.24 Have a financial

expert help to estimate the monetary loss for the FS, so that a set-off can be calculated. Note, however,

that it would be impossible to compare the two results at the time of the pension division order. Only in

hindsight – at the time of Mary Doe’s retirement – would it be possible to measure one against the

other.25

Fixed Percentage Award. Another alternative, when the laws of a state have not been adjusted to provide

for a denominator of the marital fraction which ends on the date of the divorce (since that is how DFAS

is interpreting “court order” in Sec. 641 of NDAA 17) is to have the court award to John Doe, the non-

military spouse, a fixed percentage of the military retired pay while Mary is still serving. After all, if

John is forced to receive only a share of a frozen benefit at the time of divorce, why shouldn’t he get a

fixed percentage of that frozen benefit? In this situation, the amount of the frozen benefit would remain

relatively stable, instead of losing value over time (as would occur if the denominator of the marital

fraction remains the total amount of Mary Doe’s creditable service). So, for example, if the property

division order occurred when the parties had been married for 10 years of the 20 that Mary had already

served, John would be awarded half of 50% (i.e., ½ X 10/20), or 25% of the frozen benefit. If the fixed

percentage approach were not employed and Mary served for a total of 30 years, then John would still

receive 50% of the frozen benefit times the marital fraction. However, at that time the marital fraction

would be 10/30, or 33%, and John’s share would be 16.5%, rather than 25%. Fixing the percentage at

the same time as the benefit is fixed is one way of “retaining value” for John’s pension-share award.

Present Value. In addition to the future division of retired pay, state laws also recognize a second

method of dividing pensions, the “present value offset.” This analyzes the present value of a series of

money payments over the course of the SM’s life; these are, of course, her retired pay. The present value

of this retired pay is the amount that can be used for a trade or an offset, allowing the SM to keep her

pension intact. This is beneficial for the parties since it results in a complete present accounting and

division, not the postponement of property division until retirement. In addition, it provides the spouse

with property “in hand” when it is unknown whether the SM will live for few or many years after

24 John’s share of the pension, divided as property, is limited to 50% of disposable retired pay which may be garnished

through the retired pay center. 10 U.S.C. § 1408 (e)(1). 25 It would also be possible to have the court award other assets to John in view of his loss due to the truncated division set

out in the new Frozen Benefit Rule.

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retirement, or even survive to apply for retirement.

Evaluating a pension is a complex task. It is not for the faint-hearted, the unprepared, or the amateur.

These complicated computations generally demand an evaluation report and the testimony of an

expert.26 The steps to be taken include these:

• Counsel must locate the appropriate state statute or cases which describe the methodology to use

in ascertaining the present value of periodic payments.27

• The FS needs to find and hire an expert (e.g., CPA, economist or actuary).

• The FS needs to get a “wingman” to educate the expert in understanding the military retirement

system; this advisor might be a senior lawyer with lots of experience in handling military

pension cases, a retired JAG officer, or a judge advocate who is a member of the National Guard

or Reserves with experience in this area.

• The expert needs to read the cases, apply the methodology and placed a value on the pension. In

an ideal world, counsel may even have one or two examples of pension present-value reports to

give the expert to help out in regard to what must be done, what discounts need to be applied,

what mortality table should be used, and so on.

• Then the hunt is on for some property or asset which matches the pension value and can be given

to the FS in exchange for the division of the pension, or which can be awarded to the FS by the

judge in a contested case so that the SM may retain the military pension.

Present Value and Payments. The present value of a military pension can be a pretty large figure in some

cases.28 When this happens, the court may need to do a partial setoff for the marital value of another

asset awarded to the FS, with the remainder to be made up in periodic payments. Thus, if the present

value of CDR Mary Doe’s retired pay were $400,000 and the marital component were $300,000 (that is,

the parties were married for 15 of the 20 years used by the expert in the pension value report), then the

court might set off the pension, awarded to Mary, by granting sole ownership to John of marital assets

worth $200,000. To complete the equation, the court could order Mary to pay $100,000 to John by

26 See, e.g.,Trant v. Trant, 545 So. 2d 428 (Fla. Dist. Ct. App. 1989), cited in Smith v. Smith, 934 So. 2d 636 (Fla. Dist. Ct.

App. 2006). 27 See, e.g., Cochran v. Cochran, 198 N.C. App. 224, 679 S.E.2d 469 (2009) and Bishop v. Bishop, 113 N.C. App. 725, 440

S.E.2d 591 (1994) for rules regarding the present value of pensions and the methodology to be employed in North

Carolina. 28 See, e.g., Cunningham v. Cunningham, 173 N.C. App. 641, 619 S.E.2d 593 (2005) (remanding case for presentation of

husband’s valuation of military pension; wife’s value, without expert, was about $560,000 for a Marine Corps lieutenant

colonel).

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making annual payments of $20,000 for five years. This could be done by requiring Mary to set up an

allotment immediately for the monthly payment of $1,666.67 ($20,000 ÷ 12 months) to John. Or the

court could enter a military pension division order requiring monthly payments of $1,667.67 from

Mary’s retired pay. The retired pay center will honor these “set dollar amount” payments so long as

they do not exceed the allowable percent of disposable retired pay which may be garnished as property

division, that is, 50%.29

The Western Gambit. In several jurisdictions (mostly western states), the court may order the SM to

begin present payments to the nonmilitary spouse as soon as the SM is eligible to retire and receive

monthly payments. This is so whether the military member has actually retired or not.

The seminal case is In re Marriage of Luciano,30 in which the judge ordered pension-share payments

for the wife to begin when the SM-husband retired from the Air Force. The California Court of Appeals

reversed, stating that it would be unfair to postpone payment to the ex-wife since that would give the

SM the power to determine when she received her own property. The Court went on to say that the

employee spouse cannot defeat the nonemployee spouse’s interest in community property by relying on

a condition solely within his control. The proper order for the judge to issue would state that the former

wife is the one who has the choice as to when to start receiving her share of the pension. This election

may be made at any time after the pension is matured, through a motion filed by the nonemployee

spouse. The Court stated that, if the motion is made before retired pay starts, this constitutes an

irrevocable election to give up increased payments in the future which might accrue due to increased

age, longer service and a higher salary.31

Nothing in the frozen benefit rule blocks or bars this “western gambit,” as illustrated by the Luciano

case. And the logical approach – nay, the only rational approach – for a nonmilitary spouse in those

states which follow Luciano is to move immediately for payments, to start as soon as the SM attains

sufficient service for retirement (usually after 20 years of active duty). Since there can no longer be an

29 This 50% means half of the disposable retired pay of the SM calculated at the date of the court order. The same limits

apply if the court – instead of time payments on a present-value setoff – decides to order the SM to pay the FS a fixed

dollar amount upon retirement. See Note 23 supra. 30 In re Marriage of Luciano, 104 Cal. App. 3d 956, 164 Cal. Rptr. 93 (1980). See also In re Marriage of Scott, 156 Cal. App.

3d 251, 202 Cal. Rptr. 716 (Ct. App. 1984); Ruggles v. Ruggles, 860 P.2d 182 (N.M. 1993); Koelsch v. Koelsch, 713 P.2d

1234 (Ariz. 1986); Gemma v. Gemma, 105 Nev. 458, 778 P.2d 429 (1989); Balderson v. Balderson, 896 P.2d 956 (Ida.

1994); Blake v. Blake, 807 P.2d 1211 (Colo. App. 1990); In re Marriage of Harris, 107 Wn. App. 597, 27 P.3d 656 (Ct.

App. 2001); Maccarone v. Maccarone, 108 A.3d 1053 (R.I. 2015); Janson v. Janson, 773 A.2d 901 (R.I. 2001); Furia v.

Furia, 692 A.2d 327 (R.I. 1997); and Bailey v. Bailey, 745 P.2d 830 (Utah App. 1987) (“… the distribution of retirement

benefits should generally be postponed until benefits are received or at least until the earner is eligible to retire.” (emphasis

added)). 31 In re Marriage of Luciano, 104 Cal. App. 3d at 960–961, 164 Cal. Rptr. at 95–96.

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increased payment in the future, as mentioned above, and the benefit to the FS is locked into the rank

and years of service at the time of divorce, every nonmilitary spouse should file a motion to elect

payments from the SM as soon as the pension matures.

Continuing Conundrums

Several questions remain. The answers will likely be provided in case law developments. Below

are some examples.

How should the courts write a proper court order to implement the frozen benefit rule? The

“hypothetical clause” (as it is called by DFAS) is the most difficult clause to prepare. For those who

entered military service after September 1980, the current DoDFMR rule requires that the court order

contain detailed information about the SM; this includes the years of creditable service as well as the

“retired pay base” calculated according to the “High Three,” the average of the highest three years of

continuous compensation before the specified division date.32

At present, counsel must provide this information to the court. What if a court order specifies the

“old definition” of disposable retired pay? Will it be rejected by the retired pay center, as would happen

before the frozen benefit rule when an order was found to be unacceptable? Will the center send to

counsel or the former spouse directions to specify the required data for a hypothetical clause?

When a retiree doesn’t make payments according to a pension division order which uses the original

definition of DRP, will the FS be able to obtain compliance through a show cause hearing? Will the

court’s contempt sanction be upheld? Or will an appellate court strike down the punishment on the

basis of federal preemption, ruling that the frozen benefit rule cancels all other methods of dividing the

future retired pay of a still-serving member?

If an order entered after 12/23/16 sets out terms under the original DRP definition and the SM wants

to petition the court to change the order to comply with the present definition, will the court allow a

motion to alter or amend under Rule 59 or its equivalent (in states which have not adopted the federal

Rules of Civil Procedure)? What about a motion to set side under Rule 60? Or will the existence of a

final decision bar that change? Generally speaking, courts refuse to modify final property division

judgments or to allow them to be attacked collaterally.33

What happens if a time rule order dividing the pension is final and unappealed, and then the attorney

32 DoDFMR, Vol. 7B, ch. 29, Sec. 290608. 33 See, e.g., In re Marriage of Thorne, 203 Cal. App. 4th 492, 136 Cal. Rptr. 3d 887 (2012); and Moore v. Moore, 484

S.W.3d 386 (Mo. App. Unpub. 2016).

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for the former spouse finds out that it will not be honored by the retired pay center? What if the order

will only be honored to the extent that it divides the “frozen benefit,” rather than final retired pay? Can

the court still hold the retiree liable for the unpaid portion of the pension under 10 U.S.C. § 1408 (e)(6)?

That section of USFSPA, known as the “savings clause,” states:

(6) Nothing in this section shall be construed to relieve a member of liability for the

payment of alimony, child support, or other payments required by a court order on the

grounds that payments made out of disposable retired pay under this section have been

made in the maximum amount permitted under paragraph (1) or subparagraph (B) of

paragraph (4). Any such unsatisfied obligation of a member may be enforced by any

means available under law other than the means provided under this section in any case

in which the maximum amount permitted under paragraph (1) [e.g., 50% of disposable

retired pay] has been paid….

Numerous court decisions have held that orders which require the retiree to pay more than 50% of

disposable retired pay are not void or invalid; they are simply not enforceable through garnishment from

the retired pay center for amounts in excess of 50%.34 Can counsel for the FS defeat the arguments of

the SM/retiree that federal law preempts state court orders, since this section of USFSPA provides an

“escape hatch” for the FS in enforcement of the pension division order?

Final Notes

Labelled as John Doe’s “Plan B” above under Strategy for the Former Spouse, other methods and

strategies exist for obtaining a “fair deal” (or perhaps a “fairer deal,” in John’s view) regarding division

of military retirement benefits. These would include requiring the SM to pay the full cost of the

Survivor Benefit Plan, or valuing the SM’s military medical coverage and placing that as an asset in the

SM’s share of marital or community property.35 These do not involve a larger portion of the pension;

rather, they focus on other benefits which may be valued and allocated in the property division process.

All of the above methods should be considered by lawyer for the former spouse. And this should be

done in consultation with an expert in dividing military retired pay, so as to choose the best alternatives

to the frozen benefit approach imposed by NDAA 17.

34 See, e.g., In re Hicks, 530 B.R. 912 (M.D. Fla. 2015); In re Madsen, 2002 Bankr. LEXIS 2037 (Bankr. S.D. Iowa 2002); In

re Mackmeekan, 117 B.R. 642 (D. Kan. 1990); Ex Parte Smallwood, 811 So. 2d 537 (Ala. 2001); Grier v. Grier, 731

S.W.2d 931 (Tex. 1987); Forney v. Minard, 849 P.2d 724 (Wyo. 1993); Marquis v. Marquis, 175 Md. App. 734, 931 A.2d

1164 (Md. Ct. Spec. App. 2007); Deliduka v. Deliduka, 347 N.W.2d 52 (Minn. Ct. App. 1984); Stout v. Stout, 144 So. 3d

177 (Miss. App. 2013); Gonzalez v. Gonzalez, 2011 Tenn. App. LEXIS 21; Maxwell v. Maxwell, 796 P.2d 403, 406 n.6

(Utah Ct. App. 1990); In re Marriage of Bocanegra, 58 Wn. App. 271, 792 P.2d 1263 (Wash. Ct. App. 1990); and

Geesaman v. Geesaman, 1993 Del. Fam. Ct. LEXIS 126 (Del. Fam. Ct. 1993). 35 Both of these approaches are covered in detail in Chapter 8 of Sullivan, THE MILITARY DIVORCE HANDBOOK (American

Bar Assn., 2nd Ed. 2011) and both may be employed in any military divorce case, not just one which falls under the frozen

benefit rule.

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These rules and requirements, strategies and suggestions may not apply to everyone. There are

certainly variations among the states as to what may be done in the area of division of retired pay. For

example, while some states may allow “make-up alimony” to adjust the equities when a spouse is left

short in the pension division, others maintain a strict line of division between spousal support (based on

need and the ability to pay) and property division (based on the value of what was acquired during the

marriage and how best to divide it). Be sure to understand the law and the cases. Consult an expert in

your state (if you’re not one yourself), and contact a specialist in military pension division whenever

possible – even if it’s in another state! Review the Silent Partner, “All Clauses Considered: Writing the

Frozen Benefit Award.” You can’t ask too many questions or know too much in this area. “One size”

does not fit all!

Rev. 7-24-17

* * * This SILENT PARTNER was prepared by COL Mark E. Sullivan (USA-Ret.). For revisions, comments or corrections, contact

him in Raleigh, N.C. - 919-832-8507, or at [email protected].

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SILENT PARTNER

Military Pension Division and the Frozen Benefit Rule: Nuts and Bolts

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the Military

Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s Committee on Legal

Assistance for Military Personnel. There are many Silent Partner infoletters on military family law issues. Just go to

www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov > For Lawyers. Please send any

comments, corrections and suggestions to the address at the end of this document.

Introduction

New rules for the division of military retired pay took effect December 23, 2016 for those servicemembers

(SMs) who were not yet getting retired pay on a divorce date after 12/23/16. The Frozen Benefit Rule,

prescribed in Sec. 641 of the National Defense Authorization Act (NDAA) for 2017 and clarified at Sec. 624 of

NDAA 2018, limits the disposable retired pay which can be divided. The new, required method of military

pension division involves a hypothetical amount of retired pay, calculated as of the SM had retired on the date of

the decree of divorce, dissolution, annulment or legal separation (hereafter divorce*).

This will make a big difference in most case. Thus, for example, even though John Doe might be a master

sergeant (E-8) with 28 years of service in the Army when he eventually retires with a monthly pension of $4,000,

the retired pay to be divided is fixed at the rank and years of service for John on the date of divorce*, which

might be a staff sergeant (E-6) with only 20 years of service, amounting to only $1500 monthly.

Details are found in two Silent Partner info-letters, “Fixing the Frozen Benefit Rule,” and “All Clauses

Considered: Writing the Frozen Benefit Award.”1 The text below will explain specifics regarding the data points

required in a pension division document2 and the amount of “disposable retired pay” which is subject to

division.3 As always in complex areas like military pension division, it’s a good idea to seek the help of a

“wingman” for assistance - someone who knows the subject matter and who has handled cases like this before.

Don’t go it alone!

“You're Either On the Bus or Off the Bus”4

First of all, check to see if your case qualifies for Frozen Benefit Rule treatment. Was the judgment of

divorce* on or before December 23, 2016? If so, you’re “off the bus” - the Rule doesn’t apply.

If the date of divorce* was after that date, was the military member already receiving retired pay at divorce?

If so, then you’re still “off the bus.” In either of these situations, the Frozen Benefit Rule doesn’t apply and you

1 You can also find explanations and information at the DFAS website, www.dfas.mil > Garnishment > Notice of Statutory

Change, and there is also sample order language to use in complying with the Rule. Lawyers should take care in using the

sample order language. If the attorney provides the information required in the sample, then the order will be approved.

The key, according to one retired pay center attorney, is ensuring that the lawyers knows and understands what is included

in the sample order - “Do you know what this means and how it affects your client before you fill it out?” To illustrate,

the sample order contains language setting the denominator of the marital or coverture fraction as the total military service

of the SM. Yet, as pointed out at the end of this paper, that is not only illogical (when dividing a benefit that’s fixed on the

date of divorce*), it’s also unfair and mathematically absurd. It should be fixed as of the divorce* date. 2 The pension division document is a decree of divorce, dissolution, legal separation or annulment, or a settlement agreement

incorporated therein. 10 U.S.C. § 1408(a)(2). 3 “Disposable retired pay” is that pay which may be divided between the parties in a divorce or separation case. 10 U.S.C. §

1408(a)(4). 4 Attributed to Ken Kesey, as quoted in Tom Wolfe’s The Electric Kool-Aid Acid Test.

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don’t need to bother about the rules and restrictions set out below.5

Data Points Required

When the pension division case involves the Frozen Benefit Rule, what information is required for the

pension division document?6 To comply with the Frozen Benefit Rule, you must include two data points as of

the date of the decree of divorce, annulment or legal separation (hereafter “date of divorce”):

• The SM’s retired pay base, also known as the “High-3” amount7 (i.e., the actual dollar figure); and

• The SM’s years of creditable service.8

Why Is This Needed?

The military retired pay center, usually DFAS, uses these two data points in the pension division document

to measure the SM’s disposable retired pay which can be divided.9

Calculation of regular retired pay (i.e., retired pay based on active-duty service years)10 involves multiplying

the SM’s retired pay base by the retired pay multiplier.

• For those entering military service on or after September 8, 198011 and not in the Blended Retirement

System, the retired pay base is the monthly average of the highest three years of compensation, known

as the “High-3.”12

• The retired pay multiplier for these SMs is 2.5% times the years of creditable service.13

The retired pay center uses these data points to calculate the hypothetical retired pay of John Doe as of the date

of divorce*. Although the data are required now, the calculations are done by the center when John starts

drawing retired pay.

Most family law attorneys have little knowledge of the meaning of these terms and techniques, concepts and

calculations. Let’s review what they mean and how to obtain this information.

A Short Detour into Dates: Creditable Service, Pay Date and DIEMS

Let’s say Army Master Sergeant (MSG) John M. Doe is our client. John is on active duty, and we’re trying

to obtain his years of creditable service. In most cases, we can ask John and he’ll know the answer.

If there’s any doubt, a quick way to verify this in most cases is to look at the “Pay Date” at the top of John’s

LES (Leave and Earnings Statement) to see when he entered this period of military service; it need not be his last

LES - one from six months ago will probably suffice. Count the years and months since that date, and then

convert the result into years (e.g., “18.5 years,” although “18 years and 6 months” would probably be

accepted).14 Do not include days. An example of a Leave and Earnings Statement is at ATCH 1 below. The Pay

5 See §2908 of Chapter 29, Vol. 7B, Department of Defense Financial Management Regulation (DoDFMR). 6 The basic language and the methods of division are found in the Silent Partner, Getting Military Pension Orders Honored

by the Retired Pay Center. Further information is in Military Pension Division: Guidance for Lawyers. 7 The retired pay base for those entering military service before 8 September 1980 is the individual’s final pay, but there are

almost none of these SMs still serving today. 8 See DoDFMR, Vol. 7B, Ch. 29, ¶290803. In the case of a member of the Reserves or National Guard, the years of

creditable service is replaced with “total number of retirement points” as of the date of the decree of divorce*. 9 Retired pay orders for the Army, Navy, Air Force, Marine Corps, as well as the National Guard and Reserves (known as the

RC, or Reserve Component), are processed by the Defense Finance and Accounting Service (DFAS), located in Cleveland,

Ohio. Pension orders for members of the U.S. Coast Guard and Coast Guard Reserve are sent to the USCG Pay and

Personnel Center (http://www.uscg.mil/ppc/), located in Topeka, Kansas. Orders for the commissioned corps of the Public

Health Service and the National Oceanic and Atmospheric Administration are also serviced by the Coast Guard PPC. 10 Chapter 71 of Title 10, U.S. Code. 11 This is determined by the DIEMS, as explained below. 12 10 U.S.C. § 1407. See also DoDFMR, Vol. 7B, Ch. 1, ¶010102. 13 10 U.S.C. § 1409. For RC members, the “years of service” used in calculating retired pay would be determined by

dividing the total number of points by 360. 10 U.S.C. § 12733. 14 Note that military numbering format is used for the date (e.g., 980601 means June 1, 1998).

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Date is shown on the line just below the title of the document.

DEFENSE FINANCE AND ACCOUNTING SERVICE MILITARY LEAVE AND EARNINGS STATEMENT

ID NAME (Last, First, MI) SOC. SEC. NO. GRADE PAY DATE YRS SVC ETS BRANCH ADSN/DSSN PERIOD COVERED

When there has been a break in service, however, the above calculation won’t work; a break means the start

of a new Pay Date on the LES. Pay Date15 normally refers to the date of initial commissioning or enlistment; it

will be updated, however, based on breaks in service (such as AWOL or being discharged and later rejoining the

military). One’s Pay Date refers to the date of the most recent start of military duty without a break in service.16

The Pay Date is not the only reference to military service dates, however. The retirement system which

applies to servicemembers is based on a different label - their Date of Initial Entry into Military Service, or

DIEMS.17 DIEMS refers to the date on which an individual first joined the military, irrespective of subsequent

breaks in service.18 The current DFAS LES shows the DIEMS midway down the right side, under “Summary.”

If Jake Smith serves in one branch of the military, separates, and then later rejoins the military (whether the

same branch or a different one), his DIEMS remains the same, but his Pay Date changes. For example, Jake joins

the Navy at 18, serves for two years, and then is discharged at age 20. At age 24, he decides to join the Marine

Corps. He completes 18 years of USMC service and then retires at age 42. He is entitled to retired pay because

the date he enlisted in the Navy at age 18 is his DIEMS, and his two-year tour of duty counts toward his total

time in uniform. His Pay Date, however, will reflect only the date 18 years ago when he went into the Marine

Corps; this is because the Pay Date is the most recent period of uninterrupted service. In this example neither

Jake’s Pay Date nor his DIEMS would measure accurately his creditable service until the date of divorce - the

Pay Date would show too little time (18 years) and the DIEMS would show too much (24 years).

The points to remember are these:

a) The DIEMS may be different from the Pay Date, since the DIEMS is based upon the very first date of

military service, regardless of later breaks, while Pay Date refers to the start of the most recent period

of uninterrupted service;

b) If both of these labels are the same date, that means there was no break in service, and the years of

creditable service until divorce should start with that date;

c) If the DIEMS entry is earlier than the Pay Date, however, then there was a break in the SM’s time in

the military; information is needed from the SM or his records to find out how much of a gap in time

there was (i.e., how much time the member was not in military service creditable toward retirement).

If you’re representing the spouse, you’ll need to get that information from MSG John Doe. Since this

information must be accurate, you should request the figure in discovery - along with the supporting documents -

to be sure that the calculation is correct. The interrogatories would ask about the date that John Doe entered

military service, whether there were any breaks in service (and, if so, when they occurred), the total creditable

service as of the date of divorce* (which may need to be estimated, since it could be in the future), and the

calculations which support that statement. In most cases the document requested would be a Leave and Earnings

Statement. The expected data derived from the answers would look like this: “As of the date of divorce,

15 Pay Date means the “Pay Entry Base Date” or PEBD. The PEBD is sometimes called the Basic Pay Entry Date. 16 See DoDFMR, Vol 7A, Ch. 1, ¶010201. 17 DIEMS is also referred to as the Date of Initial Entry into Uniformed Service, or DIEUS. 18 One’s DIEMS is set on the first date of joining any military service, rather than completion of any military preliminary

program. For example, SMs who first join the National Guard or Reserves and the later transfer to the active component

count their DIEMS from the date that they joined the Guard or Reserves. Those individuals who are receiving a

scholarship through ROTC or who enter a service academy (e.g., West Point) will start their DIEMS from the date of

enlisting rather than the date of graduation. Military service spans the length of time from initial entry into military service

(e.g., the date of one’s enlistment) until retirement or discharge. Thus if Roberta Roe signed up for the Marine Corps in

January 2018 but did not report for active duty until June 2018, her DIEMS is the date that she first signed up or enlisted

(i.e., January 2018).

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Defendant John M. Doe had 18.5 years of creditable service.”

Note that data for years-of-service calculations is not the province of DFAS, although it can release

documents from which the calculations may be made, such as the LES. One’s branch of service controls the

records which are the primary source of creditable service information (e.g., Human Resources Command at Ft.

Knox for the Army). The data is provided to DFAS for entry on the LES.

Creditable Retirement Points

Let’s suppose that Marine Corps Reserve Major Roberta Roe is the client. In this case we’ll need to get her

total retirement points as of the date of divorce*. Each member of the Reserves can get the current points

statement from the “personnel portal” of the Reserve Component involved (e.g., U.S. Marine Corps Forces

Reserve, New Orleans for Marine Reservists, Air Reserve Personnel Center for Air Force Reserve personnel).

National Guard members can get their points statements from the state Guard headquarters. The number of

points stated might also require making an estimate if the entry of the appropriate pension division document is

in the future. As a Reservist, Major Roe will continue to receive retirement points for weekend drilling, which

continues each month during the period leading up to the divorce* (with each two-day weekend counting as four

points). Sometimes the client, although a member of the Guard or Reserve, will be on an active-duty tour at the

time of the divorce*, and that will affect the calculation of points as well. Active-duty time is shown on the

points statement as one point for each day of active duty, within certain limits per year. An example of a

retirement points statement is at ATCH 2.

If you represent the spouse instead of the Reservist, you will have to get the information from Roberta

through discovery. Thus you should request the number of retirement points - along with the supporting

documents - to be sure that the calculation is correct. Your interrogatories would ask for the total retirement

points for Major Roe as of her most recent retirement points statement and as of the divorce* date (if that has

already happened), as well as how Major Roe is acquiring retirement points each month (to allow the spouse’s

attorney to make an intelligent estimate of continued point accumulation if the divorce* is a couple of months in

the future). The documents requested would be retirement points statements. The expected data derived from the

answers would look like this: “As of the date of divorce, Defendant Roberta S. Roe had 1,597 Reserve retirement

points.”

“High-3” Pay

The High-3 pay for John Doe is the average of the highest 36 months of compensation. It involves “base

pay,” not other entitlements (such as flight pay, combat pay, or Basic Allowance for Housing). When your client

is MSG John Doe, he will usually know the answer for the period of time involved; it’s the most recent three

years. In this situation, get his most recent three years of LES’s. If he doesn’t have all of them, have him contact

customer service at the pay center (DFAS or Coast Guard) to request that information. The documents from the

pay center will usually be a pay extract or pay summary, not actual copies of the LES’s.

Note that John will have to specify what period of time is involved. The pay center will not give him the

number or the underlying data responding to a request for “my High-3 pay.” Even though the pay center has the

information, the officials there may reply that the computers have not been programmed to provide the data. So

John will need to phrase his request in terms such as, “My base pay for each month between June 1, 2015 and

June 1, 2018,” if that is his highest 36 months of pay. Once that information is obtained, getting the monthly

average on a handheld calculator is pretty simple.

In lieu of obtaining the documents and data from the pay center, John can prepare a spreadsheet, such as a

chart in Excel. Such a document - based upon military pay tables found at www.dfas.mil for present and past

years, as well as his dates of promotion, if any - will show his rank and his pay for the applicable 36-month

period. An example of an Excel chart is at ATCH 3.

Note that the “High-3” does not involve “continuous pay.” That’s not in the statute, 10 U.S.C. § 1407. In rare

cases, John might have had a prior period of time in which he received higher pay than at present for several

months or for one or two years, due to his being in a higher pay grade. For example, John may have had a higher

pay grade previously but was reduced in rank due to misconduct. These situations seldom occur, but they are

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worth knowing about.19

When MSG John Doe is on the other side, discovery is the answer for “High-3” information. The

interrogatories would request that he provide the specific months for his highest compensation next preceding the

divorce*, including his rank and his years of service for those months, since rank and years of service are how

you compute pay. While a document request could ask for the LES’s for those 36 months, it’s unlikely that he

will have those documents; he may need to request them from the pay center.

If you are unable to obtain reliable documents from John Doe, you may need to calculate the base pay rate

yourself. To do that, you will need to know his date of rank in his current pay grade and have at least one recent

LES. Then, using published pay tables, you can ascertain the monthly base pay for each of the highest 36

months (assuming this is the most recent 36 months, which is true over 99% of the time). Keep in mind that the

pay for military members increases every two years (i.e., step increases) and also increases on the date of a

promotion. Thus there will never be 36 identical months of pay for John.

High-3 and the Guard/Reserve

In Major Roberta Roe’s case, she will also know the usual answer for the period of time involved; it’s the

most recent three years. In rare cases Roberta may have had a higher pay grade on active duty but was reduced

in rank upon transfer to the Guard or Reserves.20

Major Roe’s highest three years of pay is measured on the basis of active-duty pay for an officer with her

rank and years of service, not the Marine Corps Reserve pay that she receives for a “drill weekend.” This can be

obtained by reviewing her years of creditable service and her pay grade, and then using the military pay tables at

www.dfas.mil. The years of service can ordinarily be calculated from the Pay Date data shown on her LES.

The Need for Accuracy

What if the “High-3” number is wrong? What if there’s been a mistake in calculating it? What if the SM -

who is the one with primary access to this data - fraudulently or carelessly states a much lower number for this

data point? This would squash down the hypothetical retired pay that is fixed on the divorce* date. Or what if

the spouse, taking advantage of a SM who is unrepresented or who urgently wants a divorce, inserts a higher

number in the pension division document? This would have the effect of boosting the hypothetical retired pay

which - as disposable retired pay - is what’s divided. Won’t DFAS catch the problem and set it right?

Many attorneys would reasonably guess that the answer is “Yes.” However, a shorter and more accurate

answer is “No.” DFAS won’t catch the error at the time of submission, since it doesn’t calculate the award at the

initial review stage; the calculation occurs just prior to the receipt of retired pay by the servicemember. And, if

the pension division document contains all of the needed variables but the information submitted regarding the

“High-3” is inaccurate (i.e., different from the SM’s actual “High-3” at divorce), it is the position of DFAS that

“…we will use the information provided in the court order. If either of the parties later disagrees with our use of

that figure based on the fact that it is incorrect, they will need to provide a clarifying order.”21

The inconvenient truth is that the correct information about one’s High-3 is in the pay center’s computers.

The government officials just haven’t programmed the computers to provide it.

And DFAS also won’t verify the years of service at divorce*. Each branch of service is responsible for

correct figures for years of service, not DFAS. Retirement points are, as mentioned above, the province of the

Reserve personnel center or the state Guard headquarters.

When the Other Side Won’t Cooperate

What should the spouse do when the other side is uncooperative? What about issuing a subpoena to DFAS or

19 If you learn that John was reduced in rank for punitive reasons, you will need to research the criteria set forth in 10 U.S.

Code § 1407(f) and DoDFMR, Vol. 7B, Ch. 3, ¶ 030212 to determine whether the High-3 average is required by the

specific facts of your case. 20 Retired pay for Reservists is covered in Chapter 1223 of Title 10, U.S. Code. 21 The information in this paragraph comes from an e-mail from a senior attorney at DFAS to the author (December 19,

2017), Subject: “from Sullivan -- Questions, Clarifications” (on file with the author).

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the Coast Guard? It’s not uncommon for the author to get a phone call or an e-mail requesting “a sample of a

standard subpoena that I can issue to DFAS to get some information.”

There are several flaws with this proposed approach. First of all, there’s no such thing as a “standard

subpoena” for documents or information. The format, structure and wording of a subpoena directed to DFAS is

the same as any other subpoena which is employed for the production of documents. The documents, of course,

will vary from case to case. There is no single set that applies to every case.

Second, the subpoena must be signed by a judge from “a court of competent jurisdiction.” For DFAS or

another government agency for Army, Navy, Air Force or Marine Corps records, that usually means the court in

which the divorce, legal separation suit or other legal action is pending. For the Coast Guard, an agency of the

Department of Homeland Security, it means federal district court.

Third, you will need to choose the language you want for the documents which you are requesting. You

cannot simply demand from DFAS “copies of all relevant documents regarding John Doe’s pay and allowances

since three years ago.” That will certainly produce a rejection, since it’s unclear what is being requested. You

need to give specific and detailed information (e.g., “Leave and Earnings Statements, or the data thereon,

showing the base pay for John M. Doe, SSN 123-22-3333, for June 1, 2015 through June 1, 2018”).

Fourth, allow enough time for the agency to respond. Four to six weeks may be required. The production of

documents will be controlled in most agencies by the “FOIA/PA Office,” that is, the office which responds to

requests for information under the Freedom of Information Act and the Privacy Act. If you want to check on the

status of documents, that’s the place to contact.

You may also want to read over the rules regarding the disclosure of information pursuant to court process

(that is, a court order or a judge-signed subpoena). Each of the agencies has such rules, and it doesn’t take long

to find the location (e.g., the release of information regarding DFAS and retired pay is governed by Chapter 18

of Volume 7B of the DoDFMR).

There are also info-sheets and FAQs on-line to review. For example, the addresses and phone/fax contact

information for requests for information at DFAS are found at the DFAS website, www.dfas.mil > Freedom of

Information Act > How to Submit a FOIA Request.

Finally you will need to decide if you want only the records and data, or whether you will need the

associated documents which would be necessary for introduction of the evidence into court. You may need to

review your state rules for the business records exception or the public records exception to the hearsay rule.

Will you need an affidavit from the records custodian? A declaration from an official as to the public records

exception? If so, be prepared to draft the document yourself; the agency doesn’t have a pile of affidavits and

declarations on file to meet the requirements of each state. You may need a phone call with the officials in the

records office!

The Impact of Delay

Going through the above steps may take time. And this may wind up putting off the divorce*. But the

spouse’s attorney should remember that the Frozen Benefit is measured by the hypothetical retired pay of the SM

at divorce*. Thus the longer the divorce* is delayed, the higher his or her years of service will be. Perhaps there

will even be a promotion in the interim, or a Congressional pay raise! If you represent the spouse, resist any

attempt to bifurcate the divorce or dissolution and the entry of the pension division document. This would allow,

in some cases, a SM who is eager to be single again to obtain a divorce which would freeze the benefit, and yet

hold off on producing the data and records necessary for the pension division document. The two must be

handled at the same time, goes the argument; Congress, federal law and military regulations have made the two

inseparable. The retired pay center must have the two required data points as of the date of divorce*. If the SM

cannot provide these data points, then the divorce* should be postponed, or else there will never be any incentive

for production of the information.

A Tip About the Denominator

The attorney for the spouse will need pay close attention to the marital fraction, which in most states is

marital pension service divided by total pension service. Since the retired pay that is divided is fixed (except for

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COLAs, or cost-of-living adjustments) on the date of divorce, the court order needs to contain a fixed

denominator, ending on the date of the divorce or the decree of legal separation. This may run contrary to

applicable state rules (e.g., the Majauskas formula in New York, the Bangs case in Maryland or the Seifert

formula in North Carolina), but fixing the denominator is the only way to provide for fair division of a benefit

which is fixed on the divorce date; anything else would constitute a double dilution of the spouse’s share of the

pension. For further information, see the two Silent Partner info-letters mentioned in the first paragraph above,

and see Note 1 above as to the problem in the DFAS sample order language.

(Rev. 4/29/2018)

* * * This SILENT PARTNER was prepared by COL Mark E. Sullivan (USA-Ret.). For revisions, comments or corrections, contact

him in Raleigh, N.C. - 919-832-8507, or at [email protected].

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SILENT PARTNER Guidance for Lawyers: The Survivor Benefit Plan

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the Military

Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s Committee on Legal

Assistance for Military Personnel. There are many Silent Partner infoletters on military family law issues. Just go to

www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov > For Lawyers. Please send any

comments, corrections and suggestions to the address at the end of this document.

The Survivor Benefit Plan (SBP) is the survivor annuity associated with military retired pay.1 If the

servicemember (SM) or retiree dies first, the spouse or former spouse survivor is eligible to receive 55%

of the selected base amount (usually the full pension) for life.2 Here are the most important points to

remember when handling a divorce involving SBP coverage.

1. Specifically Address SBP Coverage At Divorce. If you’re representing the spouse of the SM

or retiree in a divorce, don’t just say that the FS (former spouse) is entitled to receive SBP

coverage as a former spouse. Be sure that the judgment, order or incorporated settlement

document states that the SM or retiree must elect former-spouse SBP coverage. This

requirement to make an election is the best way to protect the flow of income that starts with the

share of the pension. If the SM or retiree fails to elect former spouse coverage, the pension

payments stop when the pensioner dies. Remember “LIFE and DEATH.” Protect your client for

both of these contingencies – a share of the pension during life, and SBP coverage in the event of

the SM or retiree’s death. And do it right away – don’t put it off for “down the road” when

everyone has a chance to breathe. Many problems arise from reserving SBP until later on.

If, on the other hand, you represent the SM/retiree and you do not want SBP coverage for the

former spouse, then write the settlement or final court order to say so. If you don’t want to “tip

your hand” by talking about SBP, then do it the subtle way: “The parties stipulate and agree that

the Husband, John Doe, is be entitled to certain retirement benefits under Title 10, U.S. Code

since his retirement from the U.S. Army in 2016, that his military retirement is partly marital,

1 See 10 U.S.C. § 1447-1455. If the divorce follows the retirement of the servicemember, then SBP had to be selected at

retirement for it to be available at the time of divorce. Without the selection of SBP coverage at retirement, or if the choice

of less than full coverage, both of which require the written consent of the spouse, the former spouse’s SBP eligibility at

divorce is limited by that previous decision. 2 A servicemember may also elect coverage for a spouse and children, for a former spouse and children, or child coverage at

the time of retirement.

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and that the Wife is entitled to 43% of the retired pay as her one-half share of the marital portion

upon execution of this agreement. All the rest of Husband’s pension and retirement benefits

shall be his sole and separate property, free and clear of any claim by the Wife.”3

2. Meet the Election Deadline. To effectuate coverage, the SM or retiree needs to transmit the

election form to the retired pay center.4 This must be done within one year of the divorce.5 The

election for former spouse coverage is made on DD Form 2656-1 for the Army, Navy, Air Force

and Marine Corps; Coast Guard Form 4700 is used by the Coast Guard and the commissioned

corps of NOAA and the PHS. The forms are available on-line in fillable PDF format. You need

to mark that deadline on your docket control system and make sure you meet it.

3. Watch Your Wording. If the SM/retiree fails or refuses to make the election within a year of

the divorce, the former spouse can submit a deemed election to get SBP coverage. DD Form

2656-10 is used for this. When you represent the former spouse of the SM or retiree, make sure

that the language used in the SBP clause of the divorce judgment imposes a duty on the SM or

retiree to make the former-spouse election. If your wording begins “Jane Doe may choose to

receive…” or “The Army will provide…” you’ve missed the boat. Such phrases do not impose

an affirmative duty on John Doe, the former husband, and your client won’t be able to take

advantage of the “belt and suspenders” protection provided to former spouses by a deemed

election. See the APPENDIX below for examples of faulty phrasing and defective language.

The attorney should also be sure to undertake the submission of the SBP package as part of the

divorce representation. The work isn’t finished until the paperwork to implement the pension

division and the Survivor Benefit Plan is submitted. Don’t leave the client in the lurch.

4. Note the Former Spouse’s Suspense Date. Just as the SM or retiree has a deadline, as described

in Tip 2, there is a deadline for the deemed election by Jane Doe, the former spouse. The

suspense date is one year from the entry of the order giving her former spouse coverage.6 This is

often the date of the divorce; however, in some states or localities the order granting former

spouse coverage may be different than the divorce date. These situations are often called

3 For other techniques to use in avoiding SBP, see the Silent Partner info-letter, “Defending Against SBP,” at

www.nclamp.gov > For Lawyers > Silent Partner. The Silent Partner series is published by the North Carolina State Bar’s

military committee in conjunction with the Military Committee of the American Bar Association’s Section of Family Law. 4 For the Army, Navy, Air Force and Marine Corps, garnishments are handled by Garnishment Operations at DFAS (Defense

Finance and Accounting Service) in Cleveland, Ohio. Pension garnishments for the Coast Guard and the commissioned

corps of the Public Health Service and of the National Oceanic and Atmospheric Administration are handled by the Coast

Guard Pay and Personnel Center in Topeka, Kansas. 5 10 U.S.C. § 1448(b)(3)(A)(iii). 6 10 U.S.C. § 1450(f)(3)(C).

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“bifurcated “ or “divisible” divorce; the court will sometimes sever the pension or property

division claim and reserve jurisdiction to decide those issues after the divorce. In other states the

court can enter property division order before the divorce is granted. The suspense date for the

deemed election should also be a mandatory entry on your docket control system. Also see

below as to the interaction of the member’s retirement date with the date of the SBP order.

5. Allocate Payment for the SBP Premium. The monthly premium for SBP coverage is 6.5% of

the base amount for active-duty retirements and about 10% for Reserve Component SBP, or

RCSBP cases (i.e., Guard/Reserve retirees who have chosen immediate coverage as soon as they

have served 20 creditable years). Federal rules require that this premium be deducted “off the

top,” that is, subtracted from the SM or retiree’s gross retired pay before the pension is divided.7

This has the effect of splitting the SBP premium between the SM/retiree and the former spouse

in the same ratio as their shares of the pension itself. For example, if John Doe, the retiree, is

awarded 60% of the pension, then he’ll wind up paying 60% of the SBP premium.

The government cannot change the premium allocation set out in the Uniformed Services

Former Spouses’ Protection Act for deduction of the premium from total before arriving at

disposable retired pay.8 The cost of SBP coverage may not be apportioned between the parties

by the retired pay center. A court order can, however, require one party to reimburse the other

for the cost of coverage; in this situation, if it is made clear that this is a private matter between

the parties, the retired pay center will not object since it doesn’t involve changing federal rules.

Additionally, you can actually shift the premium to the former spouse by reducing her nominal

share of the pension, and the retired pay center will honor the order. The premium can also be

shifted to the SM/retiree in a similar manner. This process is explained in the Silent Partner

info-letter, “Military Pension Division: The Servicemember’s Strategy.”9

6. Don’t Try for a “Mirror Award”. There are virtually unsurmountable problems associated

with trying to create an SBP amount at the death of the SM or retiree that mirrors the former

spouse’s pension award during the lifetime of the SM or retiree. If you happen to get the divorce

case when the SM is just about to retire from active duty, then you might be able to crank out the

numbers and make it work. Otherwise, leave it alone. No one can predict what an active duty

SM’s retired pay will be. That amount in most states is based on an unknown future marital (or

7 See 10 U.S.C. § 1408(a)(4). 8 Id. 9 See Note 3 above for the URL.

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coverture) fraction, and on a military pay table yet to be voted on by Congress. The retired pay

center will not honor an order which requires it to peg the SBP amount on the share of retired

pay that the former spouse is receiving.

7. Consider the Former Spouse’s Remarriage. If Jane Doe, the former spouse, has any plans for

remarriage, be sure to remind her about the “remarriage penalty.” Remarriage before she turns

55 suspends her SBP coverage. Coverage can be reinstated, however, if that remarriage ends in

divorce, death, or annulment.

8. Consider the SM’s Remarriage. What if the SM or retiree remarries? If John Doe’s former-

spouse beneficiary is suspended, then he may only obtain eligibility to make a new SBP election

by returning to court to obtain a modification of the prior court order requiring SBP coverage, so

that he may obtain SBP coverage for his present spouse. If, on the other hand, John ceases to

have an eligible spouse-beneficiary and he later remarries, he may decline coverage for the

subsequent spouse if he does so within the first year of marriage. 10 When he remarries,

therefore, his new spouse becomes a beneficiary unless there is a proper rejection of coverage

within the first year of marriage. If there is no requirement for former spouse coverage, then

John may use DD 2656-6, the change of beneficiary form, to request that his new wife be

covered by his SBP. If the SM or retiree dies less than one year from the date of marriage, the

new spouse will receive a refund of the premium payments. If it is longer, then she will be

qualified as his surviving spouse for SBP purposes, and she will receive 55% of the selected base

amount for the rest of her life, unless she remarries before age 55 (see Tip 7).11

9. No Subdivisions in “SBP City.” Note that SBP is a unitary benefit. It cannot be subdivided.

It’s either the property of one’s former spouse or one’s current spouse, “your EX or your

NEXT.”

10. Put a Price Tag on It. When the SM or retiree’s spouse has rejected every divorce settlement

option and still demands SBP coverage, it’s time to value the asset. Get an expert witness to

"price the SBP" so that spouse is charged with the present value of this deferred annuity. If Jane

Doe is faced with the cost of this benefit, which may be $50,000, $100,000, or even more, she

may be forced to rethink that simple approach of "I demand it." She will have to start thinking

about a new issue: "If you want to buy it, then you'll be charged with the price on the tag" for the

10 10 U.S.C. § 1448(a)(2)(A). 11 A change in the law in December 2015 makes it possible for the retiree to make an election of his new spouse upon the

death of a former spouse who was the SBP beneficiary.

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present value.12

11. If the Wording Was Flawed, Get a Clarifying Order. When the court’s order contains faulty

language (see APPENDIX below for some examples) and the submission to the retired pay

center is rejected, file a motion to ask the court to amend or clarify the prior order, so that it will

be honored by the government. In this situation, the FS should be able to do her “deemed

election” within one year of the entry of the properly worded order.

12. If a Deadline was Missed, Try to Correct the Military Record. Often a party will not

recognize that there is a one-year deadline to register the former spouse election for SBP. When

this happens, sometimes the Board for the Correction of Military Records (BCMR) for the SM or

retiree’s branch of service (e.g., Coast Guard, Air Force) can remedy the problem.13 The request

must be made within three years of the error (that is, the entry of a divorce or pension division

order without follow-up in submitting the decree to the retired pay center), or discovery of the

error. Use DD Form 149 for the petition. If you’re new to this, be sure to associate competent

co-counsel on the case, one who has done this kind of work previously.

13. Survivor Benefit Plan Coverage – The Timing Trap. Retirement can be another deadline.

Sometimes the member is divorced before retirement, but the divorce decree does not contain

proper terms and acceptable language requiring him or her to make a former-spouse SBP

election. Perhaps the court has severed the claims and held open the issues of military pension

division and SBP for a later hearing. Maybe the attorneys have agreed on SBP but put off the

writing of a supplementary order. In some cases, there is an order but the SBP language is

faulty. In any event, if the member retires and chooses no coverage or elects spouse (or spouse

and child) coverage, any subsequent FS SBP order will arrive too late at the retired pay center. If

the member does not make the FS election by the time of retirement, then it cannot be made

afterwards. The DoDFMR makes this retirement deadline clear in two sentences:

• If the former spouse is the member’s former spouse at the time the member becomes eligible

to participate in SBP, an election for former spouse must take place at or before the

member’s retirement.

and

12 For more on valuation and SBP, see the Silent Partner, “Defending Against SBP” at the website cited at Note 3 supra. 13 10 U.S.C. § 1552.

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• If a member has a former spouse upon becoming eligible to participate, but is not required

by a court order or court-approved agreement to provide former spouse coverage, any

subsequent court order that requires former spouse coverage will not be honored.14

Thus the key warning for these cases is to watch out for the divorce impact on FS SBP when the

dissolution (e.g., the “status divorce”) takes place before retirement but the related issues (such as SBP)

won’t be ruled upon by the court until after retirement.15

APPENDIX - Unacceptable SBP Language

Problems with SBP language often occur because the parties, their lawyers or the judge do not

understand how the SBP works, what the benefits are, how it is paid for and what deadlines apply. The

examples below represent unacceptable language which will not be honored by the retired pay center:

(1) The former spouse may receive the Survivor Benefit Plan if she is fully responsible for payments

for coverage, with no liability for the Husband.

This clause doesn’t allocate the Survivor Benefit Plan to the Wife; it makes a conditional offer to her

based on her payment of the premium. The order needs to award SBP to her unconditionally.

(2) The Wife is entitled to the Spouse Benefit Protection plan.

The language doesn’t award the Survivor Benefit Plan to the former spouse and it doesn’t require an

election. If the court reviews and clarifies the language, however, then the ex-wife may be able to

obtain coverage so long as the Husband is ordered to make the election for her as former spouse and the

election is made before retirement.

(3) The former spouse is awarded one-half of the Husband’s military retirement benefits, including

but not limited to one-half of his total retired pay, his Survivor Benefit Plan, and any other benefits due

to his military service.

The phrasing is faulty since it tries to award half of the SBP. Survivor Benefit Plan coverage is “all or

nothing.” It cannot be subdivided. It cannot be apportioned between successive spouses. Either the

former spouse receives SBP coverage or she does not.

14 DoD 7000.14-R, Department of Defense Financial Management Regulation (DoDFMR), Military Pay Policy and

Procedures – Retired Pay, Vol. 7B, ch. 43, §430503. For a member of the Guard or Reserve, the former-spouse election

must be filed within 90 days after receipt of the Notice of Eligibility, which each Guard and Reserve member receives upon

attaining 20 creditable years of service (the “20-year letter). Id. 15 Note that, if both the divorce and a proper SBP order are obtained before retirement, the former spouse has one year from

the date of the requiring court order to submit a deemed election, as set out above. Her deemed election will trump, for

example, the member’s spousal election at retirement (e.g., he remarried and selected spouse coverage instead of former-

spouse coverage which the court order required).

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(4) The former spouse is entitled to a share of the Survivor Benefit Plan. The amount that she

receives will be the same as the amount which she is awarded as a share of the military pension.

While this clause appears to aim at a fair and just result (i.e., a “mirror share” for Jane Doe, giving her

the same amount after the ex-husband’s death as she was receiving during his lifetime), it will not be

accepted. The retired pay centers do not do calculations to effect a mirror image for life and for death of

payments to the former spouse.

(5) The former spouse is awarded the Survivor Benefit Plan, and the Husband shall make this

election. She will receive 50% of the base amount (his full retired pay) if he dies before her.

The benefit for SBP is set by federal law. It’s always 55% of a designated amount or of a share of the

pension. So long as the member hasn’t yet elected the base amount, which is done upon retirement, it

can specify his full retired pay or a lesser amount, down to $300 a month; if he’s married at the time of

designation, his spouse will need to consent to the decision. But the 55% cannot be changed, and thus

the wording is flawed and unacceptable.

(6) The former spouse is awarded SBP coverage consistent with the rules set out in the Perkins case,

140 Mo. App. 123, 44 S.W.3d 345 (1999).

The retired pay center cannot interpret or implement rules of property division in state law when they

are used to award SBP coverage.

(7) Although the Wife is entitled to 42.5% of the Husband’s military retired pay, she is ordered to

receive only 36% since she will be required to pay for the Survivor Benefit Plan, which has a premium

of 6.5%.

This will be rejected for two reasons. First, it does not award the Wife SBP coverage; it only says how

it will be paid for.). The second reason is that it does not require the Husband to make an election for

her.

In addition, note that its math is faulty. While 6.5% of the base amount is the premium (except for

Reserve Component SBP cases), correct calculations do not involve subtracting 6.5% from the Wife’s

share; she is already paying a portion of the SBP premium, since it’s subtracted “off the top” before

arriving at disposable retired pay, which is what the retired pay center divides between the parties under

10 U.S.C. §1408(a)(4). If the goal is to reduce the Wife’s share of the pension to require her payment of

the entire SBP premium, the process to be applied is found in the Silent Partner info-letter, “Military

Pension Division: The Servicemember’s Strategy.”16

16 See Note 3 above for the URL.

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(8) The Husband will immediately elect former-spouse coverage for Jane Doe, and the full cost of

the premium will be withheld by the retired pay center so that the Husband is indemnified and held

harmless as to this expense.

The retired pay center may not reject the order containing this language, but it certainly won’t enforce

the premium-shifting specified in it. Federal law (that is, the Uniformed Services Former Spouses’

Protection Act, 10 U.S.C. §1408(a)(4)) states that the SBP premium must be deducted from the gross

pay of the retiree. That is, it comes “off the top” before disposable retired pay, or DRP, is attained.

Since it is a mandatory deduction from total retired pay, the pay center cannot change this.

Rev. 7-6-16

* * * This SILENT PARTNER was prepared by COL Mark E. Sullivan (USA-Ret.). For revisions, comments or corrections, contact

him in Raleigh, N.C. - 919-832-8507, or at [email protected].

260

SILENT PARTNER Guidance for Lawyers: Military Pension Division

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the Military

Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s Committee on Legal

Assistance for Military Personnel. There are many Silent Partner infoletters on military family law issues. Just go to

www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov > For Lawyers. Please send any

comments, corrections and suggestions to the address at the end of this document.

Table of Contents I. “Some background music, maestro!” .............................................................................................................. 2

II. Documents Needed to Apply for Military Pension Division ......................................................................... 2

III. USFSPA Requirements for Payments from the Retired Pay Center ............................................................ 3

A.Servicemembers Civil Relief Act (SCRA) ................................................................................................. 3

B. Dividing the Military Pension as Property ................................................................................................ 3

(1) The “10/10” requirement ..................................................................................................................... 3

(2) USFSPA Jurisdiction ............................................................................................................................ 4

IV. LANGUAGE DIVIDING MILITARY RETIRED PAY ............................................................................. 5

A. Types of pension division awards ............................................................................................................. 5

B. The Fixed Dollar Amount and the Percentage........................................................................................... 5

C. The formula clause .................................................................................................................................... 7

(1) Member Qualifying for Active-Duty Retirement ................................................................................... 7

(2) Guard/Reserve Retirement .................................................................................................................... 8

D. Hypothetical retired pay awards ................................................................................................................ 8

(1) Retired Pay Base and Multiplier .......................................................................................................... 8

(2) Specific Pay Information, Variables ..................................................................................................... 9

(3) CSB/REDUX and TERA ..................................................................................................................... 10

(4) Example of a hypothetical retired pay calculation ............................................................................. 10

(5) Example of a hypothetical retired pay calculation ............................................................................. 11

(6) Examples of active duty hypothetical awards ..................................................................................... 11

(7) Guard/Reserve hypothetical awards ................................................................................................... 12

E. Unacceptable former spouse award language .......................................................................................... 13

F. Correcting deficient awards ..................................................................................................................... 14

Notarized statement of parties clarifying court order dividing military retired pay ......................................... 15

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I. “Some background music, maestro!” In 1981 the U.S. Supreme Court decided in McCarty v. McCarty1 that state courts lacked the

power to divide military retired pay as marital or community property in divorce, since Congress had

preempted the field and had not indicated any room for state laws impinging on the nationwide and

uniform military retirement system. In response, Congress enacted the Uniformed Services Former

Spouses’ Protection Act (USFSPA) in 1982. USFSPA allows the courts of U.S. states and territories to

treat military retired pay as community or marital property and to divide it between the spouses at

divorce.

USFSPA allowed Congress to create rules that govern the division of military retired pay. The

lawmakers sought to create a system which was fair for servicemembers (SMs), given their mobility in

regular reassignments and their unavailability during deployment status. These facts of life for SMs

create significant difficulties in civil litigation. To address this, USFSPA requires that if a SM is

divorced while on active duty, the requirements of the Servicemembers Civil Relief Act (SCRA)2 must

be met before the court can enter an order that divides military retired pay.3

Congress was also concerned about the importance of fairness in the process from the standpoint

of the former spouse. A balanced approach was the course chosen by Congress, leaving to the states

such issues such as vesting of pension benefits, the marital or coverture fraction, the use and valuation

of a survivor annuity, and the division of “final pay” vs. division of the benefit earned at time of divorce.

With certain exception (explained below), military pensions are, in many respects, divided just like any

other defined benefit plan, with most of the rules set out by state law.

USFSPA sets out specific federal jurisdiction requirements that must be met for the court to

divide the military pension as property.4 The Act also limits the amount of the SM’s pension which can

be paid to a former spouse (FS) to 50% of disposable retired pay when military retired pay is divided as

property.5

For the retired pay center to make payments to the FS out of a military pension that was divided

as property (not alimony or child support), USFSPA requires the parties to have been married 10 years

or more while the SM performed at least 10 years of service creditable towards retirement eligibility.6

Finally, USFSPA specifies how an award of military retired pay must be expressed,7 and it also provides

the FS with a means of enforcing a court order for alimony (also called maintenance or spousal support)

and/or child support.8

II. Documents Needed to Apply for Military Pension Division To divide retired pay, a court order is needed. The original version of “Guidance on Dividing

Military Retired Pay” contained a sample military retired pay order, and the same example is found at

Figure 1 in the DoDFMR, Vol. 7B, ch. 29. Beware – these sample orders contain significant omissions.

They contain no mention of former-spouse coverage under the Survivor Benefit Plan, and they omit any

reference to indemnification (i.e., reimbursement of the former spouse if the retiree elects post-divorce

to receive disability pay and this reduces the FS’s share or amount of the pension). A better military

1 McCarty v. McCarty, 453 U.S. 210 (1981). 2 50 U.S.C.App. 501 et seq. 3 10 U.S.C. §1408(b)(1)(D). 4 10 U.S.C. § 1408(c)(4). 5 10 U.S.C. § 1408 (e)(1). 6 10 U.S.C. § 1408 (d)(2). 7 10 U.S.C. § 1408 (a)(2)(C). 8 See 10 U.S.C. § 1408(a)(2)(B); 10 U.S.C. § 1408(d)(1).

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pension division order will be found at the end of the SILENT PARTNER, “Getting Military Pension

Order Honored by the Retired Pay Center.” USFSPA defines a court order dividing military retired pay enforceable under the Act as a “final

decree of divorce, dissolution, annulment, or legal separation issued by a court, or a court ordered,

ratified, or approved property settlement incident to such a decree.” 9 This also includes an order

modifying a previously issued court order. Since military retired pay is a federal entitlement, and not a

private pension plan administered under ERISA, the Employee Retirement Income Security Act of

1974, the order which divides military retired pay is not a qualified pension plan, and thus one does not

use a Qualified Domestic Relations Order (QDRO). It is sufficient if the pension division is stated in the

divorce decree or other related court order in an acceptable manner. Additionally the retired pay center

is not joined as a party in the divorce or property division case.

To apply for payments under USFSPA, the spouse or FS needs to obtain a copy of the applicable

court order, certified by the clerk of court, and submit it to the retired pay center along with the

completed application form (DD Form 2293).10 Instructions, including designated agent names and

addresses, are on the back of the form. The Defense Finance and Accounting Service (DFAS) has

published forms, frequently asked questions and instructions which can be downloaded from the DFAS

website at www.dfas.mil.

III. USFSPA Requirements for Payments from the Retired Pay Center A.Servicemembers Civil Relief Act (SCRA)

The provision of the SCRA11 that has primary application to the USFSPA and the division of

military retired pay is the section concerning default judgments against active duty service members.12

This section requires that if an active-duty defendant has not made an appearance in a legal proceeding,

the plaintiff must file an affidavit with the court advising as to the military status of the servicemember-

defendant. The court is required to appoint an attorney to represent the interests of the absent

defendant.13 If the SM has grounds to ask the court for re-opening or vacating a judgment that was

entered against him in violation of this section of the law, he may file such a request during active duty

or within 90 days after separation from active-duty service. 14 He must prove that his military duties had

a material effect on his ability to defend himself and that he has a meritorious or legal defense.

B. Dividing the Military Pension as Property

(1) The “10/10” requirement

The division of military retired pay as marital or community property (not the allocation of

pension payments for child support or alimony) has certain specific requirements. First and foremost is

the requirement that the FS must have been married to the SM/retiree for at least 10 years during at least

10 years of service creditable toward retired pay. Logically enough, this is known as the “10/10 rule.”

9 10 U.S.C. § 1408(a)(2). 10 Department of Defense Financial Management Regulation (DoDFMR), Vol. 7B, ch. 29, § 290401.A. The Regulation is at

https://comptroller.defense.gov/fmr/current/07b/Volume_07b.pdf. 11 Supra note 4 12 50 U.S.C. App. § 521. 13 50 U.S.C. App. § 521(b). 14 50 U.S.C. App. § 521(g)(2).

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The retired pay center cannot make payments to the FS when retired pay is divided as property unless

the “10/10 rule” is met.15

This rule doesn’t affect the power of the judge to divide military retired pay. It simply affects

the enforcement powers of the court by monthly garnishment of retired pay through the retired pay

center. The rule cannot be waived since it is in the federal statute. While it is always possible for the

retiree to start an allotment for payments to the FS, an allotment can be stopped as easily as it can be

started and the FS lacks the protection of a court-ordered payment from the retired pay center.

Another substantial advantage of “direct pay” from the retired pay center is related to taxes. If

DFAS pays the former spouse directly, then those pension-share payments are reported on her or his

own Form 1099-R, instead of all taxable retired pay being reported on the retiree’s Form 1099-R and

being taxed to the retiree. The Retiree Account Statement each month shows “FSPA payment” which

refers to the pension-share payment to the former spouse, and this sum is excluded from the taxable

income of the retiree.

If the retired pay center cannot determine from the court order whether the 10/10 requirement

has been met, the FS will need to provide a copy of the parties’ marriage certificate. A recitation in the

court order such as, “The parties were married for 10 years or more while the member performed 10

years or more of military service creditable for retirement purposes” will satisfy the 10/10 requirement,

unless the marriage certificate shows otherwise.

(2) USFSPA Jurisdiction

The terms for a court’s exercising jurisdiction under USFSPA are found at 10 U.S.C. §

1408(c)(4). This is just as important as the “10/10 rule.” If an order dividing military retired pay does

not comply with this, it’s “dead in the water.” The application for direct payment of retired pay as

property under the USFSPA will be rejected.

To have the authority to divide military retired pay, the court must have what DFAS garnishment

employees call “(c)(4) jurisdiction” over the military member or retiree, that is, jurisdiction pursuant to

10 U.S.C. § 1408(c)(4). There are three alternative tests under this section of the statute.

The first of these is when the SM or retiree has consented to the jurisdiction of the court. Under

state law rules, this would usually be when the retiree or SM indicates his or her acceptance of the

court’s authority by taking some affirmative action with regard to the legal proceeding, such as filing a

motion or a pleading in the case. Simply receiving notice of filing of the divorce complaint or petition is

not sufficient. Consent is the most common way for a court to have “(c)(4) jurisdiction” over a member,

since – like most domestic cases – most military pension division cases are settled, not tried.

Another way in which the court can exercise “(c)(4) jurisdiction” is for the member to be a

resident of the state at the time of divorce other than because of his or her military assignment. This

might be the case, for example, if the SM were stationed at Ft. Belvoir, Virginia, but he lived in

Maryland to be near his parents or because the lodging was cheaper there; in this case, Maryland could

exercise jurisdiction over his military pension.

A third method of exercising jurisdiction is domicile. The courts of the state where the

SM/retiree has his state of legal residence, or domicile, may divide his military retired pay at the time of

the divorce. The court decides where the individual’s domicile is, according to state rules, statutes and

15 See Baka v. United States, 74 Fed. Cl. 692,698 (2006). See also DoDFMR, Vol. 7B, § 290604.B.

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cases. Regardless of which test is used, the court order must specify the basis for the exercise of

jurisdiction.

IV. LANGUAGE DIVIDING MILITARY RETIRED PAY A. Types of pension division awards

The amount of a former spouse’s award is entirely a matter of state law. However, in order for

the award to be enforceable under USFSPA, it must be expressed in a manner consistent with the

USFSPA, and it must be sufficiently clear so that the retired pay center can calculate or determine the

amount of the award. The Act states that for a retired pay as property award to be enforceable, it must be

expressed either as a fixed dollar amount or as a percentage of disposable retired pay.16 Additionally,

pursuant to the Department of Defense Financial Management Regulation (DoDFMR), Volume 7B,

Chapter 29, paragraphs 290607 and 290608, if the parties are divorced before the receipt of retired pay,

the court order may state the pension division in terms of a formula or as a percentage of a hypothetical

retired pay amount. The retired pay centers consider the “formula clause” and a hypothetical award to be

types of percentage awards.

B. The Fixed Dollar Amount and the Percentage

The fixed dollar amount means that a specific amount per month is to be provided in the court

order. Such an award might read, “John Doe will pay his wife, Jane Doe, the sum of $400 from his

retired pay as her share of the military retired pay he acquired during the marriage.” This type of clause

does not entitle the former spouse to any of the COLAs (cost-of-living adjustments) regularly received

in regard to the member’s retired pay.17 COLAs can increase the value of the pension (and the FS’s

share) substantially over time. This type of pension division award is uncommon.

The most common method of expressing the former spouse’s award when the former member is

in pay status is the “percentage award.” When all the numbers are known, the share of the FS is stated

as a percentage of the member’s retired pay.18 This benefits the former spouse of increasing the amount

of his or her award over time due to COLAs.

The retired pay center calculates all percentage awards using the retiree’s disposable retired pay

(DRP), which is gross retired pay less authorized deductions.19 The primary authorized deductions

presently are a) retired pay waived to receive VA disability compensation, b) military disability retired

pay, and c) Survivor Benefit Plan (SBP) premiums where the FS is elected as the beneficiary.20

If the amount of the former spouse’s award is expressed as a dollar amount or percentage of

disposable retired pay less the amount of some other obligation (e.g., the amount of the Survivor Benefit

16 10 U.S.C. § 1408(a)(2)(C). 17 DoDFMR, Vol. 7B, § 290601.C. (“A retired pay award expressed as percentage will automatically receive a proportionate

share of the member’s cost-of-living adjustments, while one expressed as a fixed amount will not.”). See also DoDFMR, Vol.

7B, § 290902. 18 According to DoDFMR, Vol. 7B, § 290601.D., DFAS “will construe all percentage awards (such as a percentage of gross

retired pay) as a percentage of disposable retired pay, regardless of the language in the order.” Thus one can phrase the

general settlement, divorce decree or pension order in terms of dividing “retired pay,” “pension,” “retirement,” or even

“deferred military compensation.” The retired pay center will still treat the order or decree as dividing DRP (disposable

retired pay). 19 10 U.S.C. §1408(a)(4). See also DoDFMR, Vol. 7B, § 290701. 20 DoDFMR, Vol. 7B, § 290601.D. In Mansell v. Mansell, 490 U.S. 581, (1989), the United States Supreme Court ruled that

Congress authorized the division at divorce of only disposable retired pay, not gross retired pay. Thus the regulation

provides that all percentage awards are to be construed as a percentage of disposable retired pay.

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Plan premium or the former spouse’s child support obligation), the entire award may be unenforceable.

This is because such award language does not meet the statutory requirement of a fixed dollar amount or

percentage. In addition, tying a FS’s award to some other figure that is subject to change (such as the

SBP premium), renders the former spouse’s award indeterminate, which means that it cannot be

established in the retired pay system.

Similarly, set-offs against the former spouse’s award are not permitted.21 Although the award

language may be otherwise acceptable, if a provision of the order requires that another amount be set off

from the FS’s share, such as the SBP premium or another financial obligation that the former spouse

owes the member, the set-off is unenforceable. This is because there is no provision in the USFSPA that

authorizes enforcement of a set-off against the former spouse’s retired pay as a property award.22

There is no required phrasing or “magic language” for a percentage award or fixed dollar

amount. All the court order needs to say is the following:

Example 1: “The former spouse is awarded _______ percent [or dollars per month] of the member’s military retired pay.”23

21 DoDFMR, Vol. 7B, § 290903. 22 The primary set-off or “other deduction” found in MPDO’s is the shifting of the SBP premium. Orders will sometimes

use language such as, “The premium for SBP coverage by the ex-wife will be deducted by DFAS from her share of the

pension,” or “The Plaintiff-Husband will pay the cost of former-spouse coverage for the Defendant, and he will instruct the

retired pay center to subtract the full amount of the premium solely from his portion of the retired pay.” Pursuant to 10

U.S.C. § 1452, the SBP premium must be deducted from the member’s retired pay. The SBP premium cannot be deducted

from the former spouse’s portion of the member’s retired pay. Any provision in a court order stating that the premium

should be deducted from the former spouse’s portion is unenforceable by DFAS, Garnishment Operations. The former

spouse and the member may make alternate payment arrangements outside of the procedures of this Chapter, or else they

may adjust their shares of the pension (if all the numbers are known) to achieve the same result.

23 Throughout this info-letter, the author has used “military retired pay” instead of the term in the original DFAS publication,

“disposable retired pay,” or DRP, in the wording of acceptable clauses. Here is the rationale for this.

When one represents the former spouse, consider what happens if the court uses the restrictive federal statutory language,

“disposable retired pay.” If the servicemember makes a post-divorce election of disability pay, this may reduce the share of

the FS due to the “VA waiver” found at 10 U.S.C. § 1408 (a)(4). VA disability pay received by the SM may reduce the FS’s

amount of the pension, and when there is no indemnification language covering this, the judge may simply rule that the FS is

still getting her awarded share of the disposable retired pay, even though it’s a dramatically lower number.

A far-fetched example? Think again – or do some research. Such a situation occurred in a 2009 Texas case. The appellate

court denied relief to the FS when the retired pay order at divorce was expressed as a percentage of disposable retired pay,

and then afterwards the retiree elected Combat-Related Special Compensation (CRSC) under 10 U.S.C. § 1413a. This

election meant that all of his existing VA disability compensation was subtracted from his retired pay to arrive at DRP,

significantly reducing the amount that the FS would receive when compared to her amount before the CRSC election. The

divorce decree made no mention of benefits other than “disposable retired or retainer pay” as divisible property. It was not

written in terms of total retired pay or “gross retirement benefits.” Thus the opinion chose to divide exactly what the trial

judge selected for division, “disposable retired pay.” Sharp v. Sharp, 314 S.W. 3d 22 (Tex. App. 2009). The Sharp case does

not stand alone. A similar problem is found in these cases: Jackson v. Jackson, 319 S.W. 3d 76 (Tex. App. 2010); Brouillette

v. Brouillette, 18 So. 3d 756 (La. Ct. App. 2009); Youngbluth v. Youngbluth, 6 A. 3d. 677 (Vt. 2010); Williams v. Williams,

167 N.C. App. 373, 605 S.E.2d 266 (2004) (unpub.); and Pierce v. Pierce, 982 P. 2d 995 (Kan. App.‘99).

Remember that, regardless of the language employed, the retired pay center will treat what’s divided as DRP. Thus when

one is representing the former spouse, “retired pay” or “the military pension” should be employed, not “disposable retired

pay.”

Conversely, when one is representing the retiree or servicemember and there is to be no consideration of indemnification in

a VA waiver situation, the clause should specifically state “disposable retired pay” as what is divided. And it ought to

include a specific reference to 10 U.S.C. 1408 (a) (4) so that subsequent judges and appellate courts will be aware of what

was intended to be deducted from total retired pay to arrive at what was supposed to be divided with the former spouse.

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Blanks in the examples represent numbers that must be provided to implement the court order.

C. The formula clause

Except for Florida, Texas, Oklahoma, Tennessee and Kentucky, virtually all states use the “time

rule” to divide defined benefit pensions. The “time rule” states that it is the actual retired pay of the

member which is divided, and the share of the FS is based on the marital or coverture fraction, typically

made up of the months of marital pension service divided by the member’s total pension service. This

means the insertion of an algebraic formula in the pension clause, since the denominator of the marital

fraction is unknown while the individual is still serving. Such a clause might read, “John pays Jane 50%

of 120 months/x times his retired pay.”

The FS’s award is usually calculated by multiplying the marital fraction by ½ or 50%; the court

or the parties, however, can provide a different percentage. This award will automatically include a

proportionate share of COLAs.24

If the court order provides a variable which is incorrect, the parties need to get the variable

corrected by the court or through a notarized statement (shown below at Appendix A. The retired pay

center cannot change a number specifically stated in the order. If a court order provides a formula

award and also provides all the variables necessary to compute the formula, then the center will

complete the calculation using those variables. If the order contains a percentage award and it also

states the formula the court used to determine the percentage, the retired pay center will implement the

percentage as provided in the order, regardless of how the court determined it.

Formula clauses always require the pay center to insert a variable before completing the

computation. In these cases, the following DFAS guidance applies –

(1) Member Qualifying for Active-Duty Retirement

For SMs who qualify for retirement from active duty, the numerator of a marital fraction is

usually the total period of time from marriage to divorce or separation (depending on state law) while

the SM was performing creditable military service. The numerator of the marital fraction must be stated

in whole months.25 If the numerator is expressed in terms of years or days, the center will convert it to

months by rounding down to the nearest whole month and dropping any odd days or partial months.

Failing to provide the number to be used in the numerator will cause the court order to be rejected.

The retired pay center will supply the denominator in whole months of creditable service for

multiplier purposes, and then it will work out the formula to determine the FS’s award as a percentage

of disposable retired pay. All computations are carried out to four decimal places.

Example 2. The following language is an example of an acceptable way to express an active duty

formula award:

“The former spouse is awarded a percentage of the member’s military retired pay, to be computed by multiplying ____% times a fraction, the numerator of which is ______ months of marriage during the member’s creditable military service, divided by the member’s total number of months of creditable military service.”

24 DoDFMR, Volume 7B, § 290601.C 25 DoDFMR, Volume 7B, § 290607.A. and B.

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For example, assume that the parties’ marriage lasted exactly 12 years (or 144 months) during

the member’s military service. If the parties have agreed to use 50% as the percentage element of the

formula, then the active duty formula award might read “50% times a fraction, the numerator of which

is 144 months divided by the member’s total number of months of creditable military service.” If the

member serves for a total of 25 years (or 300 months) and then retires, the FS would receive ½ x

(144/300) = 24.0000% of the member’s disposable retired pay.

(2) Guard/Reserve Retirement

If the order provides a formula award to divide a non-regular retirement (i.e., National Guard or

Reserve), then it must provide the numerator of the marital fraction expressed in terms of reserve

retirement points earned during the marriage. 26 An order that fails to provide the numerator expressed as retirement points earned during the marriage will be rejected. The pay center will

supply the SM’s total reserve retirement points for the denominator, carrying out the computation to

four decimal places.

Example 3. Here is an example of an acceptable way to express a non-regular retirement formula

award:

“The former spouse is awarded a percentage of the member’s military retired pay, to be computed by multiplying ____% times a fraction, the numerator of which is _______ retirement points earned during the period of the marriage, divided by the member’s total number of reserve retirement points earned.”

D. Hypothetical retired pay awards

A hypothetical retired pay award is one that is expressed as a percentage of a hypothetical retired

pay amount which is different from the member’s actual retired pay. 27 If the court order uses a

hypothetical award, it is usually figured as if the member had retired on the date of separation or

divorce. Some jurisdictions use hypothetical awards to divide military retired pay, and some parties –

regardless of the state rules for dividing pensions, decide to settle using a hypothetical award. This

award does not give the former spouse the benefit of any of the member’s pay increases due to

promotions or increased service time after the divorce. Since a hypothetical award also works out to a

percentage of disposable retired pay, hypothetical awards are a type of percentage award, and as such

would automatically include a proportionate share of the member’s COLAs.28

(1) Retired Pay Base and Multiplier

The basic method for computing military retired pay is to multiply the member’s retired pay

base times the retired pay multiplier.29 The standard retired pay multiplier is the product of two and

one-half percent (2.5% or .025) times the member’s years of creditable service.30 For example, the

retired pay multiplier for an active duty member who serves 20 years will be 50% (.025 x 20 = 50%);

the retired pay multiplier for an active duty member who serves 25 years will be 62.5% (.025 x 25 =

62.5%).

26 Id. 27 The hypothetical retired pay amount is a fictional computation, in that the member often does not have the required 20

years of creditable service necessary to be eligible to receive retired pay on the date his or her retired pay is divided. Hence,

the retired pay center will compute a retired pay amount as if the member would have been eligible to retire on that date. 28 DoDFMR, Volume 7B, § 290601.C. 29 DoDFMR, Volume 7B, § 030101. 30 DoDFMR, Volume 7B, § 030101.B.1.

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The years of creditable service for a reservist are computed by dividing the Guard/Reserve

retirement points on which the award is to be based by 360.31 For example, 5,258 retirement points

would convert to 14.61 years of service for multiplier purposes (5,258 points/360 = 14.61 years).

There are different rules for SMs who entered military service on or after August 1, 1986, are

under the age of 62, and elect to participate in the CSB/REDUX retirement system. Their retired pay

multiplier is reduced one percentage point for each full year of service less than 30, and 1/12th of one

percent for each full month. Retired pay is recomputed using the standard multiplier when the member

attains age 62.32

For members entering military service before September 8, 1980, the retired pay base is the

member’s final basic pay. This figure is determined by the pay table in effect at the time of retirement,

and is based on the member’s rank and years of service for pay purposes.33 Parties can obtain the basic

pay amounts by looking at the military basic pay tables. Basic pay tables are available at the DFAS Web

site at www.dfas.mil > Military Pay > Military Pay Tables. Attorneys should be able to obtain the basic

pay figure either from the member or from the applicable pay table.

For members entering military service after September 7, 1980, the retired pay base is the

average of the member’s highest 36 months of basic pay.34 This is known as the “High-3” amount, and

it is usually the last 36 months before retirement. Thus the hypothetical retired pay base would normally

be the average of the member’s highest 36 months of basic pay prior to the hypothetical retirement date.

This information is specific to each member.

(2) Specific Pay Information, Variables

This specific pay information can be obtained from either the member during discovery or from

his pay center by court order or a judge-signed subpoena. The retired pay center garnishment office does not have access to this pay information. It must be included in the court order dividing military

retired pay. The retired pay computation is rounded down to the next lower multiple of $1. For

example, $1,501.75 would be rounded down to $1,501.

A hypothetical retired pay amount is computed the same way as a member’s actual military

retired pay, but it is based on variables that apply to the member’s hypothetical retirement. Those

variables are shown as blanks in the following examples of acceptable award language. The principal

problem DFAS encounters in hypothetical awards is that necessary variables for the hypothetical retired

pay computation are left out of the court order. These variables must be provided in the applicable court order; otherwise the court order will be rejected. To put it another way –

• The “hypo” is the most difficult clause to write.

• It is not even required as a general rule; only five states mandate this type of clause.

• As a result, the client who demands this approach to pension division, or the attorney who

insists on this type of award, should be well warned in advance. It is often necessary to hire a

specialist or a consultant to help fix the defective award after it has been rejected by the retired

pay center.

• To avoid these problems, counsel should stick to the approved language. This is not the time

to “wing it” or make up your own language, to see if it’ll work with the pay center. Stick to

31 DoDFMR, Volume 7B, § 030105.B. 32 DoDFMR, Volume 7B, § 030201.B. 33 DoDFMR, Volume 7B, § 290608.D.1. 34 DoDFMR, Volume 7B, § 290608.D.2.

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the rules, adhere scrupulously to the approved, acceptable language. You won’t go wrong if

you follow the templates. You’re almost certain to be rejected if you try to make it up as you

go.

(3) CSB/REDUX and TERA

Members who elect to retire under the CSB/REDUX retirement system will have their

hypothetical retired pay amount calculated using the standard retired pay multiplier, and not the reduced

CSB/REDUX multiplier35 (unless the court order says otherwise). Thus, the former spouse’s award will

normally not be reduced as a result of the member’s electing to receive a Career Status Bonus (CSB)

and a reduced retired pay amount.

A SM who is retired under TERA (Temporary Early Retirement Authority) will have less than

20 years of creditable service, which requires application of a reduction factor to the retired pay

computation.36 This reduction factor is completely different than the CSB/REDUX factor listed above.

The only time the pay center would apply a reduction factor to the hypothetical retired pay calculation is

if a reduction factor was actually used to compute the member’s military retired pay. In that case, the

center would apply the same reduction factor to both computations.

(4) Example of a hypothetical retired pay calculation

The retired pay center will convert all awards of a percentage of a hypothetical retired pay

amount into a percentage of the member’s actual disposable retired pay. The method is as follows:

• First, the pay center will calculate the hypothetical retired pay amount. Assume that the court

order awarded the former spouse 25% of the retired pay of an E-6 with a retired pay base of

$2,040 and with 18 years of service retiring on June 1, 1999. The member actually retires on

June 1, 2002. The member’s hypothetical retired pay multiplier would be computed as: .025 x

18 years of service = .45 (or 45%). His hypothetical retired pay would be .45 x $2,040 (retired

pay base) = $918.00.

• Next, unless the court order directs otherwise, the center will apply retired pay cost-of-living-

allowances (COLAs) to the hypothetical retired pay amount up to the member’s actual

retirement date to find a “present value” of the hypothetical retired pay as of the member’s actual

retirement date.

The addition of the COLAs does not give the FS a benefit from the member’s additional service

time or promotions after the hypothetical retirement date. It simply provides the FS with the COLA

amount he or she would have received had the member actually become eligible to receive retired pay

on the hypothetical retirement date.37

In the above example, the SM would have been eligible for the following COLAs had he retired

on June 1, 1999:

December 1, 1999 1.7% $918.00 x 1.017 = $933.00

December 1, 2000 3.5% $933.00 x 1.035 = $965.00

December 1, 2001 2.6% $965.00 x 1.026 = $990.00.

35 DoDFMR, Volume 7B, § 030110. 36 DoDFMR, Volume 7B, § 030110.C. and 030211 37 DoDFMR, Volume 7B, ch. 8, Section 0804 deals with COLAs.

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Thus, if the SM had retired on the hypothetical retirement date (June 1, 1999), his hypothetical retired

pay would have been worth $990.00 per month at the time he actually retired on June 1, 2002.

(5) Example of a hypothetical retired pay calculation

The pay center will then convert the FS’s award to a percentage of the member's actual

disposable retired pay by multiplying the percentage awarded the FS by a fraction. The SM’s

hypothetical retired pay is the numerator of the fraction, and the SM’s actual retired pay is the

denominator.

In this example, assume that the SM later retired on June 1, 2002, as an E-7 with a retired pay

base of $3,200.40 and 23 years of creditable service. The actual retired pay multiplier would be .025 x

23 years= .575. His gross retired pay would be .575 x $3,200.40 = $1,840.00. The court order awarded

the former spouse 25% of the retired pay of an E-6 with a retired pay base of $2,040 and with 18 years

of service retiring on June 1, 1999. However, the former spouse’s actual award percentage would be:

25% times $990/$1,840 = 13.4510%. The pay center will set up 13.4510% in the retired pay system.

While the percentage has been reduced from 25% to 13.4510%, the amount the former spouse

would receive is the amount intended by the court. This is because the lower percentage would be

multiplied times the higher dollar amount of the member’s actual disposable retired pay. For example, in

this case assume that the SM’s disposable retired pay is equal to his gross retired pay. Twenty-five

percent of $990 is $247, which equals 13.4510% of $1,840. The retired pay system would apply

13.4510% to the member’s actual disposable retired pay each month to determine the amount the former

spouse receives. The FS would automatically receive a proportionate share of the SM’s COLAs.

For those SMs who elected CSB/REDUX, the pay center computes the FS’s initial percentage

using the member’s reduced retired pay amount as the denominator of the fraction. It would implement

this percentage in the retired pay system effective through the month the member attains age 62. It

would also calculate the former spouse’s percentage using the retired pay amount the member would

have received had the member not elected CSB/REDUX. It will also set this lower percentage up in the

retired pay system effective on the first day of the month after the SM attains age 62, which is also the

effective date of the re-computation of his retired pay to the amount he would have received had he not

elected CSB/REDUX.38 This adjustment prevents the former spouse from receiving more than the

amount intended in the court order.

(6) Examples of active duty hypothetical awards

The following are examples of acceptable active duty hypothetical awards.

Example 4. The following is acceptable for all active duty members, regardless of service entry date.

“The former spouse is awarded _____% of the military retired pay the member would have received had the member retired with a retired pay base* of $ (dollar amount) and with _______ years of creditable service on ________.”

*The retired pay base is a base pay figure. As noted above, the retired pay base is the final basic pay at

retirement for members entering military service before September 8, 1980, and the “High-3” amount

for member’s entering military service on or after September 8, 1980.

38 DoDFMR, Volume 7B, § 290608.I.

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Example 5. If a member entered military service before September 8, 1980, the following language is

also acceptable because we can determine the member’s retired pay base by simply looking at the

pertinent military pay table.

“The former spouse is awarded _____% of the military retired pay the member would have received had the member retired with the rank of _____ and with ____ years of creditable service on _____.”

The court order may direct the retired pay center to calculate a hypothetical retired pay amount

using the pay tables in effect at the time the member becomes eligible to receive military retired pay

instead of the pay table in effect at the time the court divides military retired pay. When this occurs,

then the court order dividing an active duty member’s military retired pay must provide: 1) the

percentage awarded the FS, 2) the SM’s rank to be used in the calculation, and 3) the years of creditable

service to be used in the calculation.

The pay center will make the hypothetical retired pay calculation using the basic pay figure from

the pay table in effect at the member’s retirement for the rank and years of service given in the court

order, regardless of whether the member entered military service before September 8, 1980, or on or

after September 8, 1980.

Example 6. The following language is an example of an acceptable active duty hypothetical award

based on the pay tables in effect at the member’s retirement.

“The former spouse is awarded _____% of the military retired pay the member would have received had the member retired on his actual retirement date with the rank of _______ and with _______ years of creditable service.”

(7) Guard/Reserve hypothetical awards

These are acceptable non-regular retirement (i.e., Guard/Reserve) hypothetical awards.

Example 7. The following language is acceptable for all reserve members, regardless of service entry

date.

“The former spouse is awarded _____% of the military retired pay the member would have received had the member become eligible to receive military retired pay with a retired pay base of $(dollar amount) and with _______ reserve retirement points on _______.” Example 8. The following language is also acceptable for reservists who entered military service before

September 8, 1980.

“The former spouse is awarded _____% of the military retired pay the member would have received had the member become eligible to receive retired pay on ___________, with the rank of ________, with _______ reserve retirement points, and with _______ years of service for basic pay purposes.”

If the order requires calculation of a hypothetical retired pay amount using pay tables in effect at

the time the SM becomes eligible to receive retired pay, it must provide: 1) the percentage awarded the

former spouse, 2) the member’s rank to be used, 3) the retirement points to be used, and 4) years of

service for basic pay purposes. The retired pay center will make the hypothetical retired pay calculation

using the basic pay figure from the pay tables in effect at the member’s retirement for the rank and years

of service given in the court order, regardless of whether the member entered military service before

September 8, 1980, or on or after September 8, 1980.

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Example 9. The following language is an example of an acceptable reserve hypothetical award based on

the pay tables in effect at the member’s becoming eligible to receive military retired pay.

“The former spouse is awarded _____% of the military retired pay the member would have received had the member become eligible to receive retired pay on the date he [or she] attained age 60, with the rank of ______ , with ______ reserve retirement points, and with _____ years of service for basic pay purposes.” E. Unacceptable former spouse award language

Problems with award language usually occur when the parties are divorced prior to the member’s

becoming eligible to receive military retired pay. The examples below represent unacceptable language

which will not be honored by the retired pay center:

(1) The former spouse is awarded 50% of the community interest in the member’s military retired

pay.

This clause doesn’t say how to calculate the community interest. Nor does it provide any of the variables

necessary to make such a calculation using either a formula or hypothetical retired pay award.

(2) The former spouse is awarded half of the member’s military retirement that vested during the

time of the marriage.

“Vesting” is a state law concept. There are no more than three states which recognize it as a factor or

qualification in the divisibility of retirement benefits, including military retired pay. The retired pay

center does not know when vesting occurs in the particular state which may be involved, what the rules

for vesting are, or what data should be used to calculate the amount of the former spouse’s award.

(3) The former spouse is awarded one-half of the accrued value of the member’s military retirement

benefits as of the date of the divorce.

Military retired pay is a statutory entitlement. It is not a “retirement plan,” and it has no accrued value

prior to the member retiring since it is a defined benefit plan, not a defined contribution plan. As with

the other examples above, this clause fails to provide any specifics as to how to calculate the amount of

the former spouse’s award. In cases and clauses like this, DFAS and the Coast Guard Pay and Personnel

Center do not do calculations; they implement calculations!

(4) The former spouse is entitled to 42% of the member’s military retirement based on the amount

he would have received had he retired as of the date of the divorce.

This looks somewhat like a hypothetical award, but it does not provide the retired pay center with the

data necessary to calculate a hypothetical retired pay amount. The garnishment office at DFAS does not

have access to the member’s military service information, so it cannot do the calculations and

computations. Neither retired pay center has the personnel or the regulatory mandate to go and figure

out what a hypothetical amount might be in a divorce case. The court order must supply the information

to the retired pay center, so that it can be implemented.

(5) The former spouse is awarded 50% of the member’s military retired pay calculated according to

the Bangs formula.

Once again – as with the “vesting example” shown above – the clause assumes that the lawyers and

paralegals at the retired pay center are familiar with the laws of the particular state, they know what the

Bangs formula is, and they know how to implement it. In reality, none of this is correct. The retired pay

273

center does not research individual cases to resolve ambiguities in court orders. In addition, the clause

does not give the necessary variables for the calculation of the former spouse’s portion.

(6) The former spouse is awarded an amount equal to 50% of the member’s disposable retired pay

less the amount of the Survivor Benefit Plan Premium.

Federal law (USFSPA) states that the SBP premium must be deducted from the gross pay of the

retiree.39 That is, it comes “off the top” before disposable retired pay, or DRP, is attained. Since it is a

mandatory deduction from total retired pay, the pay center cannot change this. It cannot shift the

premium to the retiree or to the former spouse. It is borne by both, in the same ratio as their shares of

the pension. If John Doe gets 85% of the retired pay, then he’s in effect paying 85% of the SBP

premium, and the 15% share allocated to Jane Doe means that she’s paying 15% of the premium. One

party can, of course, agree to reimburse the other “out of pocket” for the cost of that party’s share of the

premium, so long as it doesn’t involve the retired pay center. Or they can, after some calculations,

adjust the share of one of the parties downward to account for that party’s paying the SBP premium.

But DFAS and the Coast Guard will not do the calculations – that’s a job for the lawyers or a CPA. The

retired pay center will only enforce what results from the premium-shift calculations.

F. Correcting deficient awards

Everyone makes a mistake now and then. What if the judge or one of the attorneys slipped up? What if

the order was rejected by the retired pay center and set back for a re-work?

If the pension order is rejected because the retired pay center cannot figure out the amount of the award

to the FS from the information provided in the court order, there are two options. One alternative is for

the former spouse to obtain a new court order clarifying the former spouse’s retired pay as property

award by expressing it in an acceptable manner. The other alternative is for the former spouse to provide

the retired pay center with any missing information by submitting a notarized agreement with the

required information signed by both the former spouse and member.40 Such a statement would indicate

the fixed dollar amount or percentage of disposable retired pay the former spouse is to receive. At

Appendix A below is a notarized statement format which will suffice for this purpose. Of course, each

party should consult with an attorney before executing any such agreement in lieu of a clarifying order.

***

This SILENT PARTNER was prepared by COL Mark E. Sullivan (USA-Ret.). For revisions, comments or corrections, contact

him in Raleigh, N.C. - 919-832-8507, or at [email protected].

39 10 U.S.C. § 1452(a)(1); DoDFMR, Vol. 7B, § 290610. 40 DoDFMR, Vol. 7B, Subparagraphs 290607.B. and 290608.E.

274

---------------------------------------------------------------------------------------------------------------

Appendix A

Notarized statement of parties clarifying court order dividing military retired pay

We, the undersigned, hereby agree to divide the military retired pay, as property, in the following manner. This

agreement clarifies -

A) The final court order was entered on ____________________________(date) in

_________________________________________________ (name & location of court).

The former spouse, ____________________________________________ (name of non-military spouse) is

entitled to receive ______% of the disposable military retired pay of the member/retiree -OR-

$___________________ paid monthly from the retiree’s/member’s disposable retired pay.

The parties acknowledge that this agreement is irrevocable except by subsequent court order. They also agree that

the Defense Finance and Accounting Service/Coast Guard Pay and Personnel Center will make payments directly

to the former spouse from the member’s disposable retired pay. The parties also understand that cost of living

increases (COLAs) can only be made on awards expressed as a percentage; COLAs cannot be made on awards

expressed as a fixed dollar amount.

_________________________________ Date:___________________, 20____

Member/retiree Member’s Social Security Number: ___________________

Before me appeared ______________________________ and showing proof of identification by

______________________________________________ (method of identification) and signed his/her name at

the place indicated above. Sworn before me this ____ day of _____________, 20____.

_______________________________________ Notary public Print Name……………………………………………………

My commission expires:________________

------------------------------------------------------------------- _________________________________ Date:___________________, 20____

Former Spouse

Before me appeared ______________________________ and showing proof of identification by

______________________________________________ (method of identification) and signed his/her name at

the place indicated above. Sworn before me this ____ day of _____________, 20____.

_______________________________________ Notary public Print Name………………………………………………..……

My commission expires:________________

Rev. 11/23/2015

* * * The SILENT PARTNER series of info-letters is prepared by Mark E. Sullivan (COL, USA – Ret.), a family law attorney in Raleigh, N.C.. For comments or

suggested changes, contact him at [email protected]; or 919-832-8507.

275

ATCH 1 - Leave and Earnings Statement

DIEMS

Pay Date

276

ATCH 2 -Retirement Points Statement

277

ATCH 3 - Sample Excel Chart

36 Nov-17 O-4 Over 18 $7,684.80

35 Oct-17 O-4 Over 18 $7,684.80

34 Sep-17 O-4 Over 18 $7,684.80

33 Aug-17 O-4 Over 18 $7,684.80

32 Jul-17 O-4 Over 18 $7,684.80

31 Jun-17 O-4 Over 18 $7,684.80

30 May-17 O-4 Over 18 $7,684.80

29 Apr-17 O-4 Over 18 $7,684.80

28 Mar-17 O-4 Over 18 $7,684.80

27 Feb-17 O-4 Over 18 $7,684.80

26 Jan-17 O-4 Over 18 $7,684.80

25 Dec-16 O-4 Over 18 $7,526.70

24 Nov-16 O-4 Over 18 $7,526.70

23 Oct-16 O-4 Over 18 $7,526.70

22 Sep-16 O-4 Over 18 $7,526.70

21 Aug-16 O-4 Over 16 $7,449.30

20 Jul-16 O-4 Over 16 $7,449.30

19 Jun-16 O-4 Over 16 $7,449.30

18 May-16 O-4 Over 16 $7,449.30

17 Apr-16 O-4 Over 16 $7,449.30

16 Mar-16 O-4 Over 16 $7,449.30

15 Feb-16 O-4 Over 16 $7,449.30

14 Jan-16 O-4 Over 16 $7,449.30

13 Dec-15 O-4 Over 16 $7,353.60

12 Nov-15 O-4 Over 16 $7,353.60

11 Oct-15 O-4 Over 16 $7,353.60

10 Sep-15 O-4 Over 16 $7,353.60

9 Aug-15 O-4 Over 16 $7,353.60

8 Jul-15 O-4 Over 16 $7,353.60

7 Jun-15 O-4 Over 16 $7,353.60

6 May-15 O-4 Over 16 $7,353.60

5 Apr-15 O-4 Over 16 $7,353.60

4 Mar-15 O-4 Over 16 $7,353.60

3 Feb-15 O-4 Over 16 $7,353.60

2 Jan-15 O-4 Over 16 $7,353.60

1 Dec-14 O-4 Over 16 $7,280.70

Total 36 Mo. Pay: $269,757.90 Avg. Monthly Pay: $7,493.28

NAME: ___ <<High-3 as of Date of Divorce>>

278

SILENT PARTNER Master Checklist for Military Retirement Benefits

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the

Military Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s

Committee on Legal Assistance for Military Personnel. There are many Silent Partner infoletters on military family law

issues. Just go to www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov > For

Lawyers. Please send any comments, corrections and suggestions to the address at the end of this document.

◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊

The aim of this article is to teach the reader how military retired pay works, to assist in

understanding the Survivor Benefit Plan, and explain how to accomplish the allocation and division

of military benefits. Also shown below are the places where attorneys can find resources which

clarify these issues so that they can guide their clients in decision-making and can submit pension

division orders which will be honored by the retired pay centers (DFAS and the Coast Guard Pay

and Personnel Center).

1. Got “DOCs”? What are the documents you need to understand military pay and retired pay,

Reserve Component retirement points, accrued leave, elections for the Survivor Benefit Plan (SBP),

and notification of eligibility for retirement for a Guard/Reserve member? For a full list of

documents, see the Silent Partner info-letter, “Docs for Division,” available at www.nclamp.gov >

For Lawyers. Here’s a simple list to use: a. Leave and Earnings Statement for active-duty personnel (this is DFAS Form 702)

b. “How to Read Your LES” on the Defense Finance and Accounting Service (DFAS) website

(www.dfas.mil)

c. Retirement Points Accounting System statement for Guard/Reserve personnel

d. Retiree Account Statement for retired personnel (DFAS-CL Form 7220)

e. “20-year letter” (Notice of Eligibility) for Guard/Reserve personnel as when SM attained 20

creditable years of service, was notified as to SBP elections

f. DD Form 2656-1 for SBP elections, coverage for retirees

g. DD Form 214 – discharge statement (“Report of Separation”)

h. Thrift Savings Plan quarterly statements

i. Letter from DFAS that servicemembers (SMs) receive upon retirement (pay status), showing

expected amount of retired pay and calculations

j. If a document cannot be obtained through SM’s signed release or discovery from SM, then

get an order from a court of competent jurisdiction, or a judge-signed subpoena. With this,

the document can be retrieved from the retired pay center (DFAS for Army, Navy, Air Force,

Marines Corps, or the Coast Guard Pay and Personnel Center for members of the USCG, and

the commissioned corps of the Public Health Service and the National Oceanic and

Atmospheric Administration, or NOAA). The records also might be at the Reserve

headquarters (e.g., Human Resources Command for Army Reserve and Army National

Guard, Buckley Air Force Base for Air Force Reserve and Air National Guard) or the state

adjutant general’s office, or other military agency.

2. “Who’s in charge here?” This is about the rules for division of military retired pay and the

SBP.

279

a. Division of military pensions is authorized by USFSPA (Uniformed Services Former

Spouses’ Protection Act), 10 U.S.C. 1408. It is an enabling act which allows states to divide

pensions but does not require it; it does not specify a method of division and contains some

restrictions.

b. The Survivor Benefit Plan is the survivor annuity program for pension division, to allow a

former spouse (FS) to continue to receive payments after the member/retiree dies. 10 U.S.C.

1447 et seq.

c. Volume 7B of the Department of Defense Financial Management Regulation, DoD 7000.14-

R (DoDFMR) explains how each of these works. Look up “DODFMR” on any search

engine to find the Regulation. Pension division under the USFSPA is at Chapter 29; SBP

rules begin at Chapter 43.

d. The Silent Partner infoletter series has guidance for lawyers on SBP and on military pension

division.

e. State laws and rules exist for pension division, whether survivor annuity is available for the

FS, what the marital fraction is, whether military leave is divisible, etc.

3. To play the game, know the rules! You need to know how military retired pay works, how

compensation for a retiree is calculated, and what is needed for state court jurisdiction to divide

military retired pay. a. Active duty retirement is under one of 3 systems: a) Final retired pay b) High-3 c)

CSB/Redux. Details are at Army Retirement Services. Go to www.armyg1.army.mil – this

is good for all branches of the uniformed services. The important date is DIEMS (Date of

Initial Entry into Military Service).

b. Reserve/National Guard retirement rules (pension based on retirement points)

i. In general retired pay starts when retiree attains age 60

ii. 20 “good years” needed to be retirement-eligible (50 points needed for a “good

year”)

iii. Four points for a “drill weekend,” one point per day of active duty (e.g., 14 points for

two weeks’ annual training or “summer camp”)

c. Jurisdiction rules are found at 10 U.S.C. 1408 (c)(4). A court has jurisdiction over a SM’s

pension through by:

i. Domicile – his or her legal residence

ii. Consent – entry of general appearance in the lawsuit

iii. Residence – but not because of assignment

d. SCRA – Whether the SM has retired or not, the pension order must state that court has

honored his or her rights under the Servicemembers Civil Relief Act, 50 U.S.C. 3901 et seq.

e. There are four methods for division of retired pay (from active duty retirement). The full

explanation is in the Silent Partner info-letter, “Guidance for Lawyers: Military Pension

Division” at www.nclamp.gov. Examples:

i. Fixed dollar amount - $500 a month

ii. Percentage – “Mary gets 10% of Tim’s pension monthly” (use when retirement has

occurred and all numbers are known)

iii. Formula clause – “Mary is to receive 50% of Tim’s final retired pay times 214

months of marriage during service divided by Tim’s total service when he retires”

(use when SM not yet retired)

iv. Hypothetical - “Mary is to receive 50% of Tim’s retired pay times 214 months of

marriage during service divided by Tim’s total service when he retires, with his

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retired pay calculated as if he had retired as a staff sergeant with 16 years of

creditable service. His HIGH-3 pay amount is $3,400 monthly.”

f. For divorces granted after 12/23/16 when the SM is not receiving retired pay at divorce, the

amount of retired pay which is divisible is limited to a share of the SM’s hypothetical retired

pay as if he had retired on the date of the divorce. See the Silent Partner info-letters, “Fixing

the Frozen Benefit Rule” and “All Clauses Considered: Writing the Frozen Benefit Clause”

for details.

g. Reserve/Guard methods of division – same as above except that formula clause must be

expressed in points, not months.

h. Disposable Retired Pay (DRP) = gross retired pay less any VA disability waiver and

premium for SBP (for FS in this divorce). DRP is what retired pay center divides, regardless

of what the order says. See also “Break a leg!” below.

i. COLAs (cost of living adjustments to retired pay) usually occur in January. They are

automatically included in all division methods except the fixed dollar amount, which does

not allow COLAs to be included or added on.

j. The military pension is not a “fund,” so you cannot refer to the account balance or the part of

the fund acquired during the marriage or at divorce. It is a defined benefit, governmental

program (not a “qualified plan”) with monthly payments to retiree. TSP is a fund (Thrift

Savings Plan), similar to 401K plan. Remember “What you see is what you get” – you can

always check the account balance to see what’s there.

4. SBP – choose it or lose it. This is about how the Survivor Benefit Plan (SBP) works, its cost

and benefits

a. SBP – an annuity that continues stream of income to designated beneficiary when SM/retiree

dies first; without it, the pension stops upon death of the SM/retiree.

b. It pays 55% of selected base amount to the recipient.

c. In a retirement from active duty, FS coverage costs 6.5% of base amount, to be paid upon

retirement by deduction from pension check.

d. If the FS dies first, then the entire pension is restored to the retiree.

e. FS coverage is implemented through a voluntary election by the SM/retiree, or through a

court order sent to the retired pay center

f. The base amount may be any the full monthly retired pay (which is the default if order or

clause is silent) down to $300/mo.

5. Snooze… and you lose. Here we learn the limitations and deadlines which apply across the

board.

a. 10/10 Rule – direct pay from the retired pay center requires 10 years of service concurrent

with 10 years of marriage. This is an enforcement rule, not a rule as to pension division

eligibility. The FS is still eligible to claim pension division if less than 10/10.

b. Never take a default judgment against the SM/retiree. File where there is jurisdiction to

divide the pension, obtain proper service, and always state the basis for jurisdiction in the

order (see jurisdiction rules above) to get valid direct-pay order honored by retired pay

center.

c. SBP is suspended for the FS if she/he remarries before age 55.

d. SBP deadlines – when the SM/retiree makes the former-spouse election, it must be done

within one year of divorce. If the SM/retiree is required to make the election and fails or

refuses to do so, then the FS may make a “deemed election,” and this must be done within

one year of order granting SBP coverage (use DD Form 2656-10)

281

e. SBP cannot be divided between present and former spouses.

f. SGLI and Ridgway decision – when representing FS, do not rely solely on Servicemembers

Group Life Insurance to secure benefits. A 1981 Supreme Court decision says that courts

cannot enforce orders or agreements that require SGLI. Ridgway v. Ridgway, 454 U.S. 46

(1981).

g. 20/20/20 Rule – full medical benefits for an unmarried FS requires 20 years marriage, 20

years of creditable service, and an overlap of 20 years. This means TRICARE and space-

available care at military medical facilities. If 20/20/20 not met, use CHCBP (Continued

Health Care Benefit Program).

6. “Break a leg!” One must understand how disability pay can reduce the divisible pension

a. The primary types of disability payments are: military disability retired pay, VA disability

compensation, Combat-Related Special Compensation (CRSC)

b. Courts cannot divide VA disability compensation, and only a small part of military disability

retired pay may be subject to pension division (although disability benefits ARE usually

subject to consideration in support cases).

c. When retiree has a VA disability rating of less than 50%, the election of VA payments

means a dollar-for-dollar reduction of the pension; thus the share for the FS is reduced due to

the unilateral action of retiree.

d. When retiree is receiving CRSC, then all VA payments operate to reduce retired pay on a

dollar-for-dollar basis.

e. Courts and agreements often employ indemnification language to guard against this. Check

state law on reserving jurisdiction to return to court and adjust the pension share, to revise

the entire property settlement, to require reimbursement, or to include in the settlement a

clause providing (for example) for $1 a year modifiable alimony for the FS.

f. For details, read Scouting the Terrain, The Servicemember’s Strategy, The Spouse’s

Strategy, The “Evil Twins” – CRDP and CRSC, and The Death of Indemnification (Silent

Partner infoletters).

(Rev. 2/3/18)

* * * This SILENT PARTNER was prepared by COL Mark E. Sullivan (USA-Ret.). For revisions, comments or corrections,

contact him in Raleigh, N.C. - 919-832-8507, or at [email protected].

282

SILENT PARTNER Military Pension Division: Scouting the Terrain

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the

Military Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s

Committee on Legal Assistance for Military Personnel. There are many Silent Partner infoletters on military family

law issues. Just go to www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov >

For Lawyers. Please send any comments, corrections and suggestions to the address at the end of this document.

◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊ ◊

The Uniformed Services Former Spouses' Protection Act (USFSPA)

Knowing the terrain is an essential part of military intelligence. This is equally true in the field of

military pension division. The basic statute covering military pension division is the Uniformed Services

Former Spouses' Protection Act.1 USFSPA was passed by Congress in 1982 to make military pensions

subject to division by state courts in divorce and property division proceedings. Before the statute was

passed, the states had a different approaches to the treatment of military pensions, with some considering

them as divisible community (or marital) property and others refusing to recognize them or considering

them as mere expectancies rather than vested benefits. The federal act was passed in the wake of

McCarty v. McCarty,2 in which the U.S. Supreme Court held that state property division laws were

preempted by federal law regarding the military retirement scheme, and that Congress could decide to

change this by appropriate legislation.

What did USFSPA do? It stated that:

1. Military pension division is neither mandated nor automatic. It is up to the states to

decide whether military retirement is marital or community property that is divisible upon

divorce or whether it is solely the property of the SM. [All of the states now allow the

division of military pensions as marital/community property]

2. It limited pension division jurisdiction to a state where the SM was domiciled, had

consented to jurisdiction, or resided not due to military assignment. [These are the

“federal jurisdiction” rules]

3. Although a state court can subject military retirement rights to division in equitable

distribution proceedings, it cannot force a SM to retire. [But it can order him/her to start

paying a share of the pension to the spouse before retirement!]

4. State courts can order the direct pay of pension division awards (where there is ten years’

overlap between the marriage and creditable military service) through DFAS.

5. Such direct payments may not exceed 50% of the SM’s disposable retired pay (in most

cases).

6. And, finally, these direct payments cease upon the death of the SM or the spouse (or

former spouse).

What didn't the Act do? It didn't tell how to handle military pension division. Nowhere in USFSPA is

there a clear picture of how a military pension is to be divided upon divorce.

Roadblocks and Minefields: Federal Jurisdiction

283

One of the roadblocks in military pension division is whether a state has jurisdiction over the SM’s

pension. This involves a federal law question. If a state does not have jurisdiction under federal law, then that

state may not divide the SM’s pension, regardless of the spouse’s wishes. The jurisdictional basis of military

pension division is not found in state long-arm statutes. Rather, it is set forth specifically in the USFSPA at 10

U.S.C. 1408 (c)(4).

Federal Jurisdictional Tests. Pursuant to this section of the Act, a state may only exercise jurisdiction over a

military SM’s pension rights if –

• That state is his or her domicile; or

• The SM consents to the exercise of jurisdiction; or

• The SM resides there (for reasons other than military assignment in that state or territory).

These statutory provisions override the more traditional long-arm statutes, which allow the exercise of

jurisdiction consistent with due process if there are sufficient minimum contacts with a state.3

Residence Not Due to Military Assignment. Just what do these tests mean? The third basis for military pension

division jurisdiction is probably the most difficult to understand. The court must have jurisdiction over the SM by

reasons of “the member's residence, other than because of military assignment in the territorial jurisdiction of the

court.” How could a SM reside somewhere other than because of military orders, when it is almost always

military orders which require his moving, cause his transfer from one installation to another and require his

presence in the general vicinity of the installation to which he is assigned?

Although there are no definitive cases in this area, perhaps the following case illustrates what Congress

had in mind: Colonel (COL) Bill Roberts is assigned to duty in Florida at Eglin Air Force Base, which is near the

Florida-Alabama state line. Although he could live on base or, if quarters were not available, off-base but in the

general vicinity of the installation, he chooses instead to reside just over the state line in Alabama, where his

elderly parents reside. In this way, he can take care of them after work, and he commutes back and forth between

his "home" in Alabama and the Air Force installation in Florida.

Is this not an example of a SM who resides in Alabama for reasons other than because of military

assignment? Alabama probably has jurisdiction over COL Roberts’ pension in this case.

Domicile. Domicile is the first stated basis for jurisdiction under U.S.C. 1408(c)(4). What is domicile?

It is not, for example, the same thing as a SM’s "home of record." Home of record is a technical term the

military services use for the state where a person enters the service or reenlists. It means the place where the

military must ship his or her household goods upon discharge. It is an administrative entry which is not

necessarily meant to specify the domicile of the SM.

And domicile isn't necessarily the place where a SM is currently stationed or living, either. A SM may be

stationed far away from his or her legal home. The Servicemembers Civil Relief Act4 allows military personnel

to retain their original domiciles for voting and state tax purposes while stationed in other states.

Rather than merely the physical residence of an individual, domicile is composed of two elements:

• Physical presence of the SM (except for temporary absences); and

• Intent to remain (or return if absent), as shown by payment of state income and property taxes, voting

records, bank accounts, motor vehicle titles, registration and driver's license, and the purchase of a home.5

284

The importance of the latter -- actions which demonstrate the intent of the individual -- cannot be

overstated. Many servicemembers claim Florida or Texas, for example, as their domiciles because these states do

not have an income tax. A close analysis of most of these claims, however, reveals that there are no actions to

back them up, such as ownership of property in that jurisdiction, and also that the SM has never really resided in

that state in the first place.

How do you find out a SM’s domicile? Here are some starting points:

• Get a copy of his Leave and Earnings Statement (LES) -- this document, which is the bimonthly pay

statement for SM, contains an entry for "State Taxes" which shows what state the SM has listed for state

tax withholding.

• Check with the SM’s spouse—where did he file state income taxes last year? Which state imposed real

estate taxes for a residence? Where did he vote?

• Get his DD Form 2058, "State of Legal Residence Certificate," which is attached to the SM’s W-4

Statement for tax withholding purposes.

If the SM is stationed in your state and domiciled there, he can be sued there for pension division. If he is

domiciled elsewhere, it may be necessary to bifurcate the equitable distribution proceeding if he does not consent

to the court's jurisdiction over his military retirement rights. That means that the pension would be handled in the

SM’s state of domicile and the other domestic issues (alimony, divorce, child support, custody, visitation and all

aspects of property division except the military pension) would be handled in the spouse’s state of residence, so

long as there is jurisdiction there for the specific claims involved.

Consent to Jurisdiction

A SM can consent to the court’s jurisdiction. This means that, knowingly or inadvertently, he may be

allowing the exercise of pension jurisdiction by the court. The test for consent to jurisdiction is a matter of state

law. For example, if a defendant intends to object to personal jurisdiction under the state equivalent of federal

Rule 12(b)(2), the general rule is that he may not move the court for other relief in his favor.6 In general a motion

for other affirmative relief will probably constitute a general appearance.

This rule poses real problems for the SM who wants to contest some claim of the lawsuit other than

military pension division -- custody or alimony, for example, or even other aspects of equitable distribution. Can

he or she do so without consenting to the court’s jurisdiction? Is this a waiver of one’s federal rights under 10

U.S.C. 1408(c)(4)? The courts are split over whether specific consent is necessary or whether a general "implied

consent" can be used to confer jurisdiction.

As stated earlier, this is a state issue. There is no federal guideline or standard, and the states make the

rules in this area. As a result, there may be fifty or more different rules as to what constitutes consent to the

court’s power over a military SM’s pension rights.

Roadblocks and Minefields – Summary

These problems show clearly the need for defensive lawyering. It is vital to ask questions -- lots of

questions -- to make sure that the defense mounted for COL Roberts is on a firm footing. It is just as important to

think before one acts. If there is a valid jurisdictional objection to a pension division claim filed against COL

Roberts, will this be waived if he files an answer? What if he files a motion to continue, or to dismiss? The

answer to these questions lies in the law of the states involved.

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Be sure to check with competent counsel in the jurisdiction involved – don’t try to “wing it” yourself

when you’re not licensed there. Even if you do hold a license for that state, it doesn’t mean that you also hold the

necessary level of expertise to answer these questions.

Dividing the Military Pension -- Crossing the Minefield

Once it is understood how to set up obstacles to pension division, the next step should be to understand

how to overcome them and divide the pension once the court has acquired jurisdiction over it. There are generally

two methods available for pension division. The first is deferred division, often called "if, as and when" payments,

which refers to payments by the pensioner when he starts receiving his pension. The second involves a present-

value offset, in which property or money is traded against the present value of the pension.

Deferred Division. These latter payments are not preferred by many courts since they are seen as an undesirable

postponement of the claimant's rights to a present pension division. It is hard to reconcile future payments to a

nonmilitary spouse (at a time when the divorce is long past) with the present-day division of all the other marital

assets. The deferred division of military pensions is usually used when a offset or trade is unavailable. Unless the

SM is retired when the division occurs, such a division will usually postpone the payments to the nonmilitary

spouse until the retirement of the SM.

There is an exception, however; the postponement of payments doesn't occur in all states. Some have

gotten around the postponement of payments until retirement by requiring the SM to begin present payments to

the nonmilitary spouse or else suffer the accrual of interest on the unpaid pension rights. Examples of cases in

this area are Mattox v. Mattox from New Mexico,7 Koelsch v. Koelsch from Arizona,8 and the California cases of

In re Luciano,9 In re Marriage of Gillmore10 and In re Marriage of Scott.11 The Gillmore case involved a civilian

employee spouse whose pension had vested but who had elected not to retire. The California Court of Appeals

applied this principle in a military case in Scott, where the court affirmed the trial court's award to an ex-spouse of

the present value of the community share in the SM’s retirement rights, notwithstanding the fact that he was still

on active duty.

Deferred Division – Examples. An example of deferred division in a hypothetical case may help to illustrate how

it works. Assume that a SM been married for 20 years and that, for all 20 years, he was on active duty in the U.S.

Army. Also assume that his active duty pay with 20 years of service is $7,200 per month, and that he can retire

after 20 years of service with 50% of his base pay.12 Thus, the monthly retired pay of the SM is $3,600.

The marital fraction in this case is 20/20. Marital fraction in most states means the number of years of

pension service during the marriage before the valuation date over the total years of pension service. The

valuation date is determined by state law -- it may be the date of irretrievable breakdown, the date of filing suit,

the date of separation or the date of divorce. In this case, then, the marital share of the SM’s monthly retired pay

is calculated as below, and all of the pension is marital property:

$3,600 x 20 years' marital pension service = $3,600 (marital part of pension = ALL)

20 years' total pension service

The law in many states presumes that the SM’s spouse is entitled to one-half of the marital property.

Also, in the case of military pensions, the USFSPA states that the spouse’s share may not exceed 50% of the

pension.13 In this case, her one-half share would equal $1,800 per month. This is the amount the SM would have

to send to her each month for an equal division of the marital pension. It is also the amount that DFAS would

send to her directly out of his retired pay if the marriage overlapped the SM’s creditable service by ten years or

more and if the payment terms were set out in a qualifying court order.14

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Let's take another example. Suppose the SM has served a total of 20 years in the Army, with 10 years of

his service preceding his marriage. In this case, the marital fraction is:

$3,600 x 10 years' marital pension service = $1,800 (marital part of pension)

20 years' total pension service

The above example assumes that 10 years of the marriage is concurrent with 10 years of the SM’s service.

Since only one-half of the pension is marital, then one-half is the SM’s' separate property (since it accrued before

the marriage), one-fourth is the spouse’s share of the marital pension, and one-fourth is the SM’s share of the

marital pension. Thus the spouse would receive one-fourth of each monthly pension check under a deferred

division approach, or about $900 per month. The remainder of the monthly retired pay belongs to the SM.

What happens, however, when the SM is still on active duty and remains so, rather than conveniently

retiring on the date of valuation? In this case, the marital fraction cannot be expressed as an absolute number.

Rather, the marital fraction looks like this –

Years of marital pension service = 10

Years of total pension service X

The numerator represents 10 years of marital pension service, and the denominator is unknown,

representing the total number of years of creditable service that the SM will perform.

Present Value Offset. In addition to the future division of retired pay, all states recognize a second method of

pension division called a "present value offset." This represents the present value of a series of money payments

over the course of the SM’s life. The money payments are, of course, his or her retired pay. The present value of

this retired pay is the amount that can be used for a trade or a setoff so that the SM can keep the entire pension.

This results in a complete and final accounting and division, not the postponement of property division until

retirement.15

A good economist or CPA will advise that the sum of the payments should be adjusted for the life

expectancy of the SM, the inflation rate and a discount factor which represents the rate at which money can be

invested. This "discount rate" is applied to reflect the ability of money to earn interest; a small amount today,

when invested, will yield a larger amount in five years and, conversely, a larger amount in the future, when

discounted for the effect of interest accumulation, would become a smaller amount "in hand" today.

How is present value calculated? There are several options available. When the case is definitely going to

trial, one should to promptly retain a CPA, an actuary or an economist to provide expert testimony at the hearing

on the present value of future pension payments over the expected lifetime of the SM. On the other hand, when a

settlement is anticipated and trial testimony will not be necessary, a "mail order" evaluation is sometimes

preferable. There are several businesses nationwide that perform mail-order pension valuations for $300-1,000.

There is also a second method of determining present value, and this one makes no assumptions regarding

interest rates, life expectancies or inflation. It involves pricing an annuity that will yield a monthly payment equal

to the pension. The way to start is to contact an insurance agent or a securities broker to get a price quote for a

single-premium annuity that would pay the marital benefit of, say, $3,600 per month (using our example above)

for life starting now for an individual who is currently the age of COL Roberts. This is an example of the

information that must be given to the professional who is obtaining the price quote.

Single-premium annuities are an excellent measure of comparison, using the actual market price of a

financial product, compared to the abstract assumptions which are always present in a present-value analysis by a

CPA.

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When dealing with other assets in a property settlement, the court requires the fair market value to be

obtained. Whether the asset happens to be a home, a parcel of land or a group of stocks, the method of valuation

follows the principle of determining the current selling price or replacement cost in the open market. Why not use the same principle in valuing a retirement plan? After all, a pension is simply a contract to make future

payments to an individual. In the financial marketplace, insurance companies sell these contracts in the form of

single premium annuity policies. When taken as a group, these companies comprise an annuity market and

provide an appropriate, non-theoretical source of valuing retirement benefits.16

Given the same information, a securities broker or an insurance agent could come up with a price that

might be even more advantageous for the client's bargaining position in this case. This approach is certainly

worth pursuing when there is a serious question about the present value of the pension.

Reserve and National Guard Pension Rights. There is nothing in the USFSPA to indicate that it was intended to

apply only to active-duty retirement benefits, and certain amendments made by Congress to other parts of the U.S.

Code dealing with Reserve retirement and benefits imply that Congress intended the Act to cover Guard and

Reserve retirement also.17 The two ways to divide Guard/Reserve pensions, and the advantages or problems

involved, are contained in the two companion SILENT PARTNERs on “The Servicemember’s Strategy” and

“The Spouse’s Strategy.”

Dividing Disposable Retired Pay. USFSPA states that the retired pay center (usually DFAS) can only divide

disposable retired pay.18 The U.S. Supreme Court upheld this requirement in the Mansell decision.19 According

to 10 U.S.C. § 1408(a)(4), "disposable retired pay" means gross retired pay minus:

• recoupments or repayments to the federal government, such as for overpayment of retired pay;

• deductions from retired pay for court-martial fines or forfeitures;

• disability pay benefits; and

• Survivor Benefit Plan premiums.

Note that disability benefits are deducted from gross pay in order to arrive at "disposable retired pay."

This means that a retired SM can waive receipt of retired pay to receive an equivalent amount of VA disability

benefits, and these latter benefits will be received tax-free. This tactic can be used by a SM to reduce the portion

of retired pay that is divisible. And there’s no way to stop a SM from taking disability pay! For more information

on this, see the two above-mentioned SILENT PARTNERs. These also contain information on early-out options,

leaving military service for federal civil service, and drafting clauses to protect clients in these areas.

Direct Payments from DFAS

Most clients who are entitled to a portion of retired pay benefits want to get the payments direct from the

source, not from an ex-spouse. Pay garnishment for division of the pension as property is available from DFAS

when:

• The retired pay is divided by a final decree of divorce, dissolution, legal separation, or court

approval of a property settlement agreement [Note: This means that an unincorporated separation

agreement, a judgment in a partition case or an order of specific performance won't get direct

payment from DFAS];

• There is a statement in the order that the SM’s rights under the Sevicemembers Civil Relief Act

(formerly the Soldiers’ and Sailors’ Civil Relief Act) were observed;

• The amount directly payable to the former spouse as pension division is not more than 50% of the

retiree's disposable retired pay;

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• The "10 year test" has to be met (there must be at least 10 years of marriage which overlap 10 years

of service creditable toward retirement);

• The court order must provide for payment from military retired pay, and the amount must be in an

acceptable format (using one of the four methods of pension division allowed by DFAS); and

• The order must show that the court has jurisdiction over the SM in accordance with USFSPA

provisions.20

The "10-year test" is not a jurisdictional requirement for dividing military pensions. Rather, it is an

"enforcement requirement," meaning that pension division cannot be enforced by direct pay from DFAS unless

this test is met.21 For more information on the above points, see the SILENT PARTNER, Getting Military

Pension Division Orders Honored by DFAS.

A Checklist for the Judge. Here is a checklist used in North Carolina for items that the judge (and the

attorneys) should consider in military pension divorce cases. Simply replace NC with the name of your state:

Checklist for Military Pension Division Orders in North Carolina Issue Comments Check for pension division

jurisdiction – must be ONE of the

following:

Required by 10 U.S.C. 1408(c)(4)

1. Domicile in North Carolina, OR Check on state income taxes, home ownership, voting, vehicle title, tags,

driver’s license, in-state tuition

2. Consent to court’s jurisdiction General appearance – the filing of motions or pleadings which recognize

the court’s authority

3. Residence in N.C. but not due to

military assignment

Example – SM assigned to naval base in southeast VA but resides in

nearby Duck, NC, to care for aged parents living there; NC has pension

division jurisdiction.

Receive evidence of period of

creditable service for

servicemember [SM] or retiree

Usually this is on his LES [Leave and Earnings Statement], DD 214

[discharge statement], retirement orders, or “points statement” [for

Reserve/Guard personnel]

Calculate coverture fraction Months of marital pension service [before separation] divided by total

pension service [which will be “X” – unknown – for those not yet

retired]. DFAS [Defense Finance and Accounting Service] will accept

an order containing total military service as an unknown, will make

calculations at time of retirement.

State formula [for SM] or

percentage [for retiree]

Usually this is 50% X coverture fraction X final retired pay

Check for “10/10” direct-pay

requirements

If payment to be made from DFAS [Defense Finance and Accounting

Service] directly to non-military spouse, then marriage and military

service must overlap by at least 10 years

Require direct pay by SM/retiree

until DFAS begins payment

DFAS will not pay non-military spouse until 90 days after retired pay

starts.

Check on “back payments” for

retiree

See if credit or recoupment needed if retiree has received pension

payments since separation. Part or all of these, depending on coverture

fraction, belong to the non-military spouse. DFAS will not make “back

payments” through garnishment in property division cases.

Check for “20/20/20” for medical

care

Non-military spouse will be entitled to full medical care benefits if there

are at least 20 years of marriage [ending at divorce, not separation], 20

years of military service, and a 20-year overlap. Granting divorce too

early can defeat this entitlement.

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Checklist for Military Pension Division Orders in North Carolina Issue Comments Provide SBP [Survivor Benefit

Plan] for non-military spouse by:

Without this, payments stop at SM’s death. Premiums are paid out of

the pension “off the top” before division between parties. Premiums are

6.5% of selected base amount for spouse/former spouse coverage.

___ordering SM to elect [or retiree

to maintain] SBP coverage;

If parties are only separated, order spouse coverage (to convert to former

spouse coverage upon divorce). If parties are divorced, order former

spouse coverage. Note: Court order alone does not create coverage; the

application (by SM) or the service of order on DFAS (by spouse) needs

to be accomplished promptly.

___at specific base amount (full

retired pay or less);

SBP payments are 55% of the base amount, which can be entire retired

pay down to $300.

___to be served on DFAS within

deadlines; and

Deadlines: one year of divorce [if application by SM/retiree], or one year

of order granting coverage [if by non-military spouse]. If deadlines are

missed, coverage is lost.

___entry of order granting former

spouse coverage at time of divorce

DFAS will only honor title designation (i.e., spouse coverage, former

spouse coverage), not designation by name.

Use model military pension

division order to avoid mistakes

Found in SILENT PARTNER, “Getting Military Pension Division

Orders Honored by DFAS.”

Survivor Benefit Plan

An essential component of a well-structured military pension division for the nonmilitary spouse is use of the

Survivor Benefit Plan (SBP). The SBP is an annuity that lets a retired SM (active duty or Guard/Reserve) provide

continued income to specified beneficiaries after his death.22 The SBP is funded by premium payments from the

retiree's paycheck. There is a slight tax break for the retiree in that the amount of the SBP premium is not

included in the taxable portion of his or her retired pay

The death of a military retiree terminates all pension payments. When SBP is elected, however, upon the

retiree's death, the designated survivor receives a lifetime annuity for 55% of the selected base amount (full

retired pay or lesser figure). In addition to spouses and former spouses there is child coverage available so long

as the child is of the marriage of the SM and the former spouse. The cost for spouse or former spouse coverage is

a premium during the retiree’s lifetime of 6.5% of the selected base amount. Thus, for example, if the total

pension payment before division is $3,000 a month, and if that were the base amount selected, then the SBP

payment would be $1,650 a month (i.e., 55% of base amount) and the monthly premium would be $195 (6.5% of

base), to be paid out of the pension.

Here is a checklist on the benefits and disadvantages of SBP coverage:

Checklist for SBP: Pro’s and Cons Advantages of Survivor Benefit Plan Security: There is no “qualification” required; unlike commercial health insurance, no physical exam is required

for the military member and coverage cannot be refused or lapse while premiums are being paid. The

member/retiree cannot terminate coverage if established by court order sent to DFAS.

Life Payments: Mrs. Roberts, the beneficiary, will receive payments for the rest of her life upon the retiree’s

death (unless she remarries before age 55, which stops benefits so long as she is married).

Tax-Free: Deductions from the retiree’s pay for SBP premiums are from his gross retired pay and thus reduce

his pension income (and her share of it) for tax purposes.

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Inflation-Proof: Payments are increased regularly by cost-of-living adjustments to keep up with inflation.

Disadvantages of Survivor Benefit Plan

Expense: Even though the premium payments are tax-free and are shared by the parties, the coverage is

relatively expensive (as compared to term life insurance) and premiums do go up.

Inflexible: As a general rule, once SBP is chosen, it cannot be canceled.

No Cash Value: Unlike whole life or variable life insurance, there is no equity build-up and no cash value for

SBP. And there is no return of premiums paid if Mrs. Roberts dies before her husband.

Let’s see how SBP works. For a married SM on active duty, the election for SBP must be made before or

at retirement.23 An active duty SM who is entitled to retired pay is automatically enrolled in SBP at the maximum

authorized level of coverage unless he or she declines (before retirement) to be covered or else chooses coverage

at a lower level; if the SM is married, the spouse must consent to this choice.24 A spouse loses eligibility as an

SBP beneficiary upon divorce. There is no provision in the law which makes former spouse coverage an

automatic benefit. The only means by which a divorced spouse may receive a survivorship annuity is if former

spouse coverage is elected. A court order cannot, by itself, be used to create coverage. A signed election request

must be submitted to DFAS by the member/retiree, or a court order by the former spouse, before coverage can be

established. Reservists can make the election upon completion of 20 years of creditable service, and they have a

second chance to elect SBP coverage upon reaching age 60.25

If a member/retiree elects former spouse coverage for a spouse who was the pre-divorce SBP beneficiary,

this must be done within one year from the date the divorce becomes final. If the SM or retiree who is required to

provide such coverage fails or refuses to do so, he or she shall be deemed to have made such an election if DFAS

receives a written request from the former spouse asking for implementation of the election and a certified copy of

the appropriate court decree. The request must be signed by the former spouse and received by DFAS within one

year from the date of the decree which requires coverage. The form to use is DD Form 2656-10.

Annuity entitlement stops upon the former spouse's remarriage when this occurs before age 55. It will be

reinstated if the former spouse's marriage is terminated. Annuity entitlement is unaffected if the former spouse is

age 55 or older at the time of remarriage.

SBP is a unitary and indivisible annuity; a valid former spouse election terminates any existing SBP

coverage of the retiree, and former spouse coverage cannot be combined with coverage for a current spouse. An

election of former spouse coverage is basically irrevocable, meaning that the member/retiree may not terminate

SBP participation once it is elected; however, the law allows an eligible member/retiree to request a change in

annuity coverage if he or she remarries, or acquires a dependent child, and meets the requirements for making a

valid option change. Such a request must be made within one year from the date of marriage or the child’s birth.

A copy of the final divorce decree must be sent to DFAS, since receipt of this is required before any

adjustment to SBP can be completed. When only SBP is required in a court order, rather than the division of

military retired pay, the order should be sent to: Defense Finance and Accounting Service, US Military Pay, PO

Box 7130, London, KY 40742-7130.

State courts may order members/retirees to participate in SBP and to designate their spouses or former

spouses as beneficiaries.26 A current spouse will be notified of the election to provide coverage for a SM’s former

spouse, but she or he cannot veto that election.27 When a separation agreement provides for SBP election, a court

can order specific performance to enforce this provision.28

Especially when deferred division is used, the attorney for the non-military spouse should insist on SBP

coverage to allow continued receipt of payments if the spouse survives the member/retiree. This is a valuable tool

in planning for continued income for the spouse.

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Early-Out Options and Severance Pay

When the Department of Defense goes through a period of “downsizing” for budgeting or personnel

management reasons, this often means service separations before retirement. For those who haven't yet served 20

years to become eligible for longevity retirement, the involuntary separation tools may involve two early

separation benefits, the Voluntary Separation Incentive (VSI) and the Special Separation Benefit (SSB).

VSI and SSB are akin to severance pay and there are few reported cases interpreting them. There are two

key issues which usually come up when a divorcing SM is offered one of these bonuses: Is it divisible, and is it

marital property?

As to divisibility, the final answer should be that they are not divisible under federal law. The argument

against division can be made as follows: The McCarty decision held that Congress preempted all state authority in

this area when it enacted the military retirement system. USFSPA was a limited response to McCarty; it only

allowed for the division of longevity retired pay and, in later amendments, for part of VA disability pay. The Act

limits state courts to the division of "disposable retired pay" under 10 U.S.C. 1408(c)(1) and these severance pay

options are not "retired pay"; they are replacements for retired pay. Their implementing statutes aren’t mentioned

in USFSPA. Thus they remain under the protective umbrella of McCarty and are exempt from division because

of preemption. Representative Patricia Schroeder even sponsored an amendment to H.R. 5006, the Department of

Defense Reauthorization Bill for F.Y. 1993, which would have made the Act applicable to both VSI and SSB, but

it wasn't passed by Congress.

This argument has worked in only one reported case.29 It has been rejected in the rest of those state cases

addressing the issue.30 Even if the spouse is successful in obtaining division of VSI or SSB, however, he or she

will find collection difficult. DFAS will not garnish VSI or SSB under 10 U.S.C. § 1408(d) pursuant to court

orders for property division. Only military retirement pay can be garnished under this statute.

If the court decides that the VSI/SSB is divisible and akin to a retirement benefit, then the question is

whether the benefit is separate property or marital property.31 Some courts have held that severance pay is not

marital property since it takes the place of future compensation, rather than being payment for past services (like

retirement pay and other deferred compensation benefits).32

If, in the alternative, it is seen as an economic benefit earned during the marriage and attributable to

marital work, efforts and labor, it may be viewed as damages for an economic loss to the marriage. This is called

the "analytic approach" and is most often applied in the personal injury area.33 In an Arkansas case involving

severance pay, the wife was granted one-half of the husband's lump-sum payment because the judge determined

that the benefit was earned by service during the marriage.34

One final point should be mentioned. Even if the payment is marital property and therefore divisible, one

would need to apply the marital fraction (usually years of marital service over total years of service) to the

payment to arrive at the portion that is marital.

Military Divorce Websites

Here is a list of helpful websites for military pension division and SBP:

ABA FAMILY LAW SECTION’S MILITARY COMMITTEE: www.abanet.org/family/military/

NC STATE BAR MILITARY COMMITTEE: www.nclamp.gov

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ARMY RETIREMENT SERVICES: www.armyg1.army.mil/rso/mission.asp

DFAS WEBSITE: www.dfas.mil

SBP RESOURCES: www.armyg1.army.mil/rso/sbp.asp

ENDNOTES

1 10 U.S. C. 1408. See also regulations at Dep’t of Defense, Financial Management Reg. vol. 7B, chap. 29, Former Spouse

Payments from Retired Pay (Sep. 1999) available at http://www.dod.mil/comptroller/fmr/07b/07b29.pdf. 2 McCarty v. McCarty, 453 U.S. 210 (1981). 3 See, e.g., Kulko v. Superior Court of California, 436 U.S. 84 (1978). In In re Hattis, 196 Cal.App.3d 1162, 292 Cal. Rptr.

410 (1987), for example, the court held there was no federal jurisdiction under 10 U.S.C. 1408(c)(4) to partition the military

retired pay of a former domiciliary despite adequate "minimum contacts." 4 50 U.S.C. App. § 500-48, 560-91. 5 See, e.g., Andris v. Andris, 65 N.C. App. 688, 309 S.E.2d 570 (1983). 6 See, e.g., Russell v. McGinnis, 514 P.2d 658 (Okla. 1973). 7 Mattox v. Mattox, 105 N.M. 479, 734 P.2d 259 (N.M.Ct.App. 1987). 8 Koelsch v. Koelsch, 713 P.2d 1234 (Ariz. 1986). 9 In re Luciano, 104 Cal. App.3d 956, 164 Cal. Rptr. 93 (1980). 10 In re Marriage of Gillmore, 29 Cal. 3d 418, 629 P.2d 1, 174 Cal. Rptr. 493 (1981). 11 In re Marriage of Scott, 156 Cal. App. 3d 251, 202 Cal. Rptr. 716 (1984). 12 BASE PAY times YEARS OF SERVICE times 2.5% is the formula for members entering active duty before Sept. 8, 1980.

Those who entered service on or after 9/8/80 use the formula: BASE PAY [average for last three years of service] X YEARS

OF SERVICE X 2.5%. Those who entered service after 1986 use the formula: BASE PAY [average for last three years of

service] X YEARS OF SERVICE X 2.5%] - [1% for each year of service under 30 years, calculated by months]. 13 10 U.S.C. 1408 (e) (1). 14 10 U.S.C. 1408 (d) (2). 15 See, e.g., Dewann v. Dewann, 389 Mass. 754, 506 N.E.2d 879 (1987). 16 J. Stacy and B. Danninger, "Seize Control of Property Settlements," Case and Comment, Vol. 93, No. 4 (August 1988), pp.

21-22 (emphasis in the original). 17 See K. MacIntyre, "Division of U.S. Army Reserve and National Guard Pay upon Divorce," 102 Mil. L. Rev. 23 (1983).

The formula for Reserve/National Guard retirement pay is: BASE PAY X [NUMBER OF RETIREMENT POINTS divided

by 360] X 2.5%. Remember the “High-3” rules for calculating retirement base pay, set out above, for those who start their

military service on or after 9/8/80. 18 10 U.S.C. § 1408 (c) (1). 19 Mansell v. Mansell, 490 U.S. 581 (1989). 20 These provisions are found in the military pension division regulations, supra note 1. 21 See, e.g., Carranza v. Carranza, 765 S.W. 2d 32 (Ky. App. 1989). 22 10 U.S.C. 1447-1455. 23 10 U.S.C. 1448 (a) (2) (A). 24 10 U.S.C. 1448 (a) (2) A). 25 10 U.S.C. 1448 (a) (2) (B). 26 10 U.S.C. 1450. (f). 27 10 U.S.C. 1448 (b) (2). 28 See, e.g., Rockwell v. Rockwell, 77 N.C.App. 381, 335 S.E.2d 200 (1985). 29 McClure v. McClure, 647 N.E.2d 832 (Ohio 1994). 30 Diaz v. Babauta, 66 Cal.App.4th 784, 78 Cal.Rptr.2d 281 (Cal. Ct. App. 1998); In re Marriage of Heupel, 936 P.2d 561

(Colo. 1997); In re Marriage of Crawford, 884 P.2d 210 (Ariz. Ct. App. 1994); Kelson v. Kelson, 675 S.2d 1370 (Fla. 1996);

Blair v. Blair, 894 P.2d 958 (Mont. 1995); Pavatt v. Pavatt, 920 P.2d 1074 (Okl. Ct. App. 1996); Fisher v. Fisher, 462 S.E.2d

303 (S.C. Ct. App. 1995); Marsh v. Wallace, 924 S.W.2d 423 (Tex. Ct. App. 1996). Abernethy v. Fishkin, 638 So.2d 160

(Fla. Ct. App. 1994).

Ct. App., 1994); Kulscar v. Kulscar, 896 P.2d 1206 (Okla. Ct. App. 1995). 31 See, e.g., Boger v. Boger, 103 N.C. App 340, 405 S.E.2d 591 (1991). 32 See, e.g., In re Marriage of De Shurley, 255 Cal. Rptr. 150, 207 Cal. App. 3d 992 (1989) and In re Marriage of Lawson,

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256 Cal. Rptr. 283, 208 Cal. App.3d 446 (1989). 33 See, e.g., Johnson v. Johnson, 317 N.C. 437, 346 S.E.2d 430 (1986). 34 Dillard v. Dillard, 772 S.W.2d 355 (Ark. Ct. App. 1989). See also Chotiner v. Chotiner, 829 P.2d 829 (Alaska 1992).

(Rev. 11/5/12)

* * *

This SILENT PARTNER was prepared by COL Mark E. Sullivan (USAR, Ret.). For revisions, comments or corrections, contact him at

Sullivan & Tanner, P.A., 5511 Capital Center Drive #320, Raleigh, N.C. 27606 [919-832-8507] or at [email protected].

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SILENT PARTNER Military Pension Division and The Big Freeze:

Rules, Remedies and Res Judicata

SILENT PARTNER is a resource for military legal assistance attorneys and civilian lawyers, published by the

Military Committee of the American Bar Association’s Family Law Section and the North Carolina State Bar’s

Committee on Legal Assistance for Military Personnel. There are many Silent Partner infoletters on military family

law issues. Just go to www.americanbar.org > Family Law Section > Military Committee, or www.nclamp.gov >

For Lawyers. Please send any comments, corrections and suggestions to the address at the end of this document.

Rules, Rules, Rules

A new set of rules for the division of military pensions took effect in 2016 for

servicemembers (SMs) not yet receiving retired pay on a divorce date after December 23, 2016.1

Details are found in three Silent Partner info-letters, “Fixing the Frozen Benefit Rule,” “All

Clauses Considered: Writing the Frozen Benefit Award,” and “Military Pension Division and the

Frozen Benefit Rule: Nuts and Bolts.”

The Frozen Benefit Rule did not require states to alter the formula which is used in dividing

military retired pay. Except for about five states, the nationwide standard for division of retired

pay - whether military, federal, state or private - is called the “time rule.” This rule states that the

share of the non-employee spouse is determined as follows:

A) The former spouse (FS) receives a share, usually 50%, TIMES

B) The marital or coverture fraction, which is pension service during the marriage divided

by total pension service, TIMES

C) The actual retired pay of the employee.

The formula looks like this:

50% 𝑋 𝑚𝑎𝑟𝑖𝑡𝑎𝑙 𝑝𝑒𝑛𝑠𝑖𝑜𝑛 𝑠𝑒𝑟𝑣𝑖𝑐𝑒

𝑡𝑜𝑡𝑎𝑙 𝑝𝑒𝑛𝑠𝑖𝑜𝑛 𝑠𝑒𝑟𝑣𝑖𝑐𝑒 𝑋 𝑎𝑐𝑡𝑢𝑎𝑙 𝑟𝑒𝑡𝑖𝑟𝑒𝑑 𝑝𝑎𝑦

The Frozen Benefit Rule doesn’t alter the spouse’s share. It is still a mandatory 50% in most

community property states and a presumptive 50% in equitable distribution states.

And the Rule doesn’t change the marital fraction. That remains unaltered by federal law.

The only element which is changed is the third one, the pension to be divided. Instead of

distributing the actual retired pay of the military retiree, the court is limited to distribution of a

“snapshot amount,” fixed at the date of the divorce or dissolution.

1 The Frozen Benefit Rule, prescribed in Sec. 641 of the National Defense Authorization Act (NDAA) for 2017 and clarified at

Sec. 624 of NDAA 2018, limits the disposable retired pay which can be divided in divorce and legal separation cases to the

hypothetical retired pay of the SM. The Rule is set out at 10 U.S.C. §1408(a)(4)(B).

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In addition to the Frozen Benefit Rule, federal law prescribes a rule for determining when a

pension can be garnished as property by the retired pay center.2 There must be a ten-year overlap

between the marriage and military service creditable for retirement in order to allow these direct

payments to the FS.3 It is customary to state compliance with the “10/10 Rule” in the pension

division order.4

A third federal rule limits what can be awarded to the FS as property division. The total

retired pay that may be paid to the ex-spouse as property cannot exceed 50% of disposable

retired pay.5

Finally, most states have a rule for date of classification and valuation of marital or

community property. By way of example, this date is the date of separation in California and

North Carolina. It is the date of filing of the matrimonial action in New York. It may be the date

of divorce or the date of irretrievable breakdown in other states.

The text below will explain the confluence of these rules, how the. SM can ensure that the

court complies with the Frozen Benefit Rule, and how the FS can try to avoid its consequences in

order to receive a share of full retired pay.

Remedies for the Servicemember

When the pension division order involves a 10/10 case (i.e., one which can be paid as a

property division garnishment), the retired pay center acts as a “control valve” to ensure that the

order contains the necessary terms so that only disposable retired pay (DRP) will be divided.

The rules in Volume 7B, Chapter 29 of the DoDFMR (the Department of Defense Financial

Management Regulation) limit the DRP (disposable retired pay) to the hypothetical retired pay

which exists on the date of divorce.6 Regardless of how much the servicemember’s total retired

pay may be, only the DRP is subject to division with the former spouse.

Here is an outline of the rules for Frozen Benefit cases when payments are made through the

military retired pay centers:

A) When the divorce is granted after December 23, 2016, AND

B) The servicemember is not receiving retired pay at divorce, then

C) The divisible retired pay cannot exceed 50% of…

2 Retired pay orders for the Army, Navy, Air Force, Marine Corps, as well as the National Guard and Reserves (known as the RC, or

Reserve Component), are processed by the Defense Finance and Accounting Service (DFAS), located in Cleveland, Ohio. Pension

orders for members of the U.S. Coast Guard and Coast Guard Reserve are sent to the USCG Pay and Personnel Center

(http://www.uscg.mil/ppc/), located in Topeka, Kansas. Orders for the commissioned corps of the Public Health Service and the

National Oceanic and Atmospheric Administration are also serviced by the Coast Guard PPC. The Coast Guard generally

follows the rules for pension division set out in the Department of Defense Financial Management Regulation (DoDFMR),

Vol. 7B, “Retired Pay.” 3 10 U.S.C. § 1408 (d)(2). 4 The “pension division order” is a decree of divorce, dissolution, legal separation or annulment, or a settlement agreement

incorporated therein. 10 U.S.C. § 1408(a)(2). 5 See 10 U.S.C. §1408(a)(4) for “disposable retired pay.” The 50% limit is found at 10 U.S.C. §1408(e)(1). 6 Cost-of-living adjustments (COLAs) under 10 U.S.C. § 1401a are added to this amount between the divorce date and the date of

actual retirement.

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D) The “snapshot amount” that would have been paid to the member if he or she had retired

at divorce.7

This restriction, operating through the retired pay center, protects the SM. It ensures that the

garnishment of his or her retired pay for a former spouse will not exceed the limits imposed by

federal law. It will always be the lesser of 50% of the DRP or the fraction or percentage of DRP

stated in the pension division order, or resulting from the terms or formula in the order.

Beyond the Domain of DFAS

That protection disappears when there is no 10/10 overlap. Instead of having two layers of

protection - the courts and DFAS - the SM must rely solely on the judge to enforce the limits of

federal law.

This may be a difficult challenge for the court, since few judges have sufficient knowledge

about military pension division, let alone the new restrictions of the Frozen Benefit Rule, to

establish and enforce the boundaries. Since most cases are settled, not tried, the judge seldom

reads the clauses and paragraphs in the pension division order before signing it. In contested

cases, the judge often makes a ruling and then directs one of the attorneys to “draw me an order”

to implement the pension division.

And that’s the next problem. Few attorneys are familiar with the requirements of the Frozen

Benefit Rule, since the division of retired pay in divorce cases is the province of state laws and

rules, not federal restrictions.

What may happen is that the pension division order gets drawn in the old, time-tested way,

with the FS getting 50% of the marital share times the SM’s actual retired pay. No one is paying

attention to the restrictions set out in the Frozen Benefit Rule; the attorneys and the court may

not even be aware of the impact of Sec. 641 of the National Defense Authorization Act for Fiscal

Year 2017, its clarification in Sec. 624 of the NDAA 2018, the codification of these changes in

the USFSPA at 10 U.S.C. §1408(a)(4)(B), and the requirements of Section 2908, Chapter 29,

Volume 7B of the DoDFMR.

What will happen at retirement if such an order was entered years before, when the SM was

still serving? In that situation, the payments will not come from DFAS since the order does not

comply with the 10/10 Rule. The FS will want enforcement so that she or he can receive a share

of the military pension, which is now in “pay status,” with the military retiree getting 100% of

the payments. Upon the motion or application of the FS for compliance or contempt, the order to

be enforced may be one which provides a larger share to the FS than that which is allowed by

the Frozen Benefit Rule. And the judge may be inclined to leave things as they stand, citing the

legal enforcement doctrine of res judicata. This doctrine bars the relitigation of matters which

7 To assist the retired pay center in calculating this amount, the rules at Section 2908 of Volume 7B, Chapter 29 require that the

instrument dividing military retired pay must set out these two numbers as of the date of divorce: the SM’s “High-3” pay (i.e.,

the monthly average of his or her highest 36 months of compensation, pursuant to 10 U.S.C. §1407) and the SM’s years of

creditable service (or, in the case of Guard/Reserve personnel, the total retirement points).

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were or could have been litigated at the time of the initial order. When a court order is erroneous

but the losing party fails to appeal it, the order stands and is enforceable, even as to those issues

erroneously decided.

Strategies for the Servicemember

The game plan for the. SM should contain two strategies. The first is to make sure the

pension division order contains the correct wording. This not only means the two data points at

the divorce date which are required by the DoDFMR, i.e., the years of creditable service (or total

points for Guard/Reserve personnel) and the “High-3” pay of the member. It also means ensuring

that the order states clearly what is divided, namely, the disposable retired pay of the SM. Since

by definition this order will not be going through the halls of DFAS, the two data points will not

provide any guidance for DFAS in limiting the amount of retired pay which can be divided. The

utility of these two data points is to peg the amount of the member’s hypothetical retired pay as

of the date of divorce. Without stern supervision by the SM’s attorney, it’s possible that the order

will omit the data points entirely.

How is retired pay calculated? Regular retired pay (i.e., retired pay based on active-duty

service years) or non-regular retired pay (i.e., retired pay based on Guard/Reserve service)

involves multiplying the retired pay base by the retired pay multiplier.

A) For those entering military service on or after September 8, 1980 and not in the Blended

Retirement System, the retired pay base is the average of the highest three years (36-

months) of monthly basic pay which the member received, whether consecutive or not.8

This is known as the “High-3.”

B) The retired pay multiplier for these SMs is 2.5% times the years of creditable service.9

It would be all too easy for the final order to state that “the spouse’s share is 50%” and that

“the marital fraction is 124 months of creditable service divided by total service at the time of

retirement” but then to lose focus when it comes to what is to be divided. The order needs to

contain a clear directive that “the pension to be divided is disposable retired pay measured on the

date of divorce as if the military member had retired on that day,” subject only to passive cost-

of-living adjustments (COLAs) under 10 U.S.C. § 1401a.

The second remedy is to appeal immediately if these essential clauses are not present. Failure

to appeal means that, if enforcement proceedings follow, whatever was stated in the order will be

binding on the SM/retiree based on res judicata. Appealing a trial court order can be expensive

and time-consuming. It may require a specialist in appeals to be sure that the record is complete,

the deadlines are met, and the arguments are crafted soundly. But a SM’s failure to appeal

means that his hands are tied on the issue of full payment to the FS; the rule of res judicata (also

8 10 U.S.C. § 1407. See also DoDFMR, Vol. 7B, Ch. 1, ¶010102. 9 10 U.S.C. § 1409. For RC members, the “years of service” component is determined by dividing the total number of retirement

points by 360. 10 U.S.C. § 12733.

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called “the law of the case” and - in the Restatement of Judgments - “claim preclusion”) will bar

future remedies and relief for him or her.

As a final point, counsel for the SM may want to include a clause which states what is to be

divided and how that amount was calculated. This makes it clear what amount is available for

division, regardless of whether some other judge is assigned down the road, another attorney

takes over for the spouse, or a new attorney signs on to represent the servicemember. Such a

clause in the pension order might read:

As of the date of divorce,

* the “High-3” retired pay base for John Doe, the defendant (used for servicemembers

who entered military service on or after September 8, 1980), is $4,567, and

* his years of creditable service is 24.5, and thus

* his disposable retired pay for division herein is $4,567 X 24.5 X 2.5%, pursuant to 10

U.S.C. §1407 and 1409, or $2,797.29.

This is pursuant to Sec. 641 of the National Defense Authorization Act for 2017 and 10

U.S.C. §1408(a)(4)(B).10

If the former spouse’s attorney is not alert to the issues in military pension division, it may

even be possible for the SM to get an agreement providing for the specified sum as a fixed dollar

amount. The award of a fixed dollar amount in a pension division order, decree or incorporated

agreement means that the recipient receives no COLAs (cost-of-living adjustment), and this

would be a substantial windfall for the SM.

Remedies and Res Judicata - Relief for the Spouse

Advocacy for the spouse or former spouse means two strategies. First of all, it means use of

standard pension division orders and language. Inertia often governs what lawyers do when they

prepare - at the end of the case - implementing orders for division of retired pay. Whether these

orders are QDROs (qualified domestic relations orders) or other instruments, everyone wants a

sample, a “go-by,” so that the blanks can be filled in, the signatures applied, the document filed

and the case closed.

This is the time for the attorney for the spouse/FS to prepare what might be called the

“standard order” using the usual language about division of the actual retired pay of the

servicemember. If this is the order which the judge signs, then it becomes the governing

instrument and can be enforced later on under res judicata; an unappealed order - even if it

contains substantive legal errors - is binding on the parties and enforceable.

Military. Pension Division and Res Judicata: The Golden Key

10 This example assumes, for the sake of simplicity, that there are no deductions from gross retired pay for the SBP premium, a

VA waiver or other items set out at 10 U.S.C. §1408(a)(4)(A).

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When the door to pension division is locked for the FS because of the VA waiver, the only

way to obtain entry is to get a key. The golden key for former spouses in VA waiver cases is res

judicata. Let’s examine some of the facets of this valuable tool. Here are four of them:

A) It was res judicata that formed the basis for upholding the division of military retired pay

despite the Supreme Court’s holding in McCarty v. McCarty that military pensions could

not be divided without Congressional authorization, enacted afterward as the USFSPA. In

re Marriage of Sheldon, 124 Cal. App. 3d 371, 177 Cal. Rptr. 380 (1981) (state courts

specifically held that the McCarty decision did not prevent division of military pension

based on res judicata); cert. dismissed Sheldon v. Sheldon, 456 U.S. 941 (1982) (petition

for certiorari was filed, but Supreme Court dismissed it for want of a substantial federal

question; dismissal on this basis is an adjudication on the merits).

B) Even though federal law bars a court from dividing VA disability compensation, or the

military retired pay that is waived to receive it, res judicata has been used to uphold the

division of gross retired pay without deduction of the VA waiver. Mansell v. Mansell,

217 Cal.App.3d 219, 265 Cal.Rptr. 227 (1989), cert. den. 498 U.S. 806 (1990); Ocasio-

Santiago v. Rockwood, No. 48066-2-II2017 Wash. App. LEXIS 740 (Wash. Ct. App.,

Div. Two, February 13, 2017) (appellate court denied claim of retiree that trial judge had

impermissibly divided his military disability benefits, stating that appellant had not raised

these arguments below and thus was barred from bringing them up in the appeal);

Winters v. Winters, 2017 IL App (5th) 160217-U, 2017 Ill. App. Unpub. LEXIS 1563 (Ill.

Ct. App., 5th Dist., July 31, 2017) (unpub.) (retiree’s agreement to pay share of pension to

former spouse plus res judicata barred his later claim that he did not have to pay because

of VA payments received and the “VA waiver”).

C) Even though in general MDRP (military disability retired pay) cannot be divided, res

judicata has been employed to uphold a trial court’s division of MDRP. Evans v. Evans,

75. Md. App. 364, 541 A.2d 648 (1988) (collateral attack on such a judgment is barred

when there was no previous appeal); Rudolph v. Jamieson, No. 88, September Term,

1988, 2018 Tex. App. LEXIS 3983, 2018 WL 2648514 (Tex. Ct. App., 3d Dist., June 5,

2018) (same).

D) The U.S. Supreme Court has specifically proclaimed that the refusal of a court to grant

relief because of res judicata is not reviewable because of constitutional error: “Whether

the doctrine of res judicata, as applied in California, should have barred the reopening of

pre-McCarty settlements is a matter of state law over which we have no jurisdiction.”

Mansell v. Mansell, 490 U.S. 581, 586, fn. 5 (1989).

The Savings Clause

There is another substantive basis for arguing that the FS should receive a share of the full

retired pay of the member, not just a portion of a fixed and frozen payment. 10 U.S.C. § 1408

(e)(6), the “savings clause” in the Uniformed Services Former Spouses’ Protection Act

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(USFSPA), allows the courts to employ state enforcement remedies for any amounts which may

not be payable through the retired pay center.11 Counsel for the FS can argue to the judge that

the court may still hold the retiree liable for the unpaid portion of the pension under 10 U.S.C. §

1408 (e)(6). That section of USFSPA, known as the “savings clause,” states:

(6) Nothing in this section shall be construed to relieve a member of liability for

the payment of alimony, child support, or other payments required by a court

order on the grounds that payments made out of disposable retired pay under this

section have been made in the maximum amount permitted under paragraph (1) or

subparagraph (B) of paragraph (4). Any such unsatisfied obligation of a member

may be enforced by any means available under law other than the means provided

under this section in any case in which the maximum amount permitted under

paragraph (1) [e.g., 50% of disposable retired pay] has been paid….

Numerous court decisions have held that orders which require the retiree to pay more than

50% of disposable retired pay are not void or invalid; they are simply not enforceable through

garnishment from the retired pay center for amounts in excess of 50%.12 If challenged on the

issue of what may be divided, counsel for the FS can attempt defeat the claim of the SM/retiree

(that federal law preempts state court orders) by arguing that this section of USFSPA provides an

“escape hatch” for the FS in enforcement of the pension division order.

Denominator Dilemmas

The second issue which must be addressed is the standard denominator of the marital or

coverture fraction used in most states. Except for Texas, Florida, Tennessee, Kentucky and

Oklahoma, virtually all states divide the pension payments actually received, and they use a

fraction to determine what portion of the pension was acquired during the marriage. The

numerator of the fraction is always that time during marriage in which the pension was earned; it

ends at the date specified in state law for classification and valuation of marital or community

property (e.g., the date of divorce, date of separation or date of marital dissolution filing). The

denominator of the standard time-rule fraction is the total time of service toward the pension.

Here is the choice point for the spouse’s attorney. And there is a risk with either choice that

is made.

• Should the denominator remain the full term of pension service?

o The advantage of this would be its consistency with the rest of the “standard order”

that the FS’s attorney is using. If nothing is changed, nothing is unusual and nothing

11 See also Brett R. Turner, EQUITABLE DISTRIBUTION OF PROPERTY (3rd Ed. & 2016-2017 Supp.), Sec. 6.4. 12 See, e.g., In re Hicks, 530 B.R. 912 (M.D. Fla. 2015); In re Madsen, 2002 Bankr. LEXIS 2037 (Bankr. S.D. Iowa

2002); In re Mackmeekan, 117 B.R. 642 (D. Kan. 1990); Ex Parte Smallwood, 811 So. 2d 537 (Ala. 2001); Grier

v. Grier, 731 S.W.2d 931 (Tex. 1987); Forney v. Minard, 849 P.2d 724 (Wyo. 1993); Marquis v. Marquis, 175

Md. App. 734, 931 A.2d 1164 (Md. Ct. Spec. App. 2007); Deliduka v. Deliduka, 347 N.W.2d 52 (Minn. Ct. App.

1984); Stout v. Stout, 144 So. 3d 177 (Miss. App. 2013); Gonzalez v. Gonzalez, 2011 Tenn. App. LEXIS 21;

Maxwell v. Maxwell, 796 P.2d 403, 406 n.6 (Utah Ct. App. 1990); In re Marriage of Bocanegra, 58 Wn. App.

271, 792 P.2d 1263 (Wash. Ct. App. 1990); and Geesaman v. Geesaman, 1993 Del. Fam. Ct. LEXIS 126 (Del.

Fam. Ct. 1993).

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