Military Issues in Family Law Cases

Military service members and their spouses (and former spouses), face unique challenges in divorce cases, as well as non-divorce cases involving custody, visitation, and support of children. Chief among these issues are those regarding the division of military retirement benefits, which often arise during and after a divorce. Issues also arise involving temporary changes of custody, visitation and support of children during temporary duty assignments and deployments. With over 31 years of experience, the Law Office of J. Michael Clay is keenly aware and capable of handling these unique issues.

Military Retirement

Texas is a community property state, meaning most property acquired during a marriage is subject to being divided by the Court and allocated between both parties or awarded to one party or the other. Nothing in the rules prevents the parties from agreeing that a former spouse will waive his or her interest in the retirement, but that is an important decision which should not be made lightly.

When it comes to how the retirement will be divided, there is a big difference in the calculations for a servicemember who is currently serving active duty/reserve duty at the time of divorce and one who is already retired as of the date of divorce (see below).

10/10 Rule. Under Texas law, a former spouse is entitled to a portion of a servicemember’s existing or future retired pay regardless of the length of the marriage. Many servicemembers and/or their spouses mistakenly believe that the parties must have been married for at least 10 years of the servicemember’s service time creditable towards retirement in order for the non-military spouse to be awarded a share of the retirement. This is wrong. The “10/10 rule” actually only dictates whether DFAS (Defense Finance and Accounting Service) will enforce the division of benefits by garnishing the servicemember’s retired pay and send it directly to the former spouse. If the parties were not married for ten years during ten years of the servicemember’s service time creditable towards retirement, the servicemember will be responsible for paying the former spouse directly. Example: Two parties have been married for more than ten years as of the date of divorce, but the servicemember only served 8 years creditable towards retirement during the marriage—servicemember would have to send former spouse’s share to him or her directly. It is common, but not required, to include a provision in the divorce decree requiring the servicemember to set up a voluntary allotment directly from his or her retirement pay to be sent to the former spouse. This is a very important and often-misunderstood rule that a client should discuss at length with his or her attorney in any divorce case.

Retired as of Divorce. If a servicemember is already retired, the calculation of the former spouse’s share is a simple one. The time spent active duty while married (including reserve duty creditable towards retirement) is divided by the total amount of creditable service the servicemember had served as of the date of his or her retirement. VA disability benefits are NOT divisible as property as per federal law, and the portion of the servicemember’s retirement subject to division is limited to the servicemember’s “disposable retired pay”. “Disposable Retired Pay” is defined by federal law, and does not include certain deductions from the servicemember’s gross retired pay, such as Survivor Benefit Plan premiums and certain other less common deductions. The Law Office of J. Michael Clay is fully aware of these rules and will take the client through the process step-by-step.

Active or Reserve as of Divorce. Federal law now dictates how military retirement benefits may be divided by a state court. Essentially, the federal rules require that the servicemember’s hypothetical retired pay be calculated as of the date of divorce, which is then multiplied by 50% of the community property portion of that figure, which is in turn converted into a percentage of the servicemember’s disposable retired pay upon retirement. That percentage will then be applied to the servicemember’s disposable retired pay from then on, including Cost of Living Allowance (COLAs) after the divorce. If you think this sounds confusing, you’re right. Even many attorneys who do not regularly deal with military retirement benefits often become confused over these issues. J. Michael Clay is highly experienced in making these calculations and will take each client through the maze of calculations and ensure that each client understands how the calculations were made.

Payment to the former spouse of his or her share of the military retirement benefits does not begin until the servicemember actually begins receiving retired pay, and there are a few other restrictions for reserve duty retirement. Once the servicemember begins receiving retired pay, payment of the retirement benefits to the former spouse lasts until the servicemember or the former spouse dies, unless a Survivor Benefit Plan election has been made (see below). Either spouse’s remarriage in the future does not effect the amount or duration of payment of the former’s spouse’s portion of the retired pay.

Survivor Benefit Plan

The Survivor Benefit Plan is for all practical purposes a life insurance annuity which protects the former spouse’s share of the servicemember’s retired pay in the event the servicembmember predeceases the former spouse. The amount of the annuity can be tailored to approximate the dollar amount the former spouse had been receiving at the time of the servicemember’s death. A current or future election of the Surivor Benefit Plan may be ordered by the Court, or the parties can simply agree that the servicemember will take that election. If a judge orders the election to be taken (or to continue), most Courts will require the former spouse to pay the cost of that premium since the SBP election only benefits the former spouse. However, the cost of the premium is automatically deducted from the servicemember’s gross retired pay and is NOT included in the servicemember’s disposable retired pay, which means that both parties are paying a portion of the SBP premium. DFAS will not make any adjustments to account for the former spouse being required to reimburse the servicemember for his or her cost of that premium. This means the divorce decree will need to have provisions for the former spouse to directly reimburse the servicemember, or, more common and easier for everyone to deal with these days, the former spouse’s percentage of the disposable retired pay can be reduced to account for that reimbursement. When using this method, there are certain other factors which both the servicemember and the former spouse must consider before making a final decision. Again, if you find all of this confusing, you are not alone, and J. Michael Clay will explain all the options in detail with you to ensure that your best interests are protected.

Thrift Savings Plan

The Thrift Savings Plan (TSP) is another important element of military retirement benefits. The TSP is just like a 401(k), and has a value as of the date of divorce. The portion of the TSP accumulated during the divorce is subject to division by the Court. An important consideration in dividing TSP accounts is whether the account is set up like a conventional IRA, meaning the money will be taxed in the future as income, or if it is set up like a ROTH IRA which means it has already been funded with after-tax dollars and will not be subject to income taxes in the future. If a former spouse is awarded a portion of the TSP, neither party will be subject to the normal 10% penalty for pulling the money out, no matter when it is pulled out. Generally, the former spouse will need to roll the money over into a similar retirement account after the money has been segregated by the Office of Personnel Management (OPM) pursuant to a separate court order done at the time of the divorce.

Blended Retirement System

Military rules and federal law now allow entering servicemembers to opt into the “Blended Retirement” system, which contributes more money into a TSP account (see above), while providing a smaller military pension upon retirement. Both the TSP and the pension will be subject to division by the Court, to the extent that such benefits accrued during the marriage. In any divorce, it is important for both parties to understand the implications and ramifications of this system.

Post-Divorce Retirement Issues

It is unfortunately very common for military retirement language in divorces to be drafted incorrectly, resulting in DFAS rejecting the divorce decree or separate military retirement pension division order (MRPDO) that they receive after a divorce has become final. In those cases, it is often necessary for the former spouse and/or the servicemember to go back to court to get a new MRPDO which complies with DFAS requirements. J. Michael Clay has handled numerous cases like this and will help you come to an amicable solution and/or take the matter before a judge. It is obviously best for everyone if the MRPDO is drafted correctly in the first place, and J. Michael Clay will work diligently to ensure that your MRPDO is drafted correctly. If a military retirement order that was drafted or approved by J. Michael Clay is rejected by DFAS, J. Michael Clay will correct it and/or go back to Court with the former client at no charge to the client.

Another issue which sometimes arises after the divorce arises when a servicemember does not pay the former spouse his or her share of the retired pay. This can happen when a military retirement pension division order for some reason does not get sent in to DFAS (or has been rejected by DFAS), or in cases where DFAS cannot enforce the division of retired pay because the parties did not meet the requirements of the 10/10 rule (see above) and the servicemember simply did not pay the former spouse for some reason. When this happens, the former spouse can normally take the servicemember back to court to recover the amounts that the servicemember should have paid him or her, and the penalties can be significant. There are statutes of limitations that limit how far a former spouse can go back for unpaid retirement (2 or 4 years under Texas law, depending on the language of the order), so it is important to address such issues as quickly as possible if the need arises.

Custody and Visitation Issues

Active duty service members who have primary custody of children, whether through a divorce or other proceeding, must be aware of special provisions that may be put in place to cover situations where the servicemember receives a temporary duty assignment (TDY) or deployment which does not allow for the servicemember to take the child with him or her to the temporary assignment location. The Texas Family Code provides for special provisions to be included in the custody order that allow the non-primary custodian parent to take temporary custody and/or visitation of the child and to temporarily modify the child support provisions in that event. However, this temporary change of custody cannot be used by the non-primary custodian to later argue that the primary custodian has “voluntarily relinquished” custody of the child for purposes of making a permanent custody modification. These provisions are extremely important to both the servicemember and non-servicemember, and should be discussed at length with your attorney before signing a final divorce decree or other custody decree.

Conclusion

When one or both parties to a divorce or child custody or support proceeding are military servicemembers, there are unique issues which must be well-understood by the parties and their attorneys. J. Michael Clay understands these issues and will help you navigate them so that your rights are adequately protected, regardless of whether you are the servicemember or the non-servicemember.