High Court Clarifies Property Division In Military Divorce Cases
A state cannot force an offset if a veteran elects to forgo retirement payments for disability payments even if it affects the property settlement, according to a unanimous decision from the United States Supreme Court.
In 1991, an Arizona family court awarded a woman half her husband’s military pension in a divorce settlement. Over a decade later, the ex-husband opted to waive $250 of his monthly (and taxable) pension benefits and receive $250 a month in non-taxable disability payments instead. His ex-wife then asked a court to alter the settlement terms, since she lost $1,500 a year ($125 per month) when her ex-husband unilaterally modified the payment arrangement. Writing for the Court, Justice Stephen Breyer ruled that the Arizona court had no power to modify the settlement under the Uniformed Services Former Spouses’ Protection Act. Justice Breyer said that a 1989 Supreme Court case was directly on point and thus settled the matter.
Justice Breyer acknowledged that the decision created a “hardship,” so he cautioned lower courts to “to take account of the contingency that some military retirement pay might be waived, or, as the petitioner himself recognizes, take account of reductions in value when it calculates or recalculates the need for spousal support.”
Support Issues in Military Divorces
The government estimates that soldiers receive an average compensation package of $99,000 per year. In most cases, the servicemember’s monetary compensation is far, far below that figure. Where does the rest of the money come from, and is it measurable for spousal and child support purposes?
Servicemembers may purchase goods at subsidized prices, and the savings available at the commissary/post exchange accounts for about 40 percent of nonmonetary military compensation. The other 60 percent consists of deferred income and health benefits.
Additionally, not all monetary compensation comes from strict cash wages, as most servicemembers receive housing allowances and income tax advantages.
The IRS broadly defines “gross income” as “all income from whatever source derived.” Under this definition, which most family courts in Florida have adopted, housing allowance and other income items certainly count in the calculation, but savings items, like lower prices at the PX and lower income taxes, probably do not count.
Even if a party can convince a court to include cost savings as income under a theory that money is money whether it is coming in or staying in, the party would probably have a hard time quantifying the amount.
Military Retirement Plans
In Florida, these plans are marital property, which is subject to a 50-50 split. Division usually follows the 20/10/10 rule. In order for the Defense Finance and Accounting Service to divide the plan, the servicemember must be at least twenty years from retirement and must have accumulated at least ten years of service. Additionally, the marriage must have lasted at least ten years.
The 50-50 split is mandatory unless the owner is delinquent on child or spousal support, in which case the split can be as great as 65-35.
Even if the 20/10/10 rule does not apply, the non-servicemember spouse may still be eligible for a portion of the account. However, the DFAS will not manage the payments, so the parties usually agree on an offset. Cost-of-living adjustments, Survivor Benefit Payments, and some other retirement-related issues must be worked out separately.
Finally, attorneys should take Justice Breyer’s advice and tailor military divorce property settlements in such a way that the non-servicemember spouse is protected in the event that the other spouse forgoes part of the payments for any reason.
Partner with Aggressive Attorneys
Military divorces involve unique property division issues. For a free consultation with an experienced family law attorney in Port St. Lucie, contact Eighmie Law Firm, P.A. today. Convenient payment plans are available.
Resource:
supremecourt.gov/opinions/16pdf/15-1031_hejm.pdf