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  • June 10, 2019

    Military Retired Pay and Benefits Considerations in Divorce Proceedings

    ERISA vs. FSPA – what’s the difference? It’s a vital consideration for divorce practitioners, says James C. W. Bock. Find out what they are, and why the FSPA and the Survivor Benefit Plan statutes matter in family law.

    James Carson W. Bock

    Many, if not most dissolutions involve at least one retirement account, and possibly multiple pensions or other retirement accounts, if not Social Security benefits, for consideration in a divorce action. As of 2017, Wisconsin had approximately 15,000 individuals, Minnesota more than 19,000 individuals, and Illinois had nearly 45,000 individuals listed as active and reserve duty employees (excluding those stationed overseas), according to the Department of Defense Military Manpower Data Center.

    Therefore, knowing and understanding the basics involved with military retired pay and benefits, and any proposed military pension division and benefits order is critical for family law practitioners.


    For family law, and specifically for divorce practitioners, an appropriate consideration of the distinct differences between typical pensions governed by the Employee’s Retirement Income Security Act of 1974 (ERISA)1 and the Uniformed Services Former Spouses’ Protection Act (FSPA)2 is vitally important.

    In 1981, the U.S. Supreme Court held in McCarty v. McCarty,3 “federal law precluded a state court from dividing military nondisability4 retired pay pursuant to state law.”5 After reaching its conclusion and noting the harsh result such conclusion could impose, the Court further noted “Congress may well decide ... that more protection should be afforded a former spouse of a retired service member.”6 Shortly thereafter, in 1982, Congress passed the Uniformed Services Former Spouses’ Protection Act (FSPA).7

    The FSPA and Survivor Benefit Plan (SBP) were enacted to protect a divorcing spouse who wishes to obtain a portion of a military member’s retired pay.8 The FSPA authorizes state courts to divide military retired pay and provides the rules to do so, while the SBP protects the former spouse’s award against the event of the service member’s death and lists the rules for doing so.9 Also, reservists are entitled to retired pay once they reach at least 60 years old and have served at least 20 years.10

    The military makes payments directly to a former spouse provided that at least 10 years of the parties’ marriage overlap with the service member’s military service.11 This is a key factual requirement family law practitioner’s should be keenly aware of when engaging a military service member.

    James C. W. Bock James Carson Whedbee Bock, Minnesota 1998, is principal of JCWB ESQ LLC, Minneapolis, where he concentrates his practice on sports and family law and on criminal, civil, and appellate proceedings in state and federal courts.

    Contrary to many practitioners’ misunderstanding, military retired pay is specifically exempt from the Employee’s Retirement Income Security Act (ERISA).12 Regardless, Wisconsin state interpretive case law makes clear that military retired pay may be considered in a division of marital property upon divorce.13

    Thus, while a Wisconsin court may divide a service member’s pension during a divorce action within the property division, whether by stipulation or contested trial, it must have jurisdiction over the service member and it must make specific findings and awards. This may become a significant problem when practitioners do not fully understand applicable federal law and those fact patterns governed by the FSPA.14

    Considering Survivor Benefit Plan or Reserve Component Survivor Benefit Plan Elections

    Not all military service members have a ‘vested’ pension or ‘earned’ retired pay, as set forth above, for specific requirements must be met. Nonetheless, the FSPA enables state courts to treat ‘disposable’ military retired pay as divisible property.16 While the FSPA “has remained contentious,” understanding the applicable federal law and revisions is mandatory in representing military clients or spouses.17

    For instance, in relation to the Survivor Benefit Plan (SBP) or Reserve Component Survivor Benefit Plan Elections (RCSBP)15 elections provided for under current federal law, 10 U.S.C. 1448 (b)(3)(A)(iii)18 states: “[a]ny such election must be written, signed by the person making the election, and received by the Secretary concerned within one year after the date of the decree of divorce, dissolution or annulment.”

    Consequently, it is critical during a divorce with a party having any potentially eligible military retired pay that specific consideration be given to the survivor benefit requirements to adequately provide for the future division of these assets, given the unique governing law.19

    In other words, SBP coverage can only be secured as long as the divorcing parties agree (preferably in writing) for a timely election or the divorce judgment expressly provides for a timely election. This is a critical practice pointer. Timely obtaining SBP/RCSBP coverage requires specific adherence to distinctly different federal statutes and the Code of Federal Regulations than with standard pensions governed by ERISA.

    For instance, 10 U.S.C. 1408(c)(1)20 states:

    Subject to the limitations of this section, a court may treat disposable retired pay payable to a member for pay periods beginning after June 25, 1981, either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court. A court may not treat retired pay as property in any proceeding to divide or partition any amount of retired pay of a member as the property of the member and the member’s spouse or former spouse, if a final decree of divorce, dissolution, annulment, or legal separation (including a court ordered, ratified, or approved property settlement incident to such decree) affecting the member and the member’s spouse or former spouse (A) was issued before June 25, 1981, and (B) did not treat (or reserve jurisdiction to treat) any amount of retired pay of the member as property of the member and the member’s spouse or former spouse.” Further, 10 U.S.C. 1408(c)(3) states: “[t]his section does not authorize any court to order a member to apply for retirement or retire at a particular time in order to effectuate any payment under this section.

    Life insurance can be considered in lieu of SBP/RCSBP protection should service members desire to reserve their SBP designation for a subsequent spouse.21 This approach would seem to be common, for in cases that are disputed, it may be the only viable option if SBP/RCSBP election within a year of a divorce judgment is not made or ordered to be made (arguably protecting the former spouse). Without an order, award or agreement otherwise, there may be nothing denying the military spouse’s right to preserve a potential future spouse such protection, and thereby providing no protection for the former spouse. This is a critical practice point, and one many malpractice carriers may address with lawyers serving military, former military, or former spouses of military personal clients.

    There is not one correct method to address and preserve potential future division of military retirement pay for a divorcing spouse, but there are express requirements to preserve these benefits.

    As a practice tip, before engaging a military service member or spouse of a military service member, review the applicable federal law and ensure you are prepared for the strict and specific requirements of current federal law.

    For more information contact a military retired pay expert and/or the Defense Finance and Accounting Service.

    Join us at the 38th Annual Family Law Workshop, Aug. 1-3, 2019, at the Stone Harbor Resort and Conference Center in Sturgeon Bay. The Workshop provides a variety of presentations on current issues faced by practitioners. Find out more information and register on Marketplace.


    1 See 29 U.S.C. §§ 1001 et seq.; see also 29 U.S.C. §§ 1003(b)(1) and 1051.

    2 See 10 U.S.C. § 11401 et seq.

    3 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981)

    4 “Disability” pay is not an asset, but is income, and therefore cannot be subject to a property division. 10 U.S.C. §1408; see also Howell v. Howell, 581 U.S. ___, 137 S. Ct. 1400, 197 L. Ed. 2d 781 (2017) (federal statute provides that a state may treat as community property, and divide at divorce, a military veteran’s retirement pay but exempts from this grant of permission any amount that the federal government deducts “as a result of a waiver” of retirement pay that the veteran must make “in order to receive” disability benefits. A state cannot treat as community property, and divide at divorce, the waived portion of the veteran’s retirement pay, even when the waiver occurs long after the divorce order and results in reduced payments to the receiving spouse) and Mansell v. Mansell, 490 U.S. 581, 109 S. Ct. 2023, 104 L. Ed. 675 (1989) (holding: federal law forbade states from treating the waived portion as community property divisible at divorce. Under Mansell, the state could not increase, pro rata, the amount the divorced spouse receives each month from the veteran’s retirement pay in order to indemnify the divorced spouse for the loss caused by the veteran’s waiver).

    5 Longo v. Longo, 266 Neb. 171, 663 N.W.2d 604, 607 (Neb., 2003).

    6 453 U.S. at 235-36, 101 S. Ct. 2728

    7 10 U.S.C. § 1401 et seq. Short title “Military Retirement Reform Act of 1986” entitled: “Computation of retired pay”; see also “A Primer on Dividing Military Pension,” Wisconsin Lawyer, August 1999.

    8 Though also applicable to present spouses and children. See 10 U.S.C. §§ 1408 and 1447.

    9 See 10 U.S.C. 1408(d)(4)

    10 See 29 U.S.C. §§ 1003(b)(1) and 1051

    11 See 10 U.S.C. § 11401 et seq.

    12 See 29 U.S.C. 1003(b)(1) and 1051

    13 See Cook v. Cook, 208 Wis. 2d 166, 560 N.W.2d 246 (1997); see also Cook, at 174, citing Bloomer v. Bloomer, 84 Wis. 2d 124, 129, 267 N. W.2d 235 (1978) (“the pension rights of one or both employee spouses are the most significant marital assets owned by the couple,” and that Wisconsin “is in the forefront of the common-law-property states recognizing the rights of the non-employee spouse [in the pension]”). Citing Cook, at footnote 12: “10 U.S.C § 1408 maintains some limitations on state court treatment of military retired pay. Because the husband does not suggest that the circuit court’s treatment of retired pay in this case is in conflict with federal law, we need inquire no further.” Note, Cook is more of a support case (e.g., income available for support calculations) than pension division, though retains precedential value. See also Howell v. Howell, 137 S. Ct. 1400 (2017) (holding: a state trial court cannot award a former spouse any interest in a service members disability benefits).

    14 10 U.S.C. 1450(f)(3)(B) requires application for SBP election or election change must be made within one year of the date of the divorce Judgment (i.e., before Oct. 17, 2018), and 132 C.F.R. 63.6(c).

    15 See 10 U.S.C. § 1448(a)(1)(B) states: “[p]ersons who would be eligible for reserve-component retired pay but for the fact they are under 60 years of age.” Annotation provides: the term “reserve-component retired pay” means retired pay under 10 U.S.C. § 1223 (or under chapter 67 of this title as in effect before the effective date of the Reserve Officer Personnel Management Act).

    16 SeeMilitary Benefits for Former Spouses: Legislation and Policy Issues,” updated Dec. 10, 2018.

    17 Id., at summary, supra, at footnote 14.

    18 For clarity the entire title of this part (i.e., 10 U.S.C. 1448(b)(3)(A)(iii)) of the ‘Code’ is: “Application of Plan: Insurable Interest and Former Spouse Coverage. – Former spouse coverage by persons already participating in plan. – Election of coverage. – Manner and time of election. –”

    19 See, generally, U.S. Military Defense Finance and Accounting Service.

    20 For clarity the entire title of this part (i.e., 10 U.S.C. § 1408(c)(1)) of the ‘Code’ is: “Payment of retired or retainer pay in compliance with court orders: Authority for To Treat as Property of the and Spouse. –”

    21 See also “A Primer on Dividing Military Pension,” at Practice pointer. “For example, if a former spouse was married to a member for only the first 10 years of his or her military service, and the member is a long way from being eligible to retire, that former spouse may wish to negotiate the type of survivor protection needed. The former spouse’s award could be equally protected by life insurance while keeping the SBP designation open for a potential subsequent spouse of the member (who may be married to the member for an even longer time).”


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