This is the fifth in a series of articles on dividing military retirements in a divorce. Read our other articles on military divorces and retirement.
Once you have determined that a part of the retirement will be divisible and how much of the pension belongs to each person, the question becomes, how do you divide it? There are several ways to go about this. You can:
Award the former spouse a percentage of the pension (most common);
Award the former spouse a specific dollar amount from the pension (less common);
Award the former spouse a "buy out" (least common).
Option 1: Award the former spouse a percentage of the pension
The most common way to divide a pension is to award the civilian spouse a percentage of the pension. This is commonly done because the military member isn't retired yet and it isn't know what the exact value of the pension will be. You don't yet know how many years they will serve or what rank they will retire at. This means that you are dividing a yet unknown number. This has to be done VERY carefully because if you do it wrong it will not be enforceable when the time comes. So many attorneys do not know DFAS' rules about how to do this. But because this is the most common way to divide the pension it means it is most likely how YOU will be dividing retirement pay. It is important to do it right now because do-overs later are unlikely to be successful and will cost a lot of money. Stay tuned for our upcoming blog post on how to write this formula!
Option 2: Award the former spouse a specific dollar amount from the pension
If you already know the amount of the pension, you can simply award the civilian spouse a specific dollar amount (plus adjustments for inflation). This is the easiest way, but really only works if the military member is already retired.
Option 3: Award the former spouse a "buy out" (least common).
A third option, which is the least common, is to offer the civilian spouse a "buy out." Basically, the non-military spouse agrees to receive cash or other assets in exchange for his or her share of the military retirement pay. If you decide to take this route, you will need to figure out the likely value of the pension and then pay out that value at the time of the divorce, therefore substituting the retirement pay. This isn't that common because military retirements are so valuable that most people don't have enough assets to trade. The most common ways this might work is:
If the marriage was short and so the civilian spouse's retirement share is quite small or
The civilian spouse has their own valuable pension and the couple can simply agree that each person keeps their own pension.
How do you value a military retirement to do a buy out? This is a really hard question. Odds are you will need professional help to do it properly. Your best bet may be to try to find a pension appraisers or a CPAs with experience valuing military pensions. They can then estimate the likely value of the retirement pay. But again, buy outs are not common because most people don't have enough assets to make this work before you go down this path, take an honest assessment of whether it can work for you.
When do payments start?
Retirement payments will not begin until the service member actually retires from the military and starts receiving their retirement pay. Military pensions are an all-or-nothing benefit. Except in very limited circumstances, Service members don't receive any retirement pay until they've served for at least 20 years, or if serving in the Reserves or National Guard, have acquired the necessary "points." Once service members complete their terms, or acquire enough points, they're entitled to their full pension. Spouses will not collect their piece of any retirement pay until the service member actually retires (or in the cases of reservists reach the appropriate age as determined by their points).
When do payment stop?
Unless otherwise agreed in the court order, retirement payments will continue until either the member or the spouse dies.
Former spouses who die before the service member cannot pass their benefit into someone else through a will or otherwise. If the spouse predeceases the service member, those payments will revert back to the member's pay.
If the service member predeceases the civilian spouse payments will also stop unless the spouse has been designated as the recipient of the Survivor Benefit Plan (SBP). Read more about SBP here.
How do I get information on the military member's retirement entitlements or points?
During your divorce, this information should be requested through the court's discovery process. The court will provide rules about how discovery is conducted and you can request this information. In many cases however, retirement won't be effective till much later and you won't know the exact dollar amount till much later. You will need new information at the time of retirement to determine the exact dollar amount you are entitled to. Ideally, you can do this without going back to court and going through the discovery process again because... oof. expensive.
If you need information later on, former spouses can contact their ex's service for more information on their ex's retirement. The former spouse may submit a request to the FOIA/Privacy Act office with either an authorization signed by your ex or a subpoena obtained in a federal court. See https://www.dfas.mil/foia/Attorney-Request/ for more details.
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