Military Divorce – Retirement & Benefits

Posted: 9 October, 2021

When it comes to dividing up marital assets in a divorce, everyone should be aware that, while civil courts have the right to divide the asset, special rules apply to military benefits, especially pensions. That includes any retirement account, including pensions. If you contributed to the account during the marriage, it is considered community property and must be divided along with other assets.

How are benefits calculated for purposes of determining marital property?

To value a military pension or other asset, it is necessary to determine the amount of time the service member was both married and in the military. If both spouses were married before the military spouse entered the military, then the marital share will begin with the day of enlistment, but if you were already in the service prior to your marriage, then the marital share will commence with the date you were officially married. Likewise, the marital share of your military benefits will stop with the filing of the divorce petition, or when the service member exits the military. In those types of cases, the marital share calculates the amount contributed while you were both married and serving. That will aid in determining percentage of your pension your former spouse will receive.

For instance, if you served in the military for 20 years in the military, and you got married on your 10th anniversary in the service, the marital share will be 50 percent of half your pension, which comes to 25 percent of your total pension amount in the state of Nevada, since all marital assets are to be divided 50/50 under state laws. Other states may have different laws.

The Frozen Benefit Rule may extend the time frame somewhat. This is a relatively new federal law that creates a hypothetical pension calculation combined with other factors in the final divorce order and that takes time. Consider a Frozen Benefit Rule hypothetical: If the hypothetical pension subject to the Frozen Benefit Rule is worth $100,000, and the above numbers apply, this is how the numbers will play out.

$100,000/20 years of contributions = $5,000 per year

$5,000 x the 10 years of the marriage = $50,000

$50,000 marital share split between 2 people = $25,000

That means the non-military spouse will receive $25,000 in value from the pension. However, when the service member retires, the non-military spouse will receive a cost of living adjustment, as calculated by the Department of Defense for the intervening years between the divorce and the military spouse’s retirement date. While this is an overly simplified example, it provides a general idea how each spouse’s share is calculated.

It is also possible for you and your spouse to divide the amount any way you’d like, as long as you both agree on the division. The only qualification is that you must use the hypothetical pension amount arrived at using the Frozen Benefit.

Each type of military benefit enjoyed by the non-military spouse has its own circumstances to deal with when the couple is granted a divorce. Here is how each type of benefit is affected and which ones the non-military soon-to-be ex-spouse can expect to keep post-divorce.

Medical Benefits

Under some very limited circumstances, the non-military spouse may receive medical benefits even after the divorce. Of course, as is the case with most government benefits, conditions exist. In many cases, the non-military ex-spouses may be prohibited from receiving coverage through the military if they have health insurance available through their own employer. If they have other health insurance available, they can be precluded from keeping access to their ex-spouse’s military health benefits.

There is also the 20-year rule, which is best known as a 20/20/20 test. In order for a non-military ex-spouse to qualify for TRICARE military health coverage and a number of other benefits they received during the marriage, the non-military ex-spouse must have been married to a service member for at least 20 years. Also, said service member must have served for at least 20 years and there must be a 20-year overlap between the spouse’s military service and the marriage.

In other words, for a non-military ex-spouse to qualify for TRICARE health benefits, the spouses must have been married and extended TRICARE benefits for 20 years before the divorce and they must not have available health insurance coverage through a current employer.

If the overlap between military service and years of marriage was more than 15 but less than 20 years, the non-military ex-spouse may have a few options available. One possible option is, if you are really close to the required 20 years of marriage and military, you may petition the court to hold off finalizing the divorce until the 20-year requirement has been met. The judge has the discretion to make such a determination. Another option is to request a formal extension of military benefits, although this will generally only last for a year beyond the official date of the divorce.

Another thing to keep in mind is, any TRICARE benefits a non-military ex-spouse receives will cease when they remarry another person.

Base Privileges

Whether or not a non-military ex-spouse gets to maintain their base privileges will also largely be based on the 20/20/20 rule. That means their ability to maintain base privileges after the divorce will be based on the length of time they were both married and how long the service member served.

Even if the non-military ex-spouse receives base privileges after the divorce, it is important for that ex-spouse to understand that certain restrictions apply, even if they qualify under the 20/20/20 rule.  For example, eligible spouses will lose base privileges when they remarry, and all other benefits received based on the 20/20/20 rule will be revoked.

GI Bill Benefits

The GI Bill refers to federal legislation that offers special education benefits to those service members who have served at least 90 days of active duty service since September 10, 2001 and have been honorably discharged. These education benefits can be applied to tuition costs for up to 15 years following your discharge, if you were discharged prior to January 1, 2013, although those who were discharged after that date have no such time limit for using the funds, which can be used to cover all the in-state tuition and fees at public universities along with providing a housing and book allowance while in school.

The Pentagon has a standard policy that applies to the transfer of Post-9/11 GI Benefits to a spouse or dependent, and a divorce will have no effect on the rights of a spouse or dependent. Service members may transfer their benefits to a spouse immediately, but they must serve at least 10 years to transfer to a dependent. It is important to note, however, that the service member retains the right to revoke or modify the transfer of GI Bill benefits at any time, which is something the non-military spouse should keep in mind.

The Uniformed Services Former Spouses Protection Act (USFSPA)

When it comes to divorces involving members of the armed services, several federal laws come into play that are never factors in a purely civilian divorce.

One such law is the Uniformed Services Former Spouses Protection Act (USFSPA). The USFSPA was passed in 1982, in response to a Supreme Court decision that determined that non-military spouses could not recover any portion of a service member’s pension in a divorce. In essence, this law establishes that state courts will divide a military pension based on state law. That means, since Nevada is a community property state and requires equal distribution of community property between spouses in a divorce.

The USFSPA permits the Defense Finance and Accounting Service (DFAS) to directly pay the former spouse their entitled benefits if:

  • The marriage lasted at least ten years, AND
  • During those ten years one spouse served in the military, AND
  • There is in place a court order saying the spouse is entitled to direct payments.

If all of these conditions are met, the prescribed amount will be sent directly to the former spouse after they complete some paperwork for the Defense Finance and Accounting Service.

The bottom line is ex-spouse who was married for at least 20 years will keep most of  the military benefits enjoyed during the marriage.  An  ex-spouse and any children will continue to qualify for military benefits, regardless of the divorce.