Military Divorce Lawyer on Retired Pay and Pension Issues
Hire A Military Divorce Lawyer For A Military Divorce
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Why Hire a Lawyer With Military Experience? Aren’t All Lawyers The Same?
Clients often refer to me to as “military divorce lawyer”. That is somewhat incorrect. The military does not supply divorce lawyers, but there are a number of divorce lawyers with military experience. To keep it simple, I will refer to attorneys with a military background as “military divorce lawyers.”
There are many excellent divorce attorneys who are woefully ignorant about the special nature of military divorces. As a result, some bad mistakes are made. These mistakes can end up costing the client.
In fact, the military pension can be so confusing, that judges and pension appraisers can make mistakes. A military divorce lawyer generally understands the military pension (or more accurately “retired pay”). Military divorce lawyers understand the military pension because they have a personal stake in it. Also, a military divorce lawyer has been kicking around the system for a while. I went on active duty as a JAG for the Army in 1987. I’ve been doing divorce for over a dozen years. I am safely call myself a “military divorce lawyer”. And keeping my eye on my military pension, I understand the system
A few years ago, in a case in Brooklyn, the judge ordered a retired Sergeant Major’s pension to be evaluated for division in the divorce. My opponent was a very knowledgeable attorney, and the judge, Eric Sunshine is simply brilliant. But neither is a military divorce lawyer. Judge Sunshine ordered an independent appraiser to give the court a report on the value of the military pension. When we received a copy of the report from the court, we immediately noticed that it was all wrong. Fortunately for our client, and using our experience as military divorce attorneys, we were able to convince the court and the opponent that report was wrong. Drawing upon my experience of the military and divorce law, I redid the calculations. In the end, we saved our client close to $300 a month.
Understanding the Military Pension – Ask A Military Divorce Lawyer
As a military divorce lawyer, I know that the military pension is unique. In most divorces, one spouse or the other has a pension. The pension is a actual chunk of money that is being held in an account somewhere, such as a 401k or an IRA.
A person could actually remove the money from this special account, although, I wouldn’t recommend it, since there are severe tax consequences for doing it. But, my point is that this money exists now. If the person died, the money would still exist and go to his heir.
Not so the military pension. A military divorce lawyer knows that there is no such thing as a military pension.
There is no chunk of money sitting anywhere.
Instead, when a person retires from the military, he gets “retired pay.” Every year, the Congress votes on a budget. As part of that budget money is set aside to pay military retirees. The retiree gets paid as long as he is alive. Once he dies, the right to be paid dies with him. There is no chunk of money going to his heir. As a military divorce lawyer I am called on to explain this simple fact to other divorce lawyers.
Very simply, by not having a military divorce attorney who understands this fundamental difference between pensions and retired pay can cost parties to a divorce a lot of money.
A Military Divorce Lawyer Explains Common Myths About Military Pensions
First, let’s explode a common military myth about the retired pay. There are people who will confidently tell you that a spouse married to a service member for 10 years gets half the pension. THIS IS FALSE.
Many times as a military divorce lawyer, I have had to fight this myth in court. Many a time a spouse tells her attorney about htis myth. That lawyer, not being a military divorce lawyer, tried to convince a judge to split the pension.
In fact, the ten year mark only relates to whether DFAS will pay the spouse her share directly. There is no federal law which states that after ten years the spouse gets half. The law, the Former Spouses Protection Act, (10 USC 1408) states that a military pension is divided according to the laws of the state which is granting the divorce.
In a New York divorce, the military retired pay will be divided as a piece of marital property.
A Military Divorce Lawyer Explains VA Disability and Equitable Distribution
Fortunately, most servicemembers, myself included, don’t get injured on duty. But many do. Attorneys without a military background tend not to understand VA disability and divorce. Military divorce lawyers, however do understand that VA disability is not subjec to division.
Since military retired pay is allocated each year by Congress, there are cost of living adjustments (COLAs). Additionally, there are offsets if the service member is getting VA disability pay. (There have been significant changes to the VA disability law which can effect pension divisions).
In 2004 the rules changed. Most divorce lawyers aren’t aware of how the old rule work. Military Divorce lawyers generally know not only the old rule but the new one as it. This new rule changes many aspects of a military divorce.
Under the old rules, a service member received only one payment on retirement. If he had a VA disability rating, then a portion of his military retired pay would be tax exempt. He would not receive two checks, one for military retired pay, and one for his VA disability. For example, assume a retiree received $1500 a month and he had VA rating that paid $500 a month. He would not receive $1500 plus $500. He would only receive $1500 of which $500 would be tax exempt.
This had significant implications for a military divorce. As discussed above, in divorce, the military retired pay is subject to division. A VA disability check, however, is not subject to a marital division. So, if the spouse was entitled to half of the military retired pay, she would receive half of $1000, not half of $1500. If, the service member was receiving $1500 in VA disability pay, then the spouse would get nothing.
That was the old rule. Effective in 2004, the rules governing VA disability pay has changed. If a service member is injured in combat or training for combat, he is entitled to two checks, one for his retired pay and the second for his VA disability. For all other disability ratings, there is a sliding scale. For all rating 50 percent and above, over a ten year period the service member will receive gradually increasing amounts of money, until by 2013, he will receive his full retired pay and full VA disability pay.
The result is that a spouse who not receiving any of the retired pay, will no longer lose her interests if the ex-spouse gets VA disability pay. This is a important new change, and unfortunately few divorce lawyers are aware of it. However, most military divorce lawyers know about the rule.
A Military Divorce Lawyer Explains How the Pension or Retired Pay is Calculated, Based Upon Years Of Service.
The average divorce attorney tends to believe that the military pension is calculated on years. However, a military divorce attorney knows this is not true. This lack of understanding by a person who is not a military divorce lawyer can result in the wrong calculation.
Military retired pay is not calculated based upon years working for the company, or the vagaries of the stock market, but by points. An active duty service member, who serves twenty years will accumulate about 7305 points. This translate into 50 percent of the base pay. Depending on the plan adopted, there is a bump up for each year over 20. So, that an active duty soldier who remains for 30 years, could realize 75 percent of his base pay upon retirement.
If he were married to the same person for those thirty years, his wife, upon divorce would be entitled to receive 50 percent of his military retired pay, plus the yearly COLAs.
Now, let’s try a harder example, and one which, as military divorce attorneys, we see more frequently. Soldier X joins the active component in 1980. He serves until 1985, accumulating 1826 points. He then joins the reserves in 1986 and gets married in 1987. He retires from the military in 2004. His wife is not entitled to half of his pension. This bears repeating: she doesn’t get half of the pension. Military divorce lawyers know this, other have to be educated.
She is entitled to half of the points earned during marriage. She is not entitled to the points earned before marriage. Assuming he earned 70 points per year as a Reserve Soldier, then he earned 1260 points. 1190 points were earned during marriage. His total number of points is 3086, of which only 39 percent were earned during marriage. Her share would then be one half of 39 percent or 18.5 percent.
One final example will demonstrate another strange quirk to the system. Soldier X get married in 1970 and joins the military at the same time. He remains married for 15 years. At the time of divorce he is an E-6. He stays in the service until 2000. He retires at E-9. His wife is entitled to 15 years of his pension. But, how is that to be calculated? If he stayed in until 20, his retired pay would be only 50 percent of his base pay. But, he stayed in until 30, so now he gets 75 percent. Is her shared based upon of 75 percent? Also, is the retired pay calculated at what an E-6 would get or what an E-9 would get?
The wife wants to gets her share based upon the 75 percent (30 years) of E-9, while the soldier wants her share to be based upon 50 percent (20 years) of an E-6. So far, no court in New York has rendered a written decision on this issue.
A Military Divorce Lawyer Explains SBP
The next joker in the pack is the Survivor’s Benefit Plan. (More information can be found at www.dfas.mil/money/retired/survivorfaq.htm.) If the service member does not choose SBP, when he dies, his wife (or ex-wife) will not get any further money from the government. The SBP election reduces the monthly payments, and puts aside money for an annuity for the surviving spouse. Not electing SBP is the death gamble. The service member is gamboling that he will outlive his spouse, and they will have more money per month.
Congress changed the SBP in the late 1980’s to prevent the service member from making the decision taking the death gamble. The service member can no longer decline SBP. Only the spouse can decline it. This has serious implications in the area of divorce.
Under the Former Spouses Protection Act, SBP can be made part of the divorce settlement. Typically, the Dependent spouse is seeking an agreement or a court order directing the service member to ensure enrollment in SBP.
If the non-military spouse’s attorney is unfamiliar with SBP, it could result in the loss of this benefit. Therefore, the wording of the order dividing the military retired pay is critical.
A Military Divorce Lawyer Explains the 20/2o Rule and the 20/15 Rule And It’s Affect On Benefits
There are two other related issues. First, military benefits. If the spouse was married to the service member for 20 years, and those 20 years over lapped with military service, upon divorce, that spouse will keep all the military benefits until death or remarriage. If there was only 15 years of over lapping military service and marriage, then there is phase out period of 1 year for military benefits.
The second issue involves health insurance. For spouses who don’t fall under the 20/20 or 20/15 rule, the biggest question is: where am I going to get health insurance? And who will pay for it?
Individuals who lose TRICARE eligibility or other coverage under the Military Health System are eligible for temporary health care coverage in CHCBP. CHCBP is not part of TRICARE but provides similar benefits and operates under most of the rules of TRICARE. To obtain this coverage, you must enroll in CHCBP within 60 days after separation from active duty or loss of eligibility for military health care. The premiums for this coverage are $933 per quarter for individuals and $1,996 per quarter for families.
DoD has contracted with Humana Military Healthcare Services, Inc. to help administer the CHCBP. You may contact them in writing or by phone for information regarding CHCBP. This includes your eligibility for enrolling in the program, to request a copy of the CHCBP enrollment application, to obtain information regarding the health care benefits that are available to CHCBP enrollees, and to obtain information regarding the premiums and out-of-pocket costs once you are enrolled.
Humana Military Healthcare Services, Inc.
P.O. Box 740072
Louisville, KY 40201
Further information on this program can be found at www.humana-military.com.
These are just of the major areas of concern for service members and dependents seeking divorce. It’s important that who ever is representing you to be aware of these issues, so as to better protect your interests.