Divorced Spouses Benefits of Retired Veterans

By Jeff Franco J.D./M.A./M.B.A.

As a result of the passage of the Uniformed Services Former Spouses’ Protection Act, or USFSPA, by Congress in 1982, former spouses of military personnel are eligible to receive a portion of a spouse’s military retirement benefits during divorce proceedings and are also eligible for continuing medical and dental coverage. The law accomplishes this by permitting state courts to treat the pension as marital property.

Military Retirement Pensions

The passage of the USFSPA was in direct response to a 1981 U.S. Supreme Court ruling forbidding state courts from treating military pensions as marital property in divorce proceedings. Since federal statutes take precedence over prior court rulings, at the time of publication, every state in the nation treats a veteran's retirement pension as marital or community property. However, states have the authority to create eligibility requirements that the non-veteran spouse must satisfy before it includes the pension in marital property. Some states, for example, require that the marriage be of a minimum duration to treat the pension as marital property.

Former Spouse Payment Limitations

States don’t have discretion to award the former spouse of a veteran more than half of the veteran’s “disposable retired pay.” Federal law defines disposable retired pay as the monthly pension payment the veteran spouse will receive, less disability payments, federal debt repayments, Survivor Benefit Plan, or SBP, premium deductions and all other compulsory deductions. However, unless the duration of the marriage covers the entire period of military service by the veteran spouse, courts will award the non-veteran spouse less than half. This is due to the USFSPA requirement that state courts treat any portion of the pension that the veteran earns before and after the marriage as separate property.

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SBP Implications

All military retirement pension benefits terminate at the veteran’s death. Therefore, a former spouse has no entitlement to the continuation of pension payments, even if the veteran dies prior to the commencement of pension payments. In other words, the pension has no cash value or minimum payout amount that the government must provide the veteran or their former spouses. Additionally, if the veteran enrolls in the SBP and pays the necessary premiums, the pension payments will terminate on the former spouse’s death rather than the veteran’s. Further, state courts can require that the veteran spouse enroll in the SBP as part of the divorce agreement, thereby insuring that the non-veteran spouse receives pension payments until death.

Medical Coverage

The federal government allows a former spouse to continue receiving medical and dental insurance benefits if the requirements of the “20/20/20 test” are met. This requires marriage to a veteran for at least 20 years, the military spouse serves a minimum of 20 years of service that is creditable to a military retirement pension and at least 20 of the creditable service years occurs during the marriage. In the event that only 15 of the creditable service years occur during the marriage, a former spouse only receives a maximum of one year of medical and dental coverage.

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North Carolina Statute for a Divorced Spouse's Entitlement to a Military Pension

References

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Spouse's Rights to Military Benefits

As a civilian spouse, your military benefits are typically based on your marital status and a divorce may mean losing those benefits. For example, you may have to give up military health insurance and the ability to shop at the exchange and commissary. However, federal law may allow you to keep these benefits if you have been married for at least 20 years. A divorce court can also award you a portion of your spouse’s retirement pay and can force your spouse to sign up for a plan that pays benefits to you if he dies after retirement.

Disability in a Military Divorce

If a servicemember becomes disabled due to an injury related to his service, he may receive payments from the Department of Veterans Affairs that add to his military compensation, sometimes reducing his retirement pay in the process. These disability payments are treated differently than retirement payments -- and state divorce courts have limited authority to give a portion of the disability funds to the military member’s ex-spouse.

How to Split the Pension in a Divorce

Unlike other retirement accounts, dividing a pension is often difficult because it’s hard to place a value on what the pension might be worth in the future, and some pensions are not guaranteed until the employee spouse has worked for the company for a certain number of years. For example, in most circumstances, a military service member does not receive his retirement benefits until he has served for at least 20 years.

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