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.
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.
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.