Until 1983, there was no federal statute that allowed state divorce courts to divide military retirement entitlements as part or a divorce proceeding and award a portion to the non-military spouse. But there was also no federal statute that BARRED the state divorce courts from doing so. Then, on June 26, 1981, the US Supreme Court put the matter to rest with the decision in McCarty v. McCarty
, 453 US 210,XXXXX2728, 69 L Ed 2d 589 (1981). The Court held that state divorce courts did not have authority to treat military retirement interests as marital property assets subject to division incident to divorce.
The Court based its reasoning on the fact that there was no federal law allowing state divorce courts to do so. But the Court also said that if Congress were to enact a law allowing state courts to treat a spouse’s disposable retired pay entitlement as a marital property asset subject to division incident to divorce, in accord with the domestic relations laws of the particular state involved, it would be OK.
So 1983, Congress enacted the Uniformed Services Former Spouses' Protection Act
(USFSPA), 10 USC § 1408, which provided the necessary federal statutory authorization that the Supreme Court said was lacking. Pursuant to the USFSPA law, state divorce court judges are authorized to treat federal military disposable retired pay (whether prospective or in actual “pay status”) as a marital property asset and to divide the asset between the military member and his spouse incident to dissolution of marriage.
The USFSPA law does not itself provide the non-military spouse with any automatic entitlement to a portion of the member's retired pay. Rather, the federal law simply authorizes the state courts to treat military disposable retired pay as a marital property asset, if the state chooses to do so. Further, the federal law provides no specific formula to be used by a state in dividing a military retirement entitlement incident to divorce, thus leaving it up to each state to develop its own methodology, rules and regulations.
The USFSPA also included a provision requiring the Dept of Defense, through the DFAS payroll office, to honor and implement state divorce court orders for the division of disposable retired pay, provided certain procedural requirements are met. If the procedural requirements are met DFAS would then send directly to the former spouse the share of disposable retired pay that was court-awarded to the former spouse.
Nebraska state divorce law. NRS § 42-366(8)
, (like that of most other states) mandates that divorce decrees include provisions making an “equitable division” of all pension plans, retirement plans, annuities, and other deferred compensation benefits owned by either party, whether vested or not vested, as part of the marital estate for purposes of the division of property at the time of dissolution. (Only exception would be if the parties agree to a different arrangement AND the court finds to be conscionable.)
In Kullbom v. Kullbom, 209 Neb. 145, 306 N.W.2d 844 (1981),
the Nebraska Supreme Court determined that by virtue of § 42-366(8)
, "the law of this state now requires that pension plans and retirement plans shall be included as part of the marital estate for the purposes of the division of property ...."
And in Reichert v. Reichert, 246 Neb. 31, 516 N.W.2d 600 (1994)
, the Nebraska Supreme Court made it clear a "military pension is included in the marital estate" and the divorce court is required to make an "equitable" division thereof unless the parties reach some other agreement that the court deems to be "conscionable."
In the Reichert case, the Nebraska Supreme Court also held that the appropriate method for dividing an entitlement to a military pension is to use formula that awards to the former spouse one-half (50%) of the portion of the pension that was "earned" during the years of marriage. In Reichert, husband was in the military for 24 years. Husband and wife were married for 13 of those years. The marital estate thus includes thirteen twenty-fourths of husband's military pension. One-half (50%) of 13/24 = .2708, which converts to 27.08%, which would then be the share of husband's disposable retired pay to which wife is equitably entitled.
In your case, you ultimately accepted a settlement agreement that award you ex-wife 43% of your disposable retired pay. This was probably based on the "formula" approach illustrated above The 43% represents one-half of the portion of the asset earned during the married. And treating the "marital portion" of the total asset as a JOINT PROPERTY ASSET (even though "titled" on only one spouse's name), ex-wife is equitably entitled to receive 50% of that portion, which in your case ends-up being 43%. So she gets 43% of each monthly benefit amount to which you are otherwise entitled to receive, and she gets her court-ordered share for so long as you continue to receive disposable retired pay.
There is one other problem with dividing military disposable retired pay incident to divorce. Specifically, when DFAS is involved in implementing the divorce court’s order dividing the pension and making payment making payments directly to the former spouse, it is limited to paying only the court-awarded percentage (such as 43%) of “DISPOSABLE retired pay” as that phrase is specifically defined in the applicable federal law. And “disposable retired pay” does not include any reductions or deductions of “retired pay” that result from the retiree qualifying for VA “disability compensation” and opting for the dollar-for-dollar trade-off, so as to received the dollars in the form of VA “disability compensation” rather than military “retired pay.”
Suppose husband is entitled to a monthly disposable retired pay benefit of $1,500 (with no reduction for VA disability compensation. Wife has been awarded 43%. So she get $645 per month, leaving husband with the remaining $855. But a couple of years after commencing to received the military pension, husband claims a disability and ends-up qualifying for a VA disability rating that would give him VA disability compensation of $600 per month. And to get the money in the form of VA disability compensation, he has to waive that amount ($600) from his military retired pay. So after reducing his military retired pay by $600, his total “DISPOSABLE” retired pay is now only $900. And DFAS then commences to send to ex-wife 43% of the $900 revised amount of disposable retired pay. And 43% of $900 is $387. Of course, husband still receives his $855 each month, being $600 in tax-free VA disability comp and the other $513 in disposable retired pay (being 57% of $900). Ex-wife is not happy. And neither is the judge.
So as to protect against this very typical occurrence, many divorce decrees and settlement agreements include a INDEMNIFICATION PROVISION. In sum, if the event husband causes a reduction in the amount of his military retired pay to occur because he waives retired pay in order to receive VA disability compensation, he will the commence making payments directly to ex-wife in an amount sufficient to indemnify her for the reduction of the portion of retired pay that she would otherwise be receiving. And I suspect that something like that is included in your divorce decree.
Finally, a spouse who has been awarded a share of JOINT property as part of a divorce proceeding does not forfeit that her court-awarded share simply due to remarriage. Although "termination upon remarriage" is often applied to an award of alimony or spousal support, it is rarely applied to the division and award of a JOINT property asset. In your case, awarding your ex-wife 43% of the military retirement (one-half of the JOINT portion of the asset) was no different than awarding her 43% of a of $10,000 bank account that existed at the time of divorce and was under your name alone. Simply because she remarries does not mean that she has to give it back.
Now, having said all of that, I do want you to understand that the Uniformed Services Former Spouses' Protection Act (USFSPA
), 10 USC § 1408, is a very controversial law, and there have been on-going efforts to repeal the statute of otherwise substantially limit its application. And the arguments against this law are certainly well-taken and worth listen to (and reading about).
Websites of interest: http://www.youtube.com/watch?v=V_OKnK6Odvg http://www.militarycorruption.com/soundoff3.htm http://www.afjag.af.mil/shared/media/document/AFD-081204-033.pdf http://www.angelfire.com/ca2/EXTORT/ http://www.veteranstoday.com/2008/02/15/attention-active-and-retired-us-military-personnel-video/ http://onerunningman.newsvine.com/_news/2008/06/22/1599122-repeal-the-uniform-services-former-spouses-protection-act-usfspa- http://www.americanretirees.org/voxpop.htm http://www.ulsg.org/index.php?option=com_content&task=view&id=8 http://www.americanretirees.org/horrors.htm http://forums.military.com/eve/forums/a/tpc/f/110192933/m/147108634
So until and unless Congress sees fit to change the law, it remains on the books, regardless of its unfairness and manifest injustice it produces. And adding insult to injury is the fact that state divorce laws do not allow provide divorce court judges (some of whom I personally know are retired military and divorced themselves, and VERY unhappy with the USFSPA law) with the legal authority to retroactively correct or modify property division provisions of previously-rendered divorce decrees. If they could, they would. But such is simply not the existing law.
Frustrating and totally unacceptable to you? Absolutely. And you (and virtually all of my servicemember clients (active duty, reserves, retired, etc.) are well-justified share the same frustration. And, frankly, I too share the frustration, wishing as a lawyer that there was something more I could do for my clients. But unfortunately I am only a lawyer, not a law maker. And sometimes, as in your case, I have to be the bearer of bad news. I wish it were otherwise. NOTE:
I realize that this answer may not be entirely to your liking, and I regret being the bearer of information that you really don’t want to hear. But it would be unfair to you and unprofessional of me were I to provide you with anything less than truthful and honest information. I hope you understand.
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