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Dividing Military Retirement 

Reese & Reese Attorneys, P.C.  June 10, 2024

Wife And Husband Splitting Children And HouseSplitting up assets during a divorce can get very complicated, and military retirement benefits are no exception.  

Charles Neville Reese at Reese & Reese Attorneys, P.C., understands how important it is to handle these issues with the right amount of knowledge and empathy. 

If you're going through a military divorce in Alabama, read on to learn about the division of retirement benefits in a military divorce. 

Understanding Military Retirement Benefits

Military retirement benefits are a big deal. Once service members retire, they work like a pension and usually are a significant part of a military family's financial plan. When a divorce occurs, these benefits must be divided fairly 

Military retirement plans are not the same as civilian pensions. They have specific rules and regulations, and it's important to understand them to ensure an equitable divorce.  

The Uniformed Services Former Spouse Protection Act (USFSPA) 

The Uniformed Services Former Spouse Protection Act (USFSPA) is a federal law that governs the division of military retirement benefits in a divorce. According to the USFSPA, state courts can treat military retirement pay as either sole or community property. This means that state laws will determine how the benefits are divided. 

Key Points of USFSPA 

  • Court authority: The USFSPA gives state courts the authority to divide military retirement pay. 

  • Disposable retired pay: Only disposable retired pay, which excludes disability pay, can be divided. 

  • Direct payment: If married for at least 10 years, during which the service member completed 10 years of military service, the Defense Finance and Accounting Service (DFAS) can make direct payments to the former spouse. 

  • 10/10 rule: The USFSPA allows for direct payments if the marriage and military service overlap for at least 10 years. This is known as the 10/10 rule. 

  • Jurisdiction requirements: The state court must have jurisdiction over the service member for the division of retirement pay. This can be through the service member’s residence, domicile, or consent to the jurisdiction. 

  • Survivor Benefit Plan (SBP): The USFSPA permits former spouses to be designated as beneficiaries under the military member's Survivor Benefit Plan, providing continued financial support after the retiree's death. 

  • Cost-of-Living Adjustments (COLA): Any cost-of-living adjustments (COLA) to military retirement pay will also apply to the former spouse's portion of the benefits. 

  • Division limitations: The total amount of military retired pay that can be awarded to a former spouse is limited to 50% of the service member’s disposable retired pay, or up to 65% if there are additional garnishments for child support or alimony. 

Splitting Military Retirement in Alabama Divorces

In Alabama, courts follow equitable distribution laws. This means that assets, including military retirement benefits, are divided fairly but not necessarily equally. The court considers several factors: 

  • Length of the marriage 

  • Contributions to the marriage by each party 

  • Any agreements between the parties 

  • Age and health of the parties: The court may consider the age and health of both the service member and the former spouse when dividing military retirement benefits. Older and less healthy individuals may have different needs than younger, healthier parties. 

  • Standard of living: The standard of living established during the marriage is also considered, aiming to maintain a similar quality of life for both parties post-divorce. 

  • Child custody agreements: If children are involved, the court may consider the impact of child custody arrangements on each party's financial needs and stability. 

  • Financial misconduct: Any financial misconduct by either party, such as wasting marital assets or hiding funds, can influence the court’s decision regarding the division of retirement benefits. 

  • Employment and earning capacity: The court considers each party’s current employment status and future earning potential. This includes assessing whether one spouse sacrificed career opportunities for the benefit of the service member’s career. 

  • Tax implications: The tax consequences for both parties are also considered to ensure that the division of benefits is equitable after taxes are considered.  

Steps to Divide Military Retirement Benefits

This is how military retirement benefits are divided during a divorce: 

1. Determine Marital Portion 

First, establish the portion of the retirement benefits earned during the marriage that is subject to division.  

2. Decide on the Division Method 

There are two main methods for dividing military retirement benefits: 

  • Present value method: The non-military spouse receives a lump-sum payment representing their share of the retirement benefits. 

  • Future payments method: The non-military spouse receives a portion of the retirement payments when the service member begins to receive them. 

3. Draft a Qualified Domestic Relations Order (QDRO) 

A QDRO is a legal order required to divide retirement benefits. Although DFAS does not require a QDRO for military retirement, having a clear court order can prevent disputes.  

4. Submit the Order to DFAS 

Finally, submit the court order to DFAS for processing. This step is necessary for direct payment to the former spouse.  

Skilled Legal Counsel in Dothan, Alabama

Dividing military retirement benefits requires expertise. Reese & Reese Attorneys, P.C. offer the knowledge and compassion needed to handle these matters effectively. If you’re getting a military divorce and need help dividing retirement benefits, reach out to Reese & Reese Attorneys, P.C. today. They will support you through challenging times and provide the peace of mind you deserve.