Military Retirement Pay Considerations In A Divorce

By Eddie Fishman

Military retired pay is property that can be divided between spouses in a divorce proceeding. The retirement benefits are often divided by the “Benson Formula.” This formula states that the non-military spouse receives ½ of the monthly retirement payments multiplied by a fraction whose numerator is the number of years the military spouse accrued benefits under the plan during the marriage and whose denominator is the total number of years of benefit accrual. The effects the Survivor Benefit Plan “SBP” and disability payments can have on retirement pay should be considered in a divorce.

Survivor Benefit Plan: The non-military spouse should ensure that the stipulation specifically mandates that he or she receives survivor benefits from the SBP. Two major issues could be created for the non-military spouse if he/she does not receive the survivor benefits. The first issue is that the benefits to the non-military spouse will end upon the death of the military spouse. The second issue is that the amount of monthly retirement paid to the non-military spouse could be reduced if the military spouse designates a new spouse as receiving survivor benefits of the SBP.

Disability Payment: Sometimes the military spouse can elect to waive retirement pay in order to receive disability benefits; this is attractive to the military spouse because retirement pay is taxable while disability benefits are not. However, the non-military spouse cannot receive the veteran’s disability benefits as an asset in the property division. Consequently, if the retirement benefits are reduced due to the military spouse receiving disability benefits, the non-military spouse simply receives less retirement pay. A non-military spouse can protect himself/herself by asking for permanent alimony, even if it is a nominal amount. This leaves the door open for the non-military spouse to seek modification of the alimony in the event the military spouse elects to receive disability instead of retirement pay. To be clear, this gives the Court the ability to raise spousal support if the military spouse retirement is reduced due to disability benefits but does not require the Court to do so.