Should military pay be considered community property when there is a divorce, and divided between the retiree and his/her spouse? In 1981, the U.S. Supreme Court ruled that military retirement pay couldn’t be divided as community property by state divorce courts. When the decision was announced, military retirees shouted for joy, while ex-spouses sent up cries of protest.
In its decision, however, the court was very clear that division of military retired pay wasn’t necessarily unconstitutional, but that current federal laws (at the time) prohibited treating military retired pay as joint property.
Once again, Congress came to the rescue. In 1982, Congress passed the Uniformed Services Former Spouse Protection Act (USFSPA). This act allows state courts to treat disposable retired pay either as property solely of the member, or as property of the member and his spouse in accordance with the laws of the state court.
Contrary to popular belief, there is no “magic formula” contained in the act to determine the appropriate division of retired pay. A state court can divide retired pay in any way it chooses (subject to state laws).
For example, it would be perfectly legal for a court to divide military retired pay fifty-fifty for a marriage that only lasted two months (again, subject to the laws of that state). A state could also decide to award a majority of the retired pay to the former spouse if the state laws allowed such a division.
Conversely, a court may also choose to treat retired pay as the exclusive property of the military member.
The myth of a “magic formula” derives from a section of the law that allows the DOD to pay the ex-spouse directly, but only under specific circumstances:
The ex-spouse must have been married to the military member for a period of at least ten years, with at least ten years of the marriage overlapping a period of military service creditable to retired pay.
Direct payments won’t be made for division of retired pay in excess of 50 percent. (If there is more than one divorce, it’s first come, first served — no more than 50 percent will be paid as division of retired pay.
For example, if a court awards ex-spouse number one 40 percent of retired pay, and another court awards ex-spouse number two 40 percent of retired pay, DOD Finance will directly pay ex-spouse number one 40 percent and will directly pay ex-spouse number two 10 percent.
However, these guidelines only restrict when the DOD can pay the ex-spouse directly. In other situations, the member receives the retirement pay and must directly pay the ex-spouse her share or otherwise face a contempt of court charge.
The moral of the story is don’t get divorced. The only ones who get rich are the lawyers.