Military Pension Order Division
Dividing Military Retired Pay (MPDO Orders)
In many families, a family home or business is the most valuable asset, however, in most of the military families our firm has the privilege of assisting, the most valuable asset in the family is the military pension. For some career military officers, a military pension can be worth millions of dollars. Sadly, this asset is often overlooked or not carefully negotiated by inexperienced family law attorneys. It is important that you have someone guiding you through the process of dividing the military pension who both, is familiar with military law and division of complex retirement assets. Both, servicemembers and former spouses need to make sure that their family law attorney has the knowledge, experience and skills to get this issue correct. Common mistakes we have seen include granting an incorrect share to the other party (that either harms or benefits unfairly one party or the other), at its worst, it can cause the former spouse to lose their entitlement benefits all together. Beyond that, there are important issues regarding future access to information and records, receipt of survivor benefit plan benefits, methods of payment, among a variety of other important consideration.
The Uniformed Services Former Spouse Protection Act (USFSPA) governs the division of the servicemember’s military retired pay. The USFSPA does not grant any rights to a former spouse regarding the service members retired pay. Instead, the law allows state courts to view disposable military retired pay as marital property and divide it in a divorce action according to state law.
Disposable Retired Pay is the gross retired pay that a military servicemember receives less authorized deductions. The deductions are as determined by DFAS (the defense finance and accounting service), who processes all active duty and military service member retired pay. In both Kansas and Missouri, generally, the former spouses entitled or marital portion of retired pay is generally determined by calculating the percentage of military retirement that was earned during the course of the parties’ marriage, while active duty or other military service took place. For example, if the parties were married during ten of twenty years of a military career, then one-half of the earned retirement is marital, meaning that each party receives a 50% of the marital share. Thus, in this example, the former spouse would receive 50% of the 50% marital share, or 25% of the total earned military retirement.
Servicemembers often ask about whether they can prevent their spouse from receiving a full share of their military retired pay. However, with rare exception considering either marital misconduct, some type of long-term separation or other extenuating circumstances, typically the court is going to be looking to divide the marital portion on a fifty-fifty basis. Under the USFSPA, however, the maximum that can be divided to a former spouse is 50 percent of the service member’s disposable retired pay. In situations where disposable retired pay is used to pay retirement pay to a former spouse and a garnishment for child support and/or alimony/maintenance, it cannot exceed 65% of the military servicemember’s disposable retired pay.
Another consideration for an attorney preparing the military pension division order prior to a servicemember’s actual retirement is the servicemember’s basic pay rate at the time of their eventual retirement. In summary, this means that the former spouse should not get credit/benefit for pay raises that the military servicemember receives for promotions or additional service time accrued after the date of divorce or conclusion of the marriage. A proper calculation therefore is typically based on the servicemember’s average pay for the 36 months prior to the filing or divorce date. This is known as a “high 36 calculation.” Failure to account for the future pay raises a servicemember receives could cost the servicemember tens of thousands of dollars- or more- over the course of his or her retirement.
Many servicemembers, military spouses and even divorce attorneys have the incorrect belief that a service member spouse must have been married for a least ten years for the court to divide the military retirement. The USFSPA does not impose this requirement. The ten year requirement only applies to whether the government, through DFAS, will make direct payments for the benefit of a former spouse. In order to make direct payment to the former spouse, through the Defense Finance and Accounting Service, the former spouse must meet the “10/10 rule.” This requires that the servicemember performed at least ten years of military service creditable toward retirement during ten years of marriage. Importantly, unlike the measurement for dividing military retired pay, the 10/10 rule ends on the date of the final judgment, not the date a petition for divorce or dissolution of marriage was filed. This allows some couples, when the parties are close to reaching this threshold to delay the finalization of the divorce until the 10/10 rule is satisfied.
Finally, any division of military retirement that is not paid through separate accounts through DFAS will need to address the tax consequences so that the tax burden is shared fairly between the parties. This will often require a specialist who understands the interplay between division of military retired pay and federal income tax laws.
Whether you are an attorney, a family law litigant or another professional, we are proud to partner with you to assist our servicemembers and their families in ensuring that a significant asset of the parties’ marriage is fairly and accurately divided. Call Pingel Family Law today at (816) 208-8130 if we can be of service to you.
"I have known Attorney Pingel for more than fifteen (15) years. Mandee is a lawyer I consider a respected colleague. She has a reputation for being intelligent, knowledgeable about the law, well-prepared and kind."- A Lawyer in Liberty, Missouri