Military Benefits for Divorced Spouses

A divorce is a trying, emotional and difficult time. Often, in the midst of a hard time, one of the biggest mistakes we see military spouses make is when they are not aware of all of the military benefits they may be entitled to and thus, leave available access to benefits or resources or entitlements “on the table.” 

Some benefits are entitlements for a former military spouse, whereas other benefits a spouse is eligible to retain with a cost incurred. 

What is the Impact of Legal Separation on the Entitlement of Military Benefits?

The department of defense generally treats a legally separated military spouse as married for the purpose of entitlement to benefits. Per joint regulations, a person remains a spouse “until a final divorce, dissolution, annulment or death occurs.” Additionally, a former spouse is defined as one who has gone through a divorce, dissolution or annulment with no reference to legal separation. Under this definition, a legally separated spouse keeps access to their military identification card and the military benefits, with the exception that the military retirement and SBP coverage are determined at the time of the decree of legal separation as that is when assets are divided/determined. While a legally separated spouse does not continue to accrue retirement benefits, he or she can continue to accrue years of creditable service to qualify as a 20/20/20 spouse or a 20/20/15 spouse. 

Military Retirement After Divorce:

The military offers its servicemembers a defined pension benefit under which military members who provide at least twenty years of creditable service will receive a monthly payment based upon the servicemember’s years of service, basic pay and their calculated retirement multiplier.

The multiplier has traditionally been 2.5% x years of service (so retiring at 20 years would provide for 50% of the high-three basic pay) and that is still true for legacy retirement plans. However, for newer service members, the multiplier is now 2% x years of service. For these newer members, an enhanced thrift savings plan is available to bridge the gap/difference.

The Military pension, once earned, has a value of hundreds of thousands of dollars (and can be worth over a million dollars for senior military officers). For many military families, the military pension is the most valuable asset the family has accumulated during the marriage. It is a marital asset subject to division, with the following caveats:

1. Payments cannot commence until the servicemember actually retires from service and receives retirement;
2. If the spouses qualify for receipt due to 10 years of marriage overlapping 10 years of military service, DFAS will pay the former spouse directly. Even without 10 years of overlapping service, the military retirement is still divisible, but in such cases, the servicemember will be required to make the payment directly the former spouse;

Finally, due to a servicemember’s benefits ending upon their death, a former spouse must be protected by the survivor benefit plan to continue receiving benefits after the death of the servicemember.

Thrift Savings Plan (TSP):

The military offers a defined contribution plan known as a thrift savings plan, which is similar in character to an employer-sponsored 401(k) plan. When a military service member contributes to his or her TSP, they will be eligible for some matching contributions by the military. The TSP is a divisible asset in a divorce and a former spouse can rollover his or her share into a qualifying account such as a rollover IRA account.

VA Disability Payments:

A servicemember’s disability payments from the Veteran’s Administration are not a divisible asset, even if the servicemember waived some of their retirement entitlement in favor of disability benefits. However, disability income can be utilized by the court in both, Kansas and Missouri to calculate entitlements to maintenance and child support. In addition, our firm has successfully argued to courts that disability entitlements, while not divisible, can be considered by the court as a marital entitlement, to offset or provide other assets in lieu of this asset to effectuate an overall fair division of assets and debts. Finally, VA payments can typically be garnished to pay maintenance and child support entitlements.