Paycheck Chronicles

Fact or Fiction: Division of Retirement Pay

I feel like I have written about this subject way too much already, but I have received a sudden surge in email and comments about the division of military retirement as a marital asset.  So, let's talk about some common misconceptions about the law.

Fiction:  The law says how military retirement pay has to be divided in a divorce.

Fact:  The law gives permission for military retirement pay to be divided.  It does not say how it should be divided, or give any formulas or suggested amounts.  This is available for negotiation just like any other asset.  If the two parties can not come to an agreement, it may be decided by the judge as part of the overall property settlement.

Fiction:  The division of retirement pay can be negotiated at any time.

Fact:  Except in very, very rare cases, the division of marital property must be set forth in the divorce decree or the settlement agreement.  I have heard about a very few cases in which a "final" divorce decree has been reopened, but it appears that it is only because the divorce occurred before the provisions of the Former Spouse Protection Act. (USFSPA.)

Fiction:  Department of Veterans Affairs (VA) benefits can be divided.

Fact:  VA disability benefits may not be divided.  However, a good settlement agreement will have provisions to change the division of retirement pay to reflect the way that VA disability benefits reduce military retirement pay.

Fiction:  The division of retirement pay is changed by the remarriage of either party.

Fact:  The division of retirement pay is unchanged by the remarriage of either party.  Look at it this way:  if you decided in a divorce settlement that one person would get the car and one person would get the other car, would that change if either party remarried?  No.  The division of retirement pay is the same way:  it is an asset.

I know this is a hot topic, and it makes some people very upset.  I think a lot of the upset comes from misinformation about the law and what it actually says.  If you have more questions, ask in the comments.

Some good resources for further reading:

Defense Finance and Accounting Service (DFAS) Uniformed Services Former Spouses Protection Act (USFSPAP) Legal Overview

Uniformed Services Former Spouses Protection Overview

 

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