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How To Divide Military Retired Pay

Anytime I write about the ability to divide military retirement pay in a divorce property settlement agreement, lots of comments reference how difficult it is to write a good division.  I agree, and I also disagree.  It is tricky, and it requires serious consideration of all the involved variables, but it isn't actually hard.  And, thankfully, the Defense Finance and Accounting Service (DFAS) has written a super-fantastic guide that helps to explain how the divisions can and can not be worded.

Note:  This post is not about how the individual parties in a divorce may come to an agreement about the division of military retirement pay, nor is it about how the state courts may decided if the divorcing parties can not come to an agreement and take the issue to court.  This post is about how to word the final property settlement in a way that meets the requirements for DFAS to administer the agreed-upon settlement.

The federal government and DFAS have no role in determining any award in a divorce settlement; that is the responsibility of the state courts.  However, the Uniformed Services Former Spouse Protection Act (USFSPA) provides for DFAS to administer the court-ordered division of military retirement pay for marriages that lasted more than ten years and coincided with at least ten years of active duty military service.

Because of all the variables that can come into play, DFAS has strict requirements that any order dividing military retirement pay must be written in a clear, unambiguous form.  To help the divorcing parties, their lawyers, and the courts, their pamphlet, "Dividing Military Retirement Pay," has sample language for every conceivable situation, including:

  • fixed dollar amount,
  • percentage of disposable retirement pay,
  • percentage of a "marital fraction" of disposable retirement pay, including calculations for active duty retirement and reserve retirements,
  • percentage of hypothetical retirement based upon pay scale and rank at date of divorce, and
  • percentage of retirement pay based upon pay table in effect when the member becomes retirement eligible.
As you can see, there are a wide number of ways in which the parties can choose to craft a division of military retirement pay.  Getting the language right isn't always obvious, which is why DFAS has issued this brochure and included sample language for each situation.  The packet also includes many examples of language that doesn't fit the requirements for DFAS to administer the division of retirement pay.

Faulty language is the number one cause of rejected claims for DFAS to divide military retirement pay, and it often requires a return to the lawyers or courts to have the language modified to an acceptable format.  Getting it right the first time will decrease the stress and costs of the already stressful and costly process of divorce.

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