Paycheck Chronicles

Good Counsel Can Pay Big Dividends During a Military Divorce

Every so often some highlight (or lowlight) regarding military divorce catches my attention. Last week, it was just a comment from a colleague about the challenges military life puts on a marriage.  Over the years, I’ve answered hundreds of personal finance questions about military divorce and one thing is clear: Like many military-money related topics, divorce has its own unique characteristics and challenges.

Whether you’re the service member or the spouse, the one piece of advice that I’m very comfortable with in just about any military divorce situation is straight forward: Get help.

Assistance Needed

Combine all that’s at stake with the complex laws on this subject, and it’s clear to me that most folks will benefit from professional guidance. Spending money on quality counsel and advice during the divorce could save you a lot of heartaches, headaches and wallet-aches later. At the very least, you should hire a lawyer who’s experienced in the nuances of military divorce. Of course, you may also want to consult with an accountant or a financial planner to truly understand the financial and tax consequences of this life event.

Not convinced? Let me share five frightening examples of questions that have rolled through my inbox. My hope is that these real-life inquiries will convince you to build a team of advisors if you’re facing the prospect of a divorce.

“Am I entitled to a portion of my spouse’s retirement pay?”

Great question, but if you’re going into or coming out of a divorce process not knowing the answer, that’s a problem. The Uniformed Services Former Spouses Protection Act allows state courts to divide military retirement as property. But calculating the value of this stream of income, adjusted, as it is, for inflation, is no simple task. Quality legal and financial counsel can help you accurately assess the value and negotiate an equitable settlement.

“When we were divorced 20 years ago, our divorce required my ex-spouse to carry  former-spouse Survivor Benefit Plan coverage. He passed away. How do I collect?”

This reader could be out of luck. Regardless of how the divorce plays out, you must notify the Defense Finance and Accounting Services within a year after the divorce if final to be covered by former spouse SBP. I’m a big proponent of SBP. It protects the retiring service member’s spouse by providing income if the retiree passes away. In a divorce, there are very specific rules and deadlines associated with what happens to this coverage. Knowing the rules, making the appropriate notifications and doing the survivorship planning in the context of the divorce will be part of you and your advisors’ job.

“I was married to my spouse for 20 years while he served in the reserves. Am I eligible for part of his retirement?”

Similar to the first question, a reservist’s retirement can be divided, but it needs to be  part of the divorce agreement. I’ve seen numerous situations where reserve retirement, which typically begins at age 60, is not divided or otherwise accounted for during divorce proceedings. That won’t be the case if you enlist the right kind of help.

“I feel cornered. My spouse said she’d take away my ID card if I don’t yield to her wishes during the divorce. What should I do? ”

The rules regarding TRICARE, ID cards and installation access among other military benefits are governed by law, not a divorce decree. Your soon-to-be former spouse has no say in this. The right team will make sure you understand all the applicable rules and regulations.

“I understand my marriage have to last 10 years before I’m required to split my retirement with my ex-wife? Is that right?”

This, or some variation of it, is an oft-asked question. Your military marriage does not have to last a specific time before it is subject to being divided during a divorce. However, for the non-military spouse to receive payments directly from the Defense Finance and Accounting Service, the marriage and retirement qualifying service must have overlapped for 10 years.

That’s just a small sample of the questions I’ve seen specific to military divorce. Though most of these are from the spouse’s perspective, trust me when I say that service members need quality counsel as well. Otherwise, they could end up losing more than they should. With possibly tens or even hundreds of thousands of dollars at stake, neither spouse should make the mistake of going it alone in a military divorce.

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