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Dividing military pension benefits in divorce can be a minefield

When one or both spouses in a Washington divorce are active or retired military personnel it is important that each of them seek legal advice from an experienced family lawyer. A Washington attorney who advises either party in a military divorce must be up to date on complicated federal laws governing military retirement and disability benefits and the complex interplay of those federal laws with Washington divorce laws governing property division and spousal maintenance.

Military retirement and disability benefits

If one of the parties is a service member who has future or present interests in military pension or disability benefits, it must be determined if and how those interests will be divided between the spouses as well as if and how they could impact the calculation of alimony or child support. These issues will be decided either in a settlement agreement between the parties incorporated into the state court's final divorce order or, if the parties cannot settle, by order of the state court judge in the divorce trial.

Military pensions are normally community property

Normally, federal law allows division of military "disposable retired pay" in a Washington divorce as part of community property. In most cases, up to 50 percent of disposable retired pay may be awarded to the nonmilitary spouse.

Disposable retired pay

Federal law defines disposable retired pay as the monthly retirement benefit minus four things:

  • Previous benefit overpayments
  • Forfeitures ordered by courts-martial
  • Certain deductions for elected annuity payments to a spouse or former spouse in case of the service member's death
  • Retirement benefits waived in lieu of military disability payments

Impact of disability benefits

The last listed deduction can cause unexpected problems for some divorcing spouses without careful planning in the divorce process. In a change from previous law, only military personnel with disability ratings of less than 50 percent must waive retirement pay to get disability, so if disability is at least 50 percent, the service member can get both retirement and disability pay at the same time.

Federal law prohibits state courts from dividing disability benefits in divorce. Rather they are treated as the military spouse's separate property. However, disability payments may be considered as part of the military spouse's available resources in determining spousal support payments.

The monthly dollar amount payable to the civilian spouse under a Washington settlement agreement or court order that orders a percentage of monthly disposable retired pay to go to that spouse could be later reduced if the military spouse with a disability rating of less than 50 percent elects to waive part of the retirement to get disability.

Consider this fictional example:

  • The divorce order awards the nonmilitary spouse 50 percent of a $1,000 monthly disposable retired pay benefit, or $500 monthly.
  • The military spouse later develops a service-connected disability rated at less than 50 percent and elects to waive part of retirement benefits to get disability pay instead (usually because it is not taxable).
  • The new retired pay amount is reduced to $600 because of the waiver, so the civilian spouse's share becomes $300.
  • Since disability benefits are the military spouse's separate property, the recipient spouse would be out the difference.

To prevent such a development, a knowledgeable lawyer representing the recipient spouse could provide in the settlement agreement an adjustment should this happen in the future, such as a corresponding increase in alimony. Another option would be to include an agreement that the military spouse would not apply for disability in the future. Should the judge be making the decision, the civilian spouse's attorney should advocate for appropriate provisions in the court order.

Seek legal counsel

This blog introduces an extremely complex area of law to which exceptions may apply under certain circumstances. Legal counsel is essential for any spouse involved in a military divorce.

The lawyers at Clement Law Center with offices in Federal Way, Seattle and Bellevue regularly represent military spouses or civilian spouses of current, reserve or retired military personnel in divorce.

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