Posts tagged with "military pension division"

Published on January 11, 2020

The final set of “magic words” are ones which belong in every military pension division order, incorporated settlement or divorce decree. These required phrases are set out in the Uniformed Services Former Spouses’ Protection Act (USFSPA), 10 U.S.C. §1408, and in the rules for administration and enforcement of pension division, found at Chapter 29 of Vol. 7b, Dept. of Defense Financial Management Regulation (a.k.a. the DoDFMR).

Compliance with the SCRA

Every pension division instrument must state that there has been compliance with the Servicemembers Civil Relief Act, or SCRA. In general, this means that the rights of the servicemember (such as the right to obtain a stay of proceedings under certain conditions and the bar against default judgments) have been protected. The statute is found at Chapter 50 of Title 50, U.S. Code.

MAGIC WORDS: “The rights of John Doe, the defendant, under the Servicemembers Civil Relief Act, Chapter 50 of Title 50, U.S. Code, have been observed.”

The “10/10 Rule”

Getting direct payments from the retired pay center is important for the former spouse (FS); it means a regular garnishment of retired pay, deposited in the recipient’s bank account around the first of each month. It is important for the retiree as well, since it eliminates the need to write a check to the FS every month and to keep track of COLAs (cost-of-living adjustments) once a year.

The “retired pay center” is DFAS, the Defense Finance and Accounting Service, for those who are retired from the Army, Navy, Air Force and Marine Corps. It’s the Coast Guard Pay & Personnel Center for those retiring from the Coast Guard and the commissioned corps of the Public Health Service (PHS) and the National Oceanic and Atmospheric Administration (NOAA).

According to the USFSPA, the retired pay center cannot garnish retired pay as property division unless it appears from the application for a share of retired pay that the marriage overlaps the creditable service by at least 10 years. Thus it is essential to include this essential language in the pension division instrument.

MAGIC WORDS: “The parties were married to each other for at least 10 years during which the member performed at least 10 years of service creditable in determining the member’s eligibility for retired pay.”

“Disposable” Retired Pay – It’s Disposable

Surprisingly, the phrase “disposable retired pay” is not in the set of “magic words” for the pension order. Although Congress stated in the USFSPA that “disposable retired pay” is all that a state court can divide in military pension division (see 10 U.S.C. §1408 (a)(4)), the rules have made this term irrelevant or, more properly, disposable. All awards of a portion of the military pension are to be construed as dividing the retiree’s “disposable retired pay,” regardless of their wording. So your order will not be rejected for faulty language or the absence of “magic words” if it divides John Doe’s “military pension” or “uniformed services retired pay,” for example.

In the Meantime…

Interim payments must be addressed in the pension division order. That’s because the parties need to know who makes what payments while the order is being processed by the retired pay center. According to the USFSPA (see 10 U.S.C. §1408 (d)(1)), the pay center will begin pension-share payments within 90 days of the retiree’s entitlement to receive retired pay or 90 days from the receipt of an acceptable order, whichever is later. For this reason, the order should specify that the retiree is responsible for payments in the interim. In a case where John Doe is the plaintiff and the military member or retiree, the following phrasing would be useful.

MAGIC WORDS: “Plaintiff will receive payments at the same time as Defendant. The parties acknowledge that DFAS is not required to begin payments to the former spouse until 90 days after receipt of an acceptable order or the start of retired pay, whichever is later. Defendant will be responsible for making these payments each month to Plaintiff until DFAS begins making these payments to her, and during this interim, Defendant will pay Plaintiff directly her full share, unadjusted for taxes.”

Language for the Award – Four Options

Finally, there are “magic words” involved in phrasing the award. The retired pay center will only accept a pension division instrument which specifies the award to the FS in terms of a fixed amount, percentage, formula, or hypothetical amount of retired pay. Examples of each one may be found in these Silent Partner infoletters: “Getting Military Pension Orders Honored by the Retired Pay Center,” and “Military Pension Division: Guidance for Lawyers.” All of the Silent Partner infoletters will be found at www.americanbar.org > Family Law Section > Military Law Committee, and at www.nclamp.gov > Publications.

A Helpful Checklist

Note that “one size fits all” definitely doesn’t apply to military pension division orders. A good practitioner will check and re-check the pension division order to be sure it complies with the regulations and the statute, accomplishes the needs of the client, makes sense, and will be honored by the retired pay center. Here is a checklist that DFAS uses for pension division orders:

DFAS CHECKLIST FOR MILITARY PENSION DIVISION ORDERS

FORMER SPOUSES’ PROTECTION ACT CHECK SHEET
MEMBER’S NAME
SOCIAL SECURITY NUMBER
SERVICE OF APPLICATION (personal, certified or registered mail, return receipt requested)
FINAL DECREE OF DIVORCE, DISSOLUTION OR ANNULMENT OR LEGAL SEPARATION
ISSUED BY A COURT – OR – A COURT ORDERED, RATIFIED OR APPROVED PROPERTY
SETTLEMENT INCIDENT TO SUCH A DECREE
AUTHENTICATED OR CERTIFIED PRIOR TO SERVICE OF PENSION ORDER
MEMBER PROPERLY IDENTIFIED (E.G., NAME, ADDRESS, SSN)
NAME, ADDRESS, AND SSN OF FORMER SPOUSE
ORDER PROVIDES FOR ONE OF THE FOLLOWING: A) PAYMENT OF FIXED MONTHLY AMOUNT OF $________; B) FIXED PERCENTAGE OF ______%; C) FORMULA CALCULATION (must use retirement points in Guard/Reserve case); D) HYPOTHETICAL CALCULATION:
MEMBER’S RIGHTS UNDER THE SERVICEMEMBERS CIVIL RELIEF ACT COMPLIED WITH
JURISDICTION MET
RESIDENCE (NOT DUE TO MILITARY ORDERS)
DOMICILE
CONSENT
ORDER HAS NOT BEEN AMENDED, SUPERSEDED, OR SET ASIDE
ORDER IS FINAL DECREE, NO APPEAL MAY BE TAKEN, NO APPEAL WAS TAKEN WITHIN TIME PERMITTED
FORMER SPOUSE MARRIED TO MEMBER AT LEAST 10 YEARS DURING AT LEAST 10 YEARS OF CREDITABLE SERVICE
PAY ENTRY DATE:
RETIREMENT DATE:
MARRIAGE DATE:
DIVORCE DATE:
IF DIVORCE AFTER 12/23/16 AND MEMBER WAS NOT RECEIVING RETIRED PAY AT DIVORCE, free sex videos ORDER CONTAINS TWO DATA POINTS REQUIRED BY DoDFMR VOL. 7B, CH. 29, §2908: HIGH-3 PAY AT DIVORCE AND TOTAL YEARS OF CREDITABLE SERVICE (FOR RC MEMBER, TOTAL RETIREMENT POINTS) AT DIVORCE

More detailed information and illustrations can be found in Chapter 8 of THE MILITARY DIVORCE HANDBOOK (Am Bar Assn., 3rd Ed. 2019).

Magic Words – Again?

The two prior pieces about the issue of special language in military divorce cases dealt with a) wording to secure the Survivor Benefit Plan for the non-military spouse, and b) wording required by the Frozen Benefit Rule so that the retired pay center would accept the pension division order. This “magic words” installment deals with the all-important issue of jurisdiction. If the court lacks jurisdiction, then your efforts would be wasted. Be sure that the judge makes the right findings.

The issue of jurisdiction under 10 U.S.C. 1408, the Uniformed Services Former Spouses’ Protection Act, is covered at subsection (c)(4) of the statute. Since most cases are settled with a consent order or a separation agreement incorporated into the divorce decree, the likely “magic words” you’ll need to use would be: “The court has jurisdiction to divide the uniformed services retired pay of the defendant, John Doe, due to his consent to the jurisdiction of the court.”

When the case is contested, you’ll have to look elsewhere for a jurisdictional basis for the order dividing military retired pay. The usual base to use is domicile. If your state is the “state of legal residence” of John Doe – that is, his domicile – then the order might state: “The court has jurisdiction to divide the uniformed services retired pay of the defendant, John Doe, due to his domicile in the state of East Virginia.”

Don’t be deceived by “home of record.” That phrase is not intended to mean one’s domicile. It’s only a reference to the place from where John Doe entered the service, and to which his household goods will be shipped upon his discharge. It may be his domicile, but that’s not dead certain. For example, when I entered military service in December 1971 [that so long ago that dinosaurs ruled the earth!], my domicile and my home of record were both Ohio, since I went on active duty from Cleveland. When I was transferred to Ft. Bragg in 1972, both were still Ohio. But in 1976 when I decided to obtain reciprocity admission to the N.C. Bar, I changed my domicile to N.C. (by changing my car title and driver’s license, my bank, my voting records, my personal property tax listing, my state income tax info, etc.), even though my home of record remained Ohio. You can look up the incidents of domicile in a Silent Partner infoletter, “Divorce and Domicile,” at www.americanbar.org > Family Law Section > Military Law Committee, or at www.nclamp.gov > Publications. The infoletter contains a checklist of every conceivable item that would be relevant in a domicile determination.

The last test is rarely used. It involves the exercise of jurisdiction by the court in East Virginia due to John’s residing in that state, but not due to military orders. Thus your order might use the following “magic words” for jurisdiction, assuming that you have the facts to back this up: “The court has jurisdiction to divide the uniformed services retired pay of the defendant, John Doe, due to his residence within the territorial jurisdiction of the court other than because of military assignment.” This test is only used when there is a nearby state boundary, such as the following – John is stationed at Eglin AFB, Florida, but he’s living just across the state line in Gulf Shores, Alabama, to be near his aged parents (and to get rent-free lodging). In that case, Alabama could exercise
jurisdiction over the military pension division, since John’s residing in Alabama is not due to his military assignment in that state.

The rules for military pension division are published by DFAS, the Defense Finance and Accounting Service; they’re found at the Dept. of Defense Financial Management Regulation, Vol. 7b, Chapter 29. The rules state that for a court order to be accepted, it must explicitly state the basis for the court’s exercise of jurisdiction. So don’t just recite the usual “blanket language” of “This court has jurisdiction over the parties and the subject matter of this case” without adding the proposed language set out above.
Anything less than the specific basis for jurisdiction will result in a rejection letter from the retired pay center, whether that’s DFAS (for Army, Navy, Air Force and Marine Corps) or the Coast Guard Pay & Personnel Center (for USCG, and for the commissioned corps of NOAA and PHS).

All of this (and more) can be found in Chapter 8 of THE MILITARY DIVORCE HANDBOOK (Am Bar Assn., 3rd Ed. 2019). The website is: https://www.americanbar.org/products/.

-Mark Sullivan

“Magic Words” in the Military Divorce

In “Jack and the Beanstalk” it is the “magic beans” that start the story. In “My Cousin Vinny,” the best line in cross-examination features “magic grits.” In military divorce cases, “magic words” are sometimes the answer.

There are several military pension division areas in which “magic words” or specific language can make the difference between success and defeat, between a happy client and a grievance (or worse!). One of the most important places to focus on language is in the paragraph in the pension division order which deals with the Survivor Benefit Plan. Attorneys who represent the non-military spouse or former spouse know that providing for this survivor annuity is an essential part of a property settlement.

Whether the pension-division text is found in the divorce decree, an incorporated settlement, or a separate consent order (often called a Military Pension Division Order, or MPDO), the attorney representing the spouse or the former spouse (FS) must be sure that specific requirements are set out clearly in order to secure SBP coverage. Without terms which anchor the SBP in the settlement, the retired pay center will deny the spouse or former spouse this substantial benefit, since the pension-share payments end when the servicemember or retiree dies. [Note: The retired pay center is DFAS, the Defense Finance and Accounting Service, for Army, Navy, Air Force and Reserve retirees; for those retiring from the Coast Guard or the commissioned corps of the Public Health Service or the National Oceanic and Atmospheric Administration, it is the Coast Guard Pay & Personnel Center.]

SBP is an income-continuation program, not strictly speaking a part of the pension. It allows the FS to continue receiving payments after the member’s death. The amount paid is 55% of the selected base amount. Payments constitute taxable income, and they increase annually with inflation through cost-of-living adjustments, or COLAs.

The basic language to be use – the “magic words,” if you wish – can be written quite simply into the instrument that divides the pension: “John Doe will immediately elect his wife, Jane Doe, for former-spouse Survivor Benefit Plan coverage.” It’s that simple!

Those who want to put a bit of frosting on the cake can use some additional language. Here are several add-ons to insert after the above sentence regarding SBP election:

“He will elect SBP for her using his full retired pay as the base amount.” [Note: The base can be anything from full retired pay down to $300 a month; failure to specify the base results in a base amount of one’s full retired pay.]
“He will make the election on DD Form 2656-1, will send a copy promptly to the retired pay center along with the divorce decree and any other order requiring former-spouse SBP coverage, and he will transmit a copy of these documents promptly to Jane Doe’s lawyer.” [Note: For members of the Reserves and National Guard, as well as their spouses, the forms need to be sent to that agency, not to the retired pay center; thus the Army Reserve office would be Human Resources Command at Ft. Knox, and the Air National Guard would be at Buckley AFB, Colorado.]
“Jane Doe may submit a deemed election to secure her SBP coverage, using DD form 2656-10.”

The addresses to use are on the forms. The deadlines for submission of the necessary documents are one year from the divorce (for the member/retiree) and one year from the order requiring SBP coverage (for the former spouse.).

All of this (and more) can be found at “SBP – Choose It or Lose It” in Chapter 8 of THE MILITARY DIVORCE HANDBOOK (Am Bar Assn., 3^rd Ed. 2019).

Mark E. Sullivan, COL, USA (Ret.)

Sullivan & Hilscher Family Law

Survivor Annuity Success

Last week we received word from the Defense Department of a major victory in one of our cases. It involved the Survivor Benefit Plan.

EX-WIFE OBTAINS SURVIVOR BENEFIT PLAN PROTECTION-

-COURT ORDER FINALLY HONORED BY FEDERAL GOVERNMENT.

THE BASICS

Federal law allows a former spouse to obtain Survivor Benefit Plan coverage in military divorce cases, but the application must be made within strict deadlines. If they’re missed, the benefit may be lost.

THE BACKSTORY

Our client, “Jane Doe,” married her husband in 1964 and the parties were divorced in 2004 in Minnesota. That’s a marriage of 40 years!

Before they were divorced. “John Doe” was determined to be mentally incompetent. We were hired by the parties’ adult daughter, “Susan,” who was the permanent guardian of her father.

The divorce judgment awarded the Survivor Benefit Plan protections (55% of husband’s retired pay for the rest of her life) to Jane Doe.

The problem was – no one was aware of the “deadline dilemma.” When SBP (the Survivor Benefit Plan) is ordered in a divorce case, the military member or retiree (here – John Doe) must apply to the government for coverage within a year of divorce. And the former spouse, Jane Doe, has to submit a deemed election document to the government within one year of the court order granting SBP to her.

Neither party knew anything about the deadlines and they were missed. Then in 2014 John died. Ordinarily, that’s the end of the case…

Not here, however!

Jane and her local attorney in Minnesota – a National Guard JAG officer whom I have known for 20 years – contacted us in 2015 to assist them in securing former-spouse SBP coverage. We then contacted Susan, the daughter and guardian of the deceased ex-husband.

Supporting Our Military Families

We made an application to the Board for Correction of Naval Records (BCNR), requesting an administrative change in the military records of the former husband to show that he’d made the election of SBP “on time,” that is, within the statutory record window.

I signed the application memo on January 30, 2018. Just last week the BCNR had voted to approve our request for SBP coverage for our client.

“Susan” – the guardian – was overjoyed. The client was ecstatic. This means that we’ll be able to ensure that the client receives a benefit which equals 55% of the late ex-husband’s retired pay for the rest of her life.

And there will be a lump-sum back payment to Jane for what was due to her for the past 5 years.

And it’s increased by COLAs to account for inflation! Jane can live to be 102 and still receive payments for the survivor annuity.

THE BOTTOM LINE

Here are some practice tips for the lawyer or client not familiar with these rules and restrictions:

A) Ensure that SBP is included in the divorce settlement.
B) Be sure to comply with the statutory deadlines for SBP registration with the retired pay center.
C) If they’re missed, apply to the appropriate Board for Correction of Military Records (10 U.S.C. 1552) to ask for correction of the military records to reflect SBP coverage.

There’s an expanded section on Board applications in my book, The Military Divorce Handbook (Am. Bar Assn., 3^rd Ed. 2019). Go to Chapter 8 – it’s all there, with references to the statutes and the regulations. The appendices show examples of documents to file in support of an application.

–Mark E. Sullivan

The Military Divorce Handbook has sold almost 400 copies in 2 ½ months and will go into its second printing within the next 30 days! The revenues it has brought in for the ABA Family Law Section have helped make it possible to continue the good work that the Section does.

Just Released! THE MILITARY DIVORCE HANDBOOK (3rd Ed.)

The Military Divorce Handbook is now available in its Third Edition as of May 20, the American Bar Association announced. This third version of the ABA best-seller is 40% larger than the Second Edition, with two volumes due to the significant increase in content.

What’s new in the book? Just a few of the improved sections are:

In Chapter 1 you’ll find an expanded section about rules and resources for getting documents from the government (e.g., pay records, retirement orders, VA rating, time in service and type of discharge) under the Freedom of Information Act and the Privacy Act.
Chapter 2 contains a new glossary of cases on the Servicemembers Civil Relief Act, a chart showing the new statutory sections for the Act since its codification by Congress in 2015, and new information on how to search the Defense Department’s on-line database for whether a party is serving in the military.
Chapter 3 includes a section-by-section analysis of the Uniform Deployed Parents Custody and Visitation Act (now the law in 14 jurisdictions), and an expanded section on international kidnaping remedies and the Hague Abduction Convention.
In Chapter 5 on “Domestic Abuse,” the reader will see new written resources and tools regarding domestic violence and the Family Advocacy Program, a section on Article 128b of the Uniform Code of Military Justice (making domestic violence a new criminal offence), and new information on representation for sexual assault victims and compensation for domestic-abuse victims.
A link to the Army JAG School’s Federal Income Tax Course is found at Chapter 7, along with guidance on tax-free allowances and their impact on the income of servicemembers.
In Chapter 8 on division of property and pensions, you will find entirely new sections on the Blended Retirement System (which took effect Jan. 1, 2019), the Supreme Court’s 2017 Howell decision as to VA payments and indemnification, new rules about the amendment to the Uniformed Services Former Spouses’ Protection Act which freezes the divisible pension on the date of divorce (the “Frozen Benefit Rule”), new resources for understanding military retired pay, and an expanded section on reduction in grade at retirement due to misconduct.

I hope you’ll find my book useful and easy to read. I spent three years putting together this edition!

-Mark Sullivan

Our Reputation is your Guarantee