Processing The Processing The Military Divorce Case; Military Divorce Case; What You Must KnowWhat You Must Know

Peter Cushing,Peter Cushing,

Orlando, FloridaOrlando, Florida

McCarty v. McCartyMcCarty v. McCarty

Decided June 26, 1981Decided June 26, 1981 U.S. Supreme CourtU.S. Supreme Court Federal law precluded California court Federal law precluded California court

from dividing military retirementfrom dividing military retirement FSPA overruled FSPA overruled McCartyMcCarty

McCartyMcCarty Rationale Rationale

Grave harm to clear and substantial federal Grave harm to clear and substantial federal interests, such as:interests, such as:– Providing for retired servicemember in old ageProviding for retired servicemember in old age– Encouraging enlistment and reenlistmentEncouraging enlistment and reenlistment– Orderly promotionsOrderly promotions– Encouragement of a youthful militaryEncouragement of a youthful military

Dividing pensions would discourage Dividing pensions would discourage purchase of an annuity for surviving spouse.purchase of an annuity for surviving spouse.

Military vs. Civilian Pensions

Retired officer is subject to recallRetired officer is subject to recall Continues to be subject to UCMJContinues to be subject to UCMJ Restricted in post-service activities, including Restricted in post-service activities, including

employmentemployment Military retirement historically considered Military retirement historically considered

reduced pay for reduced services, not a pensionreduced pay for reduced services, not a pension No “property” concept ever existed in military No “property” concept ever existed in military

compensation laws or case lawcompensation laws or case law

FSPA Overruled McCarty USFSPA Found at 10 USC 1408 Effective February 1, 1983 Retroactive to June 25, 1981, one day prior

to McCarty decision Sponsored by Patricia Schroeder (D-Co)

To Whom FSPA AppliesTo Whom FSPA Applies ““Uniformed Services”- Army, Navy, Uniformed Services”- Army, Navy,

Air Force, Marines, Coast GuardAir Force, Marines, Coast Guard Commissioned Corps of the National Commissioned Corps of the National

Oceanic and Atmospheric Oceanic and Atmospheric Administration and Public Health Administration and Public Health ServiceService

Active duty, retired, and Reserve/Guard Active duty, retired, and Reserve/Guard (whether active duty, inactive status, or (whether active duty, inactive status, or retired, pay and non-pay categories)retired, pay and non-pay categories)

WHAT FSPA DOES WHAT FSPA DOES Preempts state lawPreempts state law Allows state courts to treat military pension either as Allows state courts to treat military pension either as

property solely of the member or as property of the property solely of the member or as property of the member and spouse beginning June 25, 1981member and spouse beginning June 25, 1981

1990 amendment prevents former spouses from returning 1990 amendment prevents former spouses from returning to state court on “old” divorces unless decree divided to state court on “old” divorces unless decree divided pension or reserved jurisdiction to do sopension or reserved jurisdiction to do so

Allows division of “disposable retired pay”Allows division of “disposable retired pay” Ten-year ruleTen-year rule Special jurisdictional rulesSpecial jurisdictional rules

SPECIAL JURISDICTIONAL SPECIAL JURISDICTIONAL RULES RULES

Residence in state, but not due to military assignment Residence in state, but not due to military assignment Domicile in state Domicile in state Consent to jurisdictionConsent to jurisdiction Case law: request for affirm. relief = consentCase law: request for affirm. relief = consent * Practice Pointer: serve in state- jurisdiction for * Practice Pointer: serve in state- jurisdiction for

child support/alimony; availability of garnishment child support/alimony; availability of garnishment through DFASthrough DFAS

Ten-year ruleTen-year rule

““Disposable Retired PayDisposable Retired Pay””

Subtract from gross retirement pay-Subtract from gross retirement pay-– Debts owed U.S. GovernmentDebts owed U.S. Government

– Survivor Benefit Plan premiumSurvivor Benefit Plan premium

– Court-martial fines and forfeituresCourt-martial fines and forfeitures

– Amounts waived to obtain disability payAmounts waived to obtain disability pay Taxes of each retirement pay recipient are Taxes of each retirement pay recipient are

separately withheld, 1099’s issued to each party.separately withheld, 1099’s issued to each party. 50% maximum50% maximum

COVERTURE FRACTIONCOVERTURE FRACTION

DEFERRED DISTRIBUTION METHOD:Months of marriageMonths of marriageMonths of military service = Months of military service = % of future monthly retirement payments earned during % of future monthly retirement payments earned during the marriage the marriage X 1/2 of military member’s X 1/2 of military member’s disposable retired or retainer pay as defined by lawdisposable retired or retainer pay as defined by law

Deloach v. Deloach 590 So. 2d at 964Deloach v. Deloach 590 So. 2d at 964

BETTERBETTER COVERTURE COVERTURE FRACTION FRACTION

50% of the following:50% of the following:– ““Disposable Retired Pay” as a Major with Disposable Retired Pay” as a Major with

15 years of service times a fraction …15 years of service times a fraction …»numerator = yrs of numerator = yrs of maritalmarital pension service pension service

»denominator = yrs of service at retirementdenominator = yrs of service at retirement

BETTERBETTER COVERTURE COVERTURE FRACTIONFRACTION

Legal Malpractice Now….Legal Malpractice Now….

. . .MALPRACTICE?

RESERVE / GUARD RESERVE / GUARD COVERTURE FRACTION COVERTURE FRACTION

Marital years of service over total years of serviceMarital years of service over total years of service Marital retirement points over total retirement Marital retirement points over total retirement

pointspoints Discovery: need points recordDiscovery: need points record Pre-marital active service?Pre-marital active service? Age 60: present value issue Age 60: present value issue

RESERVE / GUARD RESERVE / GUARD COVERTURE FRACTION COVERTURE FRACTION

LEGAL MALPRACTICE NOW LEGAL MALPRACTICE NOW . . .MALPRACTICE?

MILITARY PENSION MILITARY PENSION DIVISION ORDER (not QDRO)DIVISION ORDER (not QDRO)

Certification of ten-year ruleCertification of ten-year rule Provide marriage licenseProvide marriage license Certification of compliance with Certification of compliance with

Servicemember’s Civil Relief Act (active Servicemember’s Civil Relief Act (active duty)duty)

Payment of fixed dollar amount or % Payment of fixed dollar amount or % Percentage includes COLAPercentage includes COLA Certain formula orders now accepted.Certain formula orders now accepted.

IMMEDIATE OFFSETIMMEDIATE OFFSET

Determines marital account balanceDetermines marital account balance As of jurisdiction’s “cut-off date”As of jurisdiction’s “cut-off date” Reduced to present cash valueReduced to present cash value Immediate distribution by offsetting against Immediate distribution by offsetting against

other assetsother assets Not “if, as, and when”Not “if, as, and when” Preferred approachPreferred approach

FLORIDA’S APPROACHFLORIDA’S APPROACH

61.076- All vested and non-vested pensions61.076- All vested and non-vested pensions– Acquired during the marriageAcquired during the marriage– Are marital assetsAre marital assets– Subject to equitable distributionSubject to equitable distribution

Not disability pensionsNot disability pensions Effective October 1, 1988 Effective October 1, 1988 Also case lawAlso case law

FLORIDA CASE LAWFLORIDA CASE LAW

Diffenderfer (Fla. 1986)Diffenderfer (Fla. 1986) Preferable to treat pension as assetPreferable to treat pension as asset May be treated as source of supportMay be treated as source of support Lengthy periods of separation?Lengthy periods of separation? Pension offset by other assets/liabilities?Pension offset by other assets/liabilities? 61.075 considerations always pertinent61.075 considerations always pertinent Judicial discretionJudicial discretion

DEFENSES TO PENSION DEFENSES TO PENSION DISTRIBUTIONDISTRIBUTION

No jurisdictionNo jurisdiction DisabilityDisability Merger post judgmentMerger post judgment

Moved to Puerto RicoMoved to Puerto Rico ““Early Out” defenseEarly Out” defense Immigration to foreign landImmigration to foreign land DeathDeath

FOUR MISTAKES I DON’T FOUR MISTAKES I DON’T MAKE ANY MOREMAKE ANY MORE

Omitting the pension as an assetOmitting the pension as an asset Including the pension as an asset in a 2-year Including the pension as an asset in a 2-year

marriagemarriage Forgetting to insure the pensionForgetting to insure the pension

– (...and then the member dies)(...and then the member dies)– (or insuring it with (or insuring it with SGLI onlySGLI only))

Distributing the pension w/o jurisdictionDistributing the pension w/o jurisdiction

FIVE MORE MISTAKESFIVE MORE MISTAKES (& I don’t make them any more (& I don’t make them any more

either!)either!)

Forgetting to serve the “deemed election” Forgetting to serve the “deemed election” letterletter

Forgetting to plan for disability retirementForgetting to plan for disability retirement Forgetting to plan for SSB or VSIForgetting to plan for SSB or VSI Forgetting to plan for merger of retirementForgetting to plan for merger of retirement Forgetting to reserve jurisdictionForgetting to reserve jurisdiction

LOCKING IN THE LOCKING IN THE MILITARY PENSIONMILITARY PENSION

Survivor Benefit Plan elected?Survivor Benefit Plan elected? Former spouse benefitsFormer spouse benefits ““Deemed election” provisionsDeemed election” provisions SGLI or VGLI? (Ridgeway decision)SGLI or VGLI? (Ridgeway decision) Who pays?Who pays? Malpractice pitfallMalpractice pitfall

ADVANTAGES OF SBPADVANTAGES OF SBP

Available without qualifyingAvailable without qualifying Income for lifeIncome for life Tax-freeTax-free Guaranteed benefitGuaranteed benefit Cost-of-living adjustmentCost-of-living adjustment Cannot be cancelledCannot be cancelled

DISADVANTAGES OF SBPDISADVANTAGES OF SBP

InflexibilityInflexibility Premiums are expensive; may increasePremiums are expensive; may increase No cash valueNo cash value VA offsetVA offset Social Security offsetSocial Security offset ““Deemed election” problemsDeemed election” problems Court’s discretionCourt’s discretion

DRAW DOWN, DISABILITY, DRAW DOWN, DISABILITY, MEDICAL RETIREMENTMEDICAL RETIREMENT

10 USC 140810 USC 1408 ““Disposable Retirement Pay”Disposable Retirement Pay” U.S. v. Mansell: no garnishmentU.S. v. Mansell: no garnishment Use of alimony?Use of alimony? Reservation of jurisdiction?Reservation of jurisdiction? Modification of property?Modification of property? ABA model clausesABA model clauses SSB/VSISSB/VSI

MILITARY MEDICAL MILITARY MEDICAL BENEFITSBENEFITS

20/20/20 marriage? Reserve Time Counts20/20/20 marriage? Reserve Time Counts 20/20/15 marriage?20/20/15 marriage? Commissary, theater, exchange benefitsCommissary, theater, exchange benefits ““Military COBRA plan” now availableMilitary COBRA plan” now available Premium payment requiredPremium payment required TRICARE benefits for kidsTRICARE benefits for kids DEERS enrollmentDEERS enrollment

SOLVING THE SOLVING THE SCRA SCRA (SERVICEMEMBER’S CIVIL RELIEF (SERVICEMEMBER’S CIVIL RELIEF

ACT) PROBLEMACT) PROBLEM

– Prejudice/material impairment to defendPrejudice/material impairment to defend

– By reason of active military serviceBy reason of active military service

– Leave on books?Leave on books?

– Current with family obligations?Current with family obligations?

– Presumptive evidence of bad faithPresumptive evidence of bad faith

– No default/appointment of counselNo default/appointment of counsel

– Certification of compliance- FJCertification of compliance- FJ

COLLECT YOUR COLLECT YOUR ATTORNEY’S FEESATTORNEY’S FEES

From your clientFrom your client From adversary; need income disparityFrom adversary; need income disparity Magic WordsMagic Words to garnish to garnish 42 USC 65942 USC 659 Awarded as child support or alimony, per CFR Awarded as child support or alimony, per CFR

languagelanguage Assign alimony arrearages to counsel as Assign alimony arrearages to counsel as

method of payment, then garnishmethod of payment, then garnish

GARNISHMENT OR GARNISHMENT OR INVOLUNTARY ALLOTMENT?INVOLUNTARY ALLOTMENT?

42 USC 659- Waiver of sovereign immunity42 USC 659- Waiver of sovereign immunity Child support/alimony/DFASChild support/alimony/DFAS Remuneration for employmentRemuneration for employment Disposable earningsDisposable earnings= basic pay, BAQ, BAS, Sea = basic pay, BAQ, BAS, Sea

Pay, Special Pay, etc.Pay, Special Pay, etc. 2-month support arrearage; alimony and c/s2-month support arrearage; alimony and c/s May eliminate need for contemptMay eliminate need for contempt 60% or 50% limit60% or 50% limit

MERGER OF MILITARY RETIRED PAY MERGER OF MILITARY RETIRED PAY INTO CSRS/FERS RETIRED PAYINTO CSRS/FERS RETIRED PAY

Prevent circumvention of orderPrevent circumvention of order No waiver of retired payNo waiver of retired pay Enhance CSRS/FERS annuityEnhance CSRS/FERS annuity Effective January 1, 1997Effective January 1, 1997 Member must authorize Director to pay Member must authorize Director to pay

annuity to former spouse from FERS or annuity to former spouse from FERS or CSRS; 5 USC 8332 (c)CSRS; 5 USC 8332 (c)

VA Disability FixVA Disability Fix

42 USC 659; eff. Feb. 199742 USC 659; eff. Feb. 1997 ““Moneys subject to process”Moneys subject to process” Paid by Secy of Veterans’ AffairsPaid by Secy of Veterans’ Affairs As compensation for service-connected As compensation for service-connected

disabilitydisability If member waived retired or retainer pay; i.e If member waived retired or retainer pay; i.e

was eligible for longevity retirementwas eligible for longevity retirement For child support, alimony, fees and costsFor child support, alimony, fees and costs

VSI/SSB FixVSI/SSB Fix

5 CFR 581.1035 CFR 581.103 Garnishment for alimony and child supportGarnishment for alimony and child support Office of Personnel ManagementOffice of Personnel Management Personal Responsibility and Work Personal Responsibility and Work

Opportunity Reconciliation Act of 1996Opportunity Reconciliation Act of 1996 Not equitable distribution Not equitable distribution

CONCURRENT RECEIPTCONCURRENT RECEIPT

FY 2004 Defense Authorization ActFY 2004 Defense Authorization Act 10 U.S.C. sec. 141410 U.S.C. sec. 1414 Concurrent Disability PayConcurrent Disability Pay Retirees with 20 or more years serviceRetirees with 20 or more years service Disability Rating of 50% or higherDisability Rating of 50% or higher Phase in period over 10 years before full Phase in period over 10 years before full

concurrent receiptconcurrent receipt 100% disability rating gets full CDP100% disability rating gets full CDP

CONCURRENT RECEIPT CONCURRENT RECEIPT CONTINUEDCONTINUED

Former spouses with pension award need to Former spouses with pension award need to contact Defense Finance to resume contact Defense Finance to resume paymentspayments

Justification may exist to reopen final Justification may exist to reopen final judgments to obtain pension awardjudgments to obtain pension award

Modification of alimony award may be Modification of alimony award may be justifiedjustified

PROCESSING THE MILITARY PROCESSING THE MILITARY DIVORCE CASE; WHAT YOU DIVORCE CASE; WHAT YOU

MUST KNOWMUST KNOWPeter CushingPeter Cushing

THE S/A AT DIVORCE HEARING...THE S/A AT DIVORCE HEARING...

?

. . .MALPRACTICE?

Adoption Procedures

?

?

?