Military Retirement Benefits in Guam Divorce
Introduction to Military Pensions in a Divorce
A servicemember's military pension is often the most valuable asset in a divorce. Since it is an asset, Divorce courts can divide military retirements just like any other marital asset, so each spouse should know how the divorce courts will handle the division of military pensions, VA Disability, and issues concerning the Survivor Benefit Plan (SBP).
The Myth about Dividing Military Pensions
Many people, including some family law attorneys, believe that military retirement is only divisible if the marriage lasted at least 10 years. That is not correct. Guam like all state courts, has the authority to divide a servicemember's military retirement, regardless of the length of the marriage (overseas courts cannot divide military retirements). The Uniformed Services Former Spouses' Protection Act (USFSPA) permits, but does not require, state and territorial courts to divide military retirement upon divorce. Nowhere is the court's authority to divide military retirement limited by the length of marriage. However, Defense Finance and Accounting Service (DFAS) will only pay directly the former spouse's share of the military retirement if there were at least 10 years of marriage overlapping 10 years of creditable military service (the 10/10 rule). State courts divide military retirement for couples with fewer than 10 years of marriage all the time - it simply means that the servicemember actually has to cut the check to pay the civilian spouse, rather than DFAS making the payments.
Military Thrift Savings Plan (TSP)
The FY 2001 National Defense Authorization Act allows servicemembers to contribute up to 7% of their basic pay to a Thrift Saving Plan (TSP), but with no matching funds from the federal government. In a nutshell, it is similar to a private sector 401(k) plan in that taxes are deferred on the contributions and appreciation until disbursement. Contributions to a TSP do not affect the right to receive "standard" military retirement. And the divorce judge must sign a Qualified Domestic Relations Order to divide the TSP, which is separate and distinct from the division of military retirement.
Disposable Retired Pay
The disposable retired pay a divorce court can divide is the total retired pay minus:
1. Amounts owed to the government for previous overpayments,
2. Forfeitures adjudged by a court-martial,
3. Pay waived to receive VA disability payments, and
4. SBP premiums.
Bonuses or Benefits in Lieu of Retirement
The most common benefit in lieu of retirement is when a servicemember receives VA disability, and must waive some of the military retirement to receive those payments. See VA Disability for more information.
The military has a variety of methods to separate servicemembers from active duty before retirement which may result in separation pay or other benefits in lieu of retirement. Should this occur, the divorce court may award the former spouse a portion of the benefit or bonus received in lieu of retirement.
Pursuant to 10 U.S. Code §1408(h), a spouse may receive a portion of the servicemember's retired pay if the servicemember was (1) eligible for retirement, and (2) discharged at a court-martial or administratively for spousal abuse, including domestic violence or sexual assault. See Former Spouse Military Benefits for more information.
Division of Military Retirement Formula in Guam.
Guam is a community property jurisdiction. There is no Guam Supreme Court case determining the formula to be used in dividing us military retirement benefits. However, the trial court’s have been following the formula used in most other community property jurisdictions:
The former spouse is entitled to one-half of the marital portion of the servicemember's disposable disposable retired pay, calculated as one-half of:
Months of marriage overlapping military service
Total months of military service at retirement
Example: If a couple was married for exactly 12 years (144 months) overlapping creditable military service and the servicemember retired at 20 years (240 months), the marital portion would be 144 / 240, or 60% of the servicemember's disposable retired pay. The former spouse would therefore receive half of that, or 30%, and the servicemember receives the remaining 70% (consisting of the servicemember's 40% separate property share, plus his/her 30% marital share).
Reserve component retired pay is treated in a similar fashion.
Servicemember Still On Active Duty
If the servicemember is still on active duty at the time of dissolution, the divorce court can:
1. Try to figure out the retirement's net present value, and offset it against other marital assets,
2. Determine the formula in advance, but defer distribution until retirement, when the denominator can be established, or
3. Reserve jurisdiction altogether (essentially, wait and see what happens until retirement).
While it has not been decided definitely in Guam , most courts allow the former spouse to share the benefit of future promotions and COLAs. Whether the spouse will receive these benefits will depend on the wording used in the Divorce decree or marital settlement agreement. Including COLA and promotions can significantly affect the amount of retirement paid to the non military spouse. It is important that the divorce attorney is aware of this issue and frames the decree or agreement properly.
Application for Share of Military Retirement
If the former spouse satisfies the 10/10 rule, the spouse can apply for direct payment from DFAS of his/her portion from the division of military retirement (if Army, Navy, Air Force or Marines), at:
Assistant General Counsel for Garnishment Operations
Defense Finance and Accounting Service - Cleveland Center
PO Box 998002
Cleveland , Ohio 44199-8002
Because military retirement is a federal entitlement, not a qualified pension plan, no Qualified Domestic Relations Order is required - simply send DFAS a DD Form 2293, Application for Former Spouse Payments from Retired Pay, and a certified copy of the court order dividing the retirement. The order should contain the following:
1. An indication that the servicemember's rights under the Servicemembers Civil Relief Act (formerly the SSCRA) were respected,
2. An indication of the divorce court's jurisdiction over the servicemember (either residence, domicile, or consent to jurisdiction, including not contesting jurisdiction),
3. The marriage date, and an indication that the 10/10 rule has been met, and
4. The percentage share (or dollar amount) awarded to the former spouse.
Note that it may take up to 90 days to receive the first payment. DFAS sends the servicemember notice of the application, and the servicemember then has 30 days to contest payment.
Maximum Payments from DFAS
The maximum portion of a retirement that DFAS will pay a former spouse as part of a property division is 50% of the servicemember's disposable retired pay. This does not prevent a divorce court from dividing the military retirement and awarding a former spouse more than half. Should a servicemember be in that unlucky situation, he/she will have to make up the difference between what DFAS pays directly and the divorce court's division of military retirement.In cases where military pay is both awarded to a former spouse as a property division, and subject to garnishment for child support or maintenance, the maximum DFAS will pay the former spouse directly is 65%. But again, should the divorce court order's encompass this situation, the servicemember would have to make up the difference between the amount DFAS pays out and the amount ordered.