September 30, 2016 | Share
Proposed Law Could Drastically Change How Military Pensions Get Divided in a Texas Divorce
When military officers and their spouses get divorced, as a general rule, the non-officer spouse can claim a portion of the officer’s retirement benefits as community property. Generally speaking, income that either spouse earns during the marriage is considered community property (and therefore subject to division in a divorce), and this includes military pensions and other retirement benefits. In fact, the Uniformed Services Former Spouses’ Protection Act (USFSPA) specifically provides that state courts have the authority to divide military pensions in a divorce.
Two Ways Military Pensions Get Divided in a Texas Divorce
Currently, there are two primary options for dividing a military pension in a divorce:
- Option 1: The first option actually does not involve dividing the pension at all, but rather exchanging the non-officer spouse’s interest in the pension for other community property. For example, assume that the pension is valued at $100,000 (note, however, that valuing a pension in a divorce is a process unto itself) and that the non-officer spouse would be entitled to half of the pension. If the couple has other community property assets that are worth $50,000, they can agree that the military officer will keep his or her entire pension while the non-officer spouse retains the equally-valued property.
- Option 2: The second option is to actually divide the pension. Under the USFSPA, this division is done “if, as and when” the officer retires. So, if the parties get divorced when the officer has 10 years of service and he or she retires 20 years later, the non-officer spouse is entitled to a share of the actual pension payments (at the then-current rank pay rate) based upon 30 years of service.
In either case, determining the future value of the military officer’s retirement pay will be critical to both parties in the divorce. Until the parties assess the non-officer spouse’s entitlement, they will not be able to confidently establish an appropriate division of their community property.
Congress is Considering Bills that Would Reduce Former Spouses’ Share of Military Pensions
Soon, however, we may see a drastic change in the way that military pensions get divided in a Texas divorce. The U.S. House and Senate are currently considering alternate versions of a bill that would replace the “if, as and when” calculation with a calculation that focuses on the military officer’s years of service at the time of divorce.
So, in the example above, instead of receiving a portion of the officer’s actual pension payments based upon 30 years of service, the non-officer former spouse would only be entitled to payments at the 10-year service level. The House version of the bill would also apply the officer’s rank pay rate at the time of divorce, while the Senate version includes a proposal to adjust the pay rate to reflect the officer’s rank at the time of retirement.
If Congress passes either version of the bill, the impact for military couples in Texas is likely to be substantial. We will continue to monitor the bills for further developments.
Schedule a Free Consultation with a Divorce Attorney Today
The McKinney divorce lawyers at Nordhaus Walpole PLLC provide experienced legal representation for military officers and spouses in Texas. If you are contemplating a divorce and would like to learn more about your options, contact us online or call (214) 726-1450 to schedule a free consultation today.
Categories: Family Law & Divorce