Nolo's Essential Guide to Divorce - Emily Doskow [145]
In general, there's not much a spouse can do about this. But recently, a Maryland appellate court held that the ex-wife of a service member who was discharged because of permanent disability was entitled to receive her share of the lump sum that her husband elected to receive instead of his pension. The court said that the payment didn't violate the rule saying disability benefits aren't included in pension payments, because the court ordered the husband to pay the wife out of his assets generally, not specifically out of the disability award.
When Can You Get Your Retirement Share?
As discussed above, it's possible you might agree to take a lump sum buyout of your share in your military spouse's retirement. You'd receive that when you settle your divorce. If you don't, you'll be waiting to get your share later-but what does later mean? Your spouse may continue working for many years after becoming eligible for retirement benefits, while you may want to start receiving your share of those benefits as early as possible. In many states, you'll be able to include a provision in your divorce judgment that says you're entitled to receive your share as soon as your former spouse becomes eligible for retirement. This should be a date you can figure out and include in your judgment.
Bankruptcy and Retirement
An award of a share of military retirement is considered a nondischargeable debt, just like support obligations. This means that a military spouse who files for bankruptcy still owes the other spouse a share of the pension. (See Chapter 14 for more about bankruptcy.)
Career Status Bonus
Some service members opt for the retirement plan called REDUX, which gives the service member the option of taking a midcareer bonus, called a Career Status Bonus (CSB) of $30,000 when the service member reaches 141/2 years of service. In exchange, the service member takes a reduction in pension benefits.
The DFAS website unequivocally states that as a bonus, the CSB is not divisible in a divorce action, but such a statement isn't binding on state courts. In fact, many courts will require that a service member compensate a former spouse for any reduction the service member causes in the retirement benefits to which the spouse is entitled.
However, it's possible for a service member to opt for the CSB without a spouse's consent and even without the spouse's knowledgeespecially if the service member's eligibility for the CSB occurs some time after the divorce is final. If you think your spouse has received a CSB, make sure you find out. And make sure that your marital settlement agreement or judgment states that your spouse must inform you-and compensate you-if a CSB comes into play.
The Survivor Benefit Plan
The Survivor Benefit Plan (SBP) is a form of annuity that allows retired service members to leave a death benefit to specified survivors, including a former spouse. The service member pays premiums through a payroll deduction starting after retirement. Unless a court orders otherwise, the service member has control over the amount of the benefit and the beneficiary. Upon the service member's death, the beneficiary receives a lifetime annuity-for most beneficiaries, currently 55% of the retired pay the service member would have been entitled to if he or she retired on the date of death.
The SBP is a way that a former spouse can continue receiving something after the service member's death. Whether a divorcing spouse wants to negotiate for SBP coverage depends on all the circumstances of the divorce.
The Thrift Savings Plan
Service members also may participate in a Thrift Savings Plan (TSP), which is similar to a private employer's 401(k) plan. The service member contributes a percentage of basic pay (no more than 7%) to the plan, with no matching by the military employer. The TSP is completely separate from the military pension and is treated as