In the event of a divorce, divided assets might include retirement benefits. Military retirement benefits are subject to some specific rules. In some cases this can allow for retirement benefits owed to the ex spouse of a veteran to be paid to them directly.
However, it’s not always entirely straightforward. The basis for it is what is known as the 10/10 rule.
Military Spouses and Retirement Pay.
In 1982, the Uniformed Services Former Spouses’ Protection Act was enacted in response to a Supreme Court ruling that decreed that a former spouse could not be awarded any part of retiree pay in community property states. The court challenged Congress to fix the issue.
The purpose of the act was to protect former spouses by ensuring that they received their fair share of support. The act authorizes courts to divide retired pay. It does not require that pay be divided in any specific manner, or at all. It also allows for the enforcement of alimony and child support and allows military and retirees to designate a former spouse as a survivor beneficiary.
Disability pay is excluded from the terms of the USFSPA and cannot be divided. The act also does not deal with alimony and child support, which have always been able to be garnished from retired pay.
So, what is the 10/10 rule, and why does it cause confusion?
What is the 10/10 Rule?
The 10/10 rule is often brought up in connection to dividing retirement pay, but is equally often misunderstood. It is sometimes confused with the 20/20/20 rule that determines whether former spouses are eligible for TRICARE benefits.
The actual rule is simple. There must have been at least 10 years of marriage which overlap with 10 years of service. This often leads people to think that if they don’t meet this rule (for example, if they were in service for 15 years, but only married for five of them) that they are not eligible to receive anything. They may, thus, not push for a fair division of retired pay, which can be treated as property for the purposes of divorce.
This is not true. Under the USFSPA, judges can award a share of retired pay under whatever circumstances they deem reasonable, generally following the same rules they would apply to civilians.
However, the 10/10 rule does apply to something specific:
If you meet the 10/10 rule the payments will be made directly to the former spouse. Direct payments are normally limited to 50% of the retired pay, but may go up to 65% in order to cover alimony or child support. If the service member has more than one former spouse, payment orders are handled first-come first-served and the total amount cannot exceed 65%. Also, these percentages are not of gross military retired pay, but disposable retired pay. This excludes disability, medical retired, VA disability compensation and SBP premiums. The award has to have been made in a court-ordered divorce-related settlement.
The award may be made as a direct amount or as a percentage; a percentage means that the spouse will get cost of living increases and thus is better for them. If you don’t meet these requirements, then the court will order the service member to pay their former spouse themselves.
Direct payment is, of course, safer for the former spouse, who doesn’t have the risk of their ex not paying them. It’s also easier and more convenient. However, a court can order more than 50% if it’s not being paid by direct payment. It still has to come from disposable pay, not gross pay, which provides some protection to the service member from being asked to pay excessive alimony or support, especially if they have more than one former spouse.
Child support and alimony can still be taken from retired pay if the 10/10 rule is not met. This is handled under a separate garnishment system and follows the same rules as civilian garnishment.
What Other Limitations Are There in Military Divorce?
To divide pensions, the state court has to have appropriate jurisdiction. With military families, this can be complicated. A court has jurisdiction over a service member if: The service member resides in the court’s territorial jurisdiction and is not there for a military assignment; The service member domiciles in the court’s territorial jurisdiction; The service member consents to the court’s jurisdiction. If the court does not have jurisdiction, then they are not able to divide the pension.
So, it’s important to make sure that you file for divorce in that state, not the one you are currently deployed in. It is also possible for both spouses to consent to the jurisdiction of a more convenient court, but this has to be done properly. Also, the military will not process direct payments if the divorce was finalized overseas.
The spouse has to send an application to the Defense Finance and Accounting Service (DFAS) along with a copy of the court order. Payments will then start within 90 days, and will go out on the normal monthly retired pay cycle.
The money is considered taxable income, and the DFAS will do all required withholding if the amount hits the necessary threshold.
The 10/10 rule is often misunderstood. Too many military divorcees think that if they don’t have the ten years of overlap, then the civilian spouse is not entitled to a share of retired pay. This is not, in fact, true, but it does have to be handled properly. Whether you meet the 10/10 rule or not, you need a lawyer who is experienced with military divorces and can guide you through the process of getting a court order and applying for direct payments if you are eligible.
QDRO Masters helps lawyers and their clients by drafting domestic relations orders that meet all legal requirements. This includes ones for military divisions and military divorces. Contact us to find out how we can help you and your clients put together court orders that will ensure that former spouses get their fair share of divided property.