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Washington State Divorce

Retirement and Disability Benefits

Military retirement and disability benefits are the rewards for a career of putting your life on the line to defend the country. If you were injured protecting this country, you deserve to receive military disability benefits. If you are going through divorce, it’s important to speak with an experienced attorney to understand how divorce will affect your military disability benefits.

retirement and disability benefits

DISABILITY AND RETIREMENT

The Uniformed Services Former Spouses Protection Act permits, but does not require, states to treat a service member’s retirement benefits as property to be divided in accordance with state divorce laws. As a general rule, Federal law prohibits states from awarding a former spouse over 50% of a service member’s disposable retirement benefits.

Washington is a community property state. That means that your retirement benefits will be part of the community property divided during the divorce. Community property is the shared property of the marriage, the assets and debts which must be equitably divided by the court during the divorce. Only the benefits you earned while both married and in the service are considered community property.  This also means you can negotiate the division of other assets to keep your full pension.

HOW BENEFITS ARE CALCULATED

Most retirement calculations are done using the “High-3” formula.  This takes the highest three years of base pay during service and puts that into the formula (2.5% x years of service x highest 3 years of base pay).  For a divorce, this calculation takes place at the time of the decree.  

Meaning service members still in the service can increase their overall retirement pay by receiving promotions or increasing time of service after the divorce is finalized without increasing their financial obligation to their former spouse. 

There are other formulas for calculating retirements for service members who enlisted prior to 1980 (Final Pay formula), elected to have a mid-career bonus (REDUX formula), or enrolled in the Blended Retirement System (only applies if service was entered on/after Jan 1 2018). 

HOW BENEFITS ARE DIVIDED

Disability retired pay is not divisible or disposable under the Uniformed Services Former Spouses Protection Act. If you receive half of your retirement benefits in the form of disability pay and your former spouse is entitled to 50% of your disposable retirement pay, he/she will receive 50% of the retirement benefits, but not 50% of the disability pay.

The amount of retirement funds available for division equals your full retirement benefits minus the portion designated as disability retirement benefits.

If you are disabled but able to continue service, or if a disability is discovered after you retire, you have the option of waiving a portion of your normal retirement benefits and having those benefits replaced with disability retirement benefits. These are paid by the Department of Veteran’s Affairs. In this way, you can reduce the amount of divisible retirement benefits while not reducing the total benefits received. This results in a smaller portion of benefits available to your former spouse.  This concept also applies if you already have an agreed division of retirement benefits and elect to have it reduced in order to receive disability pay.  A Supreme Court ruling in 2017 (Howell v. Howell) established that waiving the right to retirement benefits that cause a decrease in divisible pay is beyond the power of a state court to order a requirement to offset with compensation.

In 2003, Congress passed legislation that will allow some service members to receive disability benefits without waiving any normal retirement benefits. The affected service members will keep their normal retirement benefits and have disability retirement benefits added to the total amount received. This legislation will be phased in until it’s fully implemented in 2014. However, only service members with 20 or more years of qualifying service and a Department of Veteran’s Affairs disability rating of 50% or greater will qualify. For those who qualify, obtaining Department of Veteran’s Affairs paid disability retirement benefits will not reduce their divisible retirement benefits (or how much is owed to a former spouse).

Disability retirement pay is counted as income for purposes of calculating child support and maintenance payments.

This means even though a State court can’t order you to pay a portion of your disability retirement benefits to your former spouse, receiving a large disability retirement payment can increase your payment obligations via a higher child support and maintenance award.

DEFENSE FINANCE AND ACCOUNTING SERVICE

Retirement and disability retirement benefits are paid to service members by the Defense Finance and Accounting Service, which is the accounting firm for the Department of Defense. If you were married for 10 or more years of your military service, and your former spouse is awarded part of your benefits, he/she will receive his or her portion directly from the Defense Finance and Accounting Service.

NO PAYMENTS UNTIL RETIREMENT

If your former spouse is awarded a portion of your retirement benefits, it is important to know that no benefits will be paid out until you actually retire. Federal law prohibits a court from forcing you to retire.

COMPLETION OF PAYMENTS

Payments from retirement benefits will cease upon death. Therefore, any portion of benefits awarded in a divorce will stop if the service member or the former spouse dies.

KEEP YOUR FAIR SHARE

Once you have completed thorough and efficient pre-trial discovery you are ready to begin preparation for a professional presentation of your case at trial. That is an entirely different process. The proper delivery of testimony and exhibits is just as important as what you say.

The information above may seem complicated and overwhelming. Trying to understand the effect of divorce on your military benefits is difficult. While you may be tempted to dismiss it, it’s extremely important to your future. You put your life at risk to earn those benefits and deserve to keep the maximum amount possible.