“The Clock is Ticking”—Dates and Deadlines in the Military Divorce Case (Part One)
Handling a military divorce case can be a confusing and painful task for the family law attorney. One of the most difficult parts of the case can be keeping track of deadlines that must be met to ensure (or exclude) the eligibility of a spouse or former spouse regarding federal and military benefits, such as the Survivor Benefit Plan and military medical care.
Military Pension Division Orders
The division of military retired pay can be done in several ways. The Uniformed Services Former Spouses’ Protection Act (USFSPA)1 only allows courts to direct the retired pay center2 to divide military retired pay and pay a portion to a former spouse when the order dividing the pension is a “final decree of divorce, dissolution, annulment, or legal separation issued by a court,” or as a property settlement that is ratified or approved by the court and issued incident to such a final decree.3 When done as a stand-alone order, the document effecting pension division is often termed a military pension division order (MPDO).
There is no formal deadline for submission of the MPDO.4 It may be tendered months or years after the divorce, the separation of the parties, or the retirement of the military member. “A former spouse may apply for payments anytime [sic] after the court has issued a court order enforceable under the USFSPA.”5 However, delays can create penalties for the former spouse.
Four General Delay Problems
There are four potential problems when the FS (former spouse) waits too long. The first problem is that a subsequent spouse may obtain an MPDO and serve it on the retired pay center first, thus laying claim to most of the retiree’s disposable retired pay.6 Priority in processing is the first reason for the FS to submit the MPDO promptly instead of waiting. The order may be submitted as soon as it is entered, if it is a decree of legal separation; otherwise, it may be submitted as soon as the divorce has been granted. The sooner it is submitted, the better.
The second reason for timely submission is arrears. The retired pay center—whether U.S. Coast Guard or the Defense Finance and Accounting Service (DFAS)—will not collect back payments. Only current retired pay garnishments will be made.
The other two difficulties arise out of rules which apply across the board with civil lawsuits and time limitations. Prompt action in claiming pension division and submitting the military pension order to the retired pay center is necessary to avoid the possible running of a statute of limitations.7 And finally, the court may apply the equitable doctrine of laches to bar recovery.8
More Problems—Survivor Benefit Plan Coverage & Double Deadlines
Many military retirees elect Survivor Benefit Plan (SBP) former-spouse coverage so that the former spouse will be covered by this survivor annuity after the parties are divorced.9 Retirees participating in the SBP must elect former spouse coverage within one year of the divorce decree.10 At the time of making this election, the retiree must provide a statement setting forth whether the election is being made pursuant to a court order. If it is not, the statement must indicate whether it is pursuant to a written agreement previously entered into voluntarily by the retiree as part of, or incident to, a divorce proceeding (and, if so, whether such written agreement has been incorporated in, ratified, or approved by a court order).11 An election filed by the retiree is effective upon receipt by the retired pay center.12 The form to use for submissions to DFAS is DD Form 2656-1; the form to submit to the Coast Guard Pay and Personnel Center is CG Form 4700.
If the servicemember (SM) is required to provide such coverage and then fails or refuses to do so, the FS can still obtain the required coverage by serving on the retired pay center a written request for implementation of the election and a certified copy of the appropriate court decree. The request must be signed by the FS and received by the center within one year of the order providing for SBP coverage.13 This is called a “deemed election.”
It is important to note that this is a second one-year deadline, distinct from the first one involving the member’s election. A divorce decree need not contain the terms of a property division or marital settlement. In some states, the divorce decree simply recites the facts of the marriage and enters an order dissolving it. Sometimes the court allows the divorce and reserves the remaining terms for later determination. On occasion, the decree of divorce or dissolution provides for some of the property division but leaves other terms to be resolved by agreement or court order.
Preventing Catastrophe—The Second Order
The separate order specified above—the one for SBP coverage—may thus precede or follow the divorce decree. Counsel for the nonmilitary spouse should note carefully these deadlines on the law firm calendar to prevent a catastrophe for the spouse and a malpractice claim for the attorney.
The form for a deemed election request is DD Form 2656-10; a search for “DD Form 2656-10” on any internet search engine will result in a copy of a fillable PDF form for the attorney’s use. A letter should accompany the form, and this should include a certified copy of the court order and divorce decree.14 The use of Form 2656-10 is mandatory for a deemed election, whether for regular or Guard/Reserve retirements.
Survivor Benefit Plan Coverage—The Retirement Trap
Retirement can be another important deadline. Sometimes the member is divorced before retirement, but the divorce decree does not contain proper terms and acceptable language requiring him or her to make a former-spouse SBP election. Perhaps the court has severed the claims and held open the issues of military pension division and SBP for a later hearing. Maybe the attorneys have agreed on SBP but put off the writing of a supplementary order. In some cases, there is an order but the SBP language is faulty.
In any event, if the member retires and chooses no coverage or elects spouse (or spouse and child) coverage, any subsequent FS SBP order will arrive too late at the retired pay center. If the member does not make the FS election by the time of retirement, then it cannot be made afterwards. The DoDFMR makes this retirement deadline clear in two sentences:
- If the former spouse is the member’s former spouse at the time the member becomes eligible to participate in SBP, an election for former spouse must take place at or before the member’s retirement.
- If a member has a former spouse upon becoming eligible to participate, but is not required by a court order or court-approved agreement to provide former spouse coverage, any subsequent court order that requires former spouse coverage will not be honored.15
Thus, the key warning for these cases is to watch out for the divorce impact on FS SBP when the dissolution (i.e., the “status divorce”) takes place before retirement but the related issues (such as SBP) will not be ruled upon by the court until after retirement.16
The “Ten/Ten Rule” and Garnishment of Retired Pay
Most former spouses want a garnishment order to obtain monthly pension-share payments from the U.S. government. They do not want to chase the military retiree from Georgia to Japan to Germany to try to collect the monthly payments from military retired pay that are disbursed to him or her. “Direct from the source” is what the typical former spouse is likely to request.
What dates and deadlines are involved when the FS wants to obtain an order that gives her direct payments from the retired pay center? When the military pension is divided as marital or community property, there must be at least ten years of marriage, overlapping with ten years of service creditable toward retirement, to obtain payments directly from the retired pay center.17 This is sometimes known as the “10/10 rule.”
Note that the 10/10 rule is not a jurisdictional requirement for dividing military pensions.18 There is no limitation or minimum number of years of marriage overlapping military service as a prerequisite to military pension division, although this is a widely held misconception in the civilian bar. A military pension may be divided by court order whether the spouse has been married to the SM for thirty years or thirty days. Rather, this time requirement is a prerequisite to enforcement through the retired pay center. The payment mechanism of a garnishment of the SM’s retired pay is not available unless this test is met.
There are different rules for a member of the Reserve Component, or RC, which means National Guard and Reserves. When there are ten years of combined Guard/Reserve and active service, the retired pay center will aggregate these to allow the 10/10 rule to be met in cases of an RC retirement, but not a retirement from active duty.
Note that being in the Guard or Reserves for ten years is not necessarily the same thing as “having ten good years” which are creditable toward retirement. A “good year”—one which is creditable toward retirement—is one in which the RC servicemember has accumulated at least fifty points. A year with fewer retirement points means that the year is not creditable toward Guard/Reserve retirement (which requires a minimum of twenty qualifying years), although the points in that year still count in calculating retired pay.
Proving Ten/Ten Eligibility
To make it clear to the retired pay center that Reserve/Guard time and active duty time are being added together to yield ten years of creditable service, it is helpful if the divorce decree states that the 10/10 rule has been satisfied and it shows how this test has been met. Such a recitation will usually be honored by the retired pay center unless it has contrary information.
If the court order does not state that the 10/10 rule has been met, then counsel will need to provide information to support that contention. This includes marriage and service records of the SM. The retired pay center, whether DFAS or the Coast Guard Pay and Personnel Center, is separate from the National Guard/Reserve headquarters, so one cannot assume that the pay center has easy or instant access to such data. To avoid a delay, provide the copies of documents that the retired pay center would need to verify this assertion.
1 10 U.S.C. § 1408.
2 For the Army, Navy, Air Force, and Marine Corps, garnishments are handled by Garnishment Operations at DFAS (Defense Finance and Accounting Service) in Cleveland, Ohio. Pension garnishments for the Coast Guard and the commissioned corps of the Public Health Service and of the National Oceanic and Atmospheric Administration are handled by the Coast Guard Pay and Personnel Center in Topeka, Kansas.
3 10 U.S.C. § 1408 (a)(2), (c)(1), (d)(1); see also DoD 7000.14-R, dep’t of def. fin. mgmt. reg. (DoDFMR), military pay policy and procedures—retired pay, Vol. 7B, ch. 29, § 290204.
4 Potts v. Potts, 790 A.2d 703 (Md. 2002) (no time limit for submission of pension division order after divorce judgment); accord Duhamel v. Duhamel, 772 N.Y.S.2d 437 (App. Div. 2004), and Jordan v. Jordan, 147 S.W.3d 255 (Tenn. Ct. App. 2004).
5 DoDFMR § 290404.
6 “If the designated agent is served with applications from more than one former spouse, then the designated agent will honor the applications on a first-come, first-served basis. Subsequently served USFSPA applications shall be satisfied out of the disposable retired pay that remains after the satisfaction of all court orders which have been previously served….” Id. § 291002.
7 See, e.g., Terry v. Lee, 445 S.E.2d 435 (S.C. 1994) (attempt by former spouse to establish rights to husband’s military pension twenty-two years after divorce decree is barred by laches); and Randle v. Randle, 2015 Ala. Civ. App. LEXIS 275 (former spouse applied for share of military pension twenty-eight years after divorce decree; appellate court upheld trial court’s denial of her application, saying that it was too late to modify divorce decree).
8 See, e.g., Schaub v. Schaub, 305 P.3d 337 (Alaska 2013) (former spouse’s claim for prospective share of retirement benefits was not barred by statute of limitations or estoppel; parties were divorced 1992, former spouse brought claim in 2010; laches barred her claim for retroactive division).
9 10 U.S.C. § 1448(b)(3)(A)(i).
10 § 1448(b)(3)(A)(iii).
11 § 1448(b)(5).
12 § 1448(b)(3)(E).
13 § 1450(f)(3)(C).
14 § 1450(f)(3)(A).
15 DoDFMR § 430504. For a member of the Guard or Reserve, the former-spouse election must be filed within ninety days after receipt of the Notice of Eligibility, which each Guard and Reserve member receives upon attaining twenty creditable years of service (the “20-year letter”). Id.
16 Note that, if both the divorce and a proper SBP order are obtained before retirement, the former spouse has one year from the date of the requiring court order to submit a deemed election, as set out above. Her deemed election will trump, for example, the member’s spousal election at retirement (e.g., he remarried and selected spouse coverage instead of former-spouse coverage which the court order required).
17 10 U.S.C. § 1408(d)(2). Creditable service is computed using the rules set out at 10 U.S.C. § 1405 and the DoDFMR, volume 7B, chapter 1, subsection 0103.
18 See, e.g., Carranza v. Carranza, 765 S.W.2d 32 (Ky. Ct. App. 1989).