Equitable Distribution and the Division of Military Retirement Benefits in Divorce

In Virginia, the court divides marital property in a process that is called “equitable distribution.” Specific assets that the court is given express authority to distribute include the marital share of a “pension, profit-sharing or deferred compensation plan or retirement benefits.” Va. Code § 20.-107.3(G)(1). The statute lays out rules for the majority of retirement benefits, but explicitly states that the division of any military retirement benefits shall be in accordance with Federal law.

The division of military retirement in a divorce is governed by the Uniformed Services Former Spouses’ Protection Act (“USFSPA”), 10 U.S.C. § 1408. The USFPA authorizes—but does not require—State courts to divide military retired pay as a marital asset in a divorce proceeding. It also allows the former spouse to enforce a Court’s division of the retired pay by allowing such payments to be made directly to the former spouse by the Defense Finance and Accounting Service (“DFAS”).

The USFPA set a uniform method of determining the amount of retired pay to be considered and potentially divided by a state court. The USFPA mandates “(1) that only disposable retirement income may be considered as [marital] property, (2) that a court may not order a military member to retire in order to effectuate a payment of retirement benefits, and (3) that no more than fifty percent of the disposable retired or retainer pay may be paid out.” Starr v. Starr, 70 Va. App. 486, 490 (2019) (quoting 10 U.S.C. §§ 1408(c)(1), (c)(3), (d)(1)). This last provision is the same limit that imposed by Virginia law.  See Va. Code § 20.-107.3(G)(1).

“Disposable retirement income” is defined as the amount of basic pay payable to the service member for the member’s pay grade and years of service at the time of the court order, as increased by each cost-of-living adjustment defined in the statute. The precise amount of the service member’s retirement is calculated based on the service member’s “High-3” pay and years of service as of the date of divorce or separation. The “High-3” is “the total amount of monthly basic pay to which the member was entitled for the 36 months (whether or not consecutive) out of all the months of active service of the member for which the monthly basic pay to which the member was entitled was the highest, divided by 36.” 10 U.S.C. § 1407(c)(1).

For service members that are still serving, who are divorced after December 23, 2016, the Court also uses the “Frozen Benefit Rule.” The Frozen Benefit Rule requires every state court order in which a military retirement is being divided to freeze the retired pay base and years of service on the date of the decree of divorce, dissolution, annulment, or legal separation. It should be noted that the Frozen Benefit Rule does not affect cases in which a service member is already retired. In those circumstances, the matter is handled as previously ordered since the rank and years of service are fixed at retirement.

If the former spouse and the service member were married for at least 10 years of the service member’s “creditable service,” the former spouse’s share of the military retirement will be paid to them directly by DFAS. This is known as the “10-10 rule,” and is outlined in 10 U.S.C. § 1408(d)(2). If the parties were not married for 10 years of credible service, DFAS will not pay the former spouse directly. Rather, the entire military retirement will be paid to the service member, who is then responsible for paying their former spouse.

Because each case involves unique circumstances, it is best to consult with an experienced family law attorney to explore your options. If you are facing a separation or divorce and need assistance from someone with intimate knowledge of family law, please do not hesitate to contact our firm at 804-423-1382 or info@wmmlegal.com to schedule a one-on-one consultation with one of our experienced Virginia attorneys.