Military Retirement and Disability Pay

January 31, 2024 | By Doppelt and Forney
Military Retirement and Disability Pay

In San Diego, California, there are many military members and many spouses of military members. In San Diego, there a Marines, Navy, Air Force, Army and Reserve units. In San Diego, when a military member is divorced, the division of the military retirement is an issue if this is a community property asset meaning that the service member worked at any time during the marriage for the military. If this is the case, then this would be considered a community property asset and would be subject to division.

Our San Diego divorce attorneys have written a general article regarding retirements and the different types and division methods.

For purposes of this article, the division would be the time-line rule which takes the years of marriage divided by the years of service which leads to the community property interest which is then divided one half to the member spouse and one half to the non member spouse. These can be difficult calculations if they involve service both pre, during and post marriage and also with reserve duty.

For example, if the marriage was 20 years and the service was for 10 of those 20 years, then the community property interest would be 50% and the non member spouse would receive 25% and the member spouse receive 75% and this would be for the life of the member spouse and, if a survivor benefit plan was part of the judgment, then for the life of the non member spouse. As such, the sums involved in these military retirement plans can be significant, as our lawyers recognize.

There are many types of retirements in private companies and this is seen as a mostly a private benefit. There are also disability claims and payments and this is seen as public benefit and application is often made through the State of California. In the military, there are both retirement and disability and the distinction is extremely significant when there is a division of the military retirement benefit.

In our lawyers' opinions, previously, disability was seen as mostly income and not community property to be divided whereas the retirement was seen as community property to be divided and not income. This line was further blurred by the use of the income from the division of the retirement as income for support purposes. San Diego Judges looked at these on a case by case basis and applied the rules governing division of a community property asset and income for support purposes.

This was even further blurred and complicated when the division of the retirement interest was already concluded, a judgment entered, the member retired, retirement pay was being made by the military and divided per the court order and then all or part of the retirement was converted to disability. The issue then became was the non member spouse entitled to the same percentage division of the disability as the retirement.

This was, again, taken on a case by case basis by the San Diego County Judges and recently a case was heard by the California Court of Appeals in 2007 which holds that an agreement to divide a community property interest in military retirement includes disability pay irrespective of federal law and requires that the member spouse participate in the survivor benefit plan and name the non member spouse as the sole beneficiary. As with all cases, it is crucial to analyze each case on its own set of facts. Our attorneys know that no two cases are exactly factually the same.

In the Smith case, the member spouse had served in the military for 8 years prior to marriage and was still serving on active duty at the date of the divorce. The parties marriage was over 15 years. The Judgment of Dissolution provided that the community interest in the retirement of the member spouse shall be divided equally. This case involved the member's election to receive veteran's disability payments and waive his retirement benefits.

This is not an uncommon factual situation for many service members and their non member spouses post dissolution, as our attorneys have seen, and this is the exact factual situation in this case. To quote from the case, "If a spouse elects to receive a disability pension when he or she is qualified for a retirement based on longevity of service, the pension is a community asset except for (1) that portion which is attributable to service before marriage, and (2) that portion which, by virtue of its disability status, exceeds the amount of the longevity benefit." As such, in this case, the disability was divided per the judgment as a community property asset and the Court ordered that the survivor benefit plan be awarded to the non member spouse.

There was an additional issue as to who would have to pay for the survivor benefit plan which is, in essence, an annuity and results in less per month in benefit for both the member and non member spouse during the life of the member spouse.