If a military retirement divorce asset
could be disbursed at the time of divorce, it would be. Only because
the Federal law prevents immediate disbursement or valuation of the
final retirement value, do military divorces become problematic. Even
though you cannot value the total retirement at time of divorce you CAN
always value the marital asset portion, using methods that were first
published 6 years ago at increa.com. Now, in 2016, the NDAA 2017
amendment captures these methods. The intent of the 2017 NDAA amendment to USFSPA can be concisely captured with a litmus test:
the decisions of the parties following the judgment of divorce must not
affect the value of the distribution of a portion of the pension to the
nonemployee spouse."
“[The
marital asset must be calculated so that] decisions of either
spouse after divorce must not affect the value [as expressed in constant year dollars] of the distribution of a prtion of the pension to the nonemployee spouse."
Are percentage methods and hence give both parties COLA for all time after the divorce.
Are not fixed-based methods.
They fix the rank and longevity of divorce, but that does NOT mean the
benefit is fixed “like a fly in amber” (as described in the August 2016
white paper distributed by the ABA). See the NDAA 2017 ABA Rebuttal.
As the NDAA bill moves toward law, there
are an increasing number of attorneys taking notice, with reports and
commentary showing up. Many are misleading. What follows is
a chronological listing of articles or publications I've become aware
of, along with analysis. Remember, as far back as 2001, a report
funded by the 1998 NDAA from the Department of Defense to the Armed
Services Committees recommended this change.
Mr. Philpott accurately writes that the previous situation “creates a
windfall for ex-spouses that should be eliminated. … The former spouse
law (Sec. 1408, 10 U.S.C.) will be changed so retired pay to be divided
is based on a member's rank and years of service at time of divorce,
plus cumulative military pay raises up through retirement.” Yes, see a
slideshow tutorial for attorneys and clints.
What a misleading title. There is nothing radical about the NDAA 2017
proposal. It can be implemented simply with a second coverture
fraction. This paper incorrectly identifies the NDAA method as a DFAS
fixed method and therefore predicts all sorts of false foreboding
implications. A point-by-point rebuttal to the ABA NDAA white paper
is available. I’ve been in correspondence with the ABA Family Law
Chair, but so far she has been unwilling to publish a correction or a
rebuttal.
The ABA paper referenced at the bottom of this blog entry is the biased
26 August 2016 paper referenced above. Misleading another
attorney is a prime example of why the ABA should not continue
publishing a faulty document.
The first example (officer) has the numbers correct. The marital
asset portion is $3842.50, whereas the faulty time-based coverture
incorrectly calculates the marital asset as $5662, giving the ex-spouse
a 47% windfall, taken from a second spouse or the military member
themselves. He does a Hypothetical Method-like calculation,
but it’s much easier to get to the same answer with Area Diagrams shown on a spreadsheet.
The second example (enlisted) ends with an exasperated exclamation
point showing that the spouse payment is only 46% of the prior
(incorrect) method. Such an outcome is correct since the first
spouse only spent 5 years of a 28 year career and contributed nothing
to FOUR competitively earned promotions during years 6 to 28! Why
in the world would anybody take 23 years of longevity and 4 promotions
from a second spouse who rightfully deserves it and give it to the
first spouse?! With the old methods, the marital asset was
incorrectly identified as $846 whereas the NDAA methods give a correct
marital asset of $400.35. The error was a 111% windfall taken
from a second spouse and given to a first spouse simply because the
wrong division method was never questioned! Retirement division
is not welfare or spousal support. It is dividing an asset and
can be done with mathematical precision. An Area Diagram spreadsheet shows the enlisted mathematical details.
Interestingly, Mr. Graham failed to show an example where the ex-spouse benefits from the new law.
This follows the biased precedence of every single author and
commentator I have found. I’ve made my analysis clearly available
to the ABA and each of the others, yet nobody acknowledges this
fact. Any example where the military member does duty/promotions
before marriage would show this. Why does nobody acknowledge
this? It’s disingenuous to misrepresent the new law as biased in
only one direction. Not raising this issue while representing an
ex-spouse is cause for malpractice.
Lastly, Mr. Graham points out that the new military retirement
calculations respecting the marital asset at divorce may now be
different than other civilian plans. That is a red herring.
There is no way we should continue to incorrectly value marital assets
in order to match other incorrect calculations. Military
retirements are unique in that longevity/rank/duty credit are NOT
commingled in the mathematics and there is no reason to intentionally
do so. Perhaps other civilian retirement plan calculations should
be improved – certainly any court is free to follow the good guidance
of the NDAA 2017 law for civilian retirements also. In any case,
the litmus test stands true: marriage assets should not change up
or down (in constant year dollars) based on anything done by either
party after divorce.
Overall, Mr. Graham’s post is numerically accurate but misleading and
biased. For example, why ask how to “make up the loss” rather
than celebrate that marital division will stop “giving windfall” to the
first spouse by stealing from the second spouse? Why say a first spouse “lost $909” when, in fact, it rightfully belongs to a second spouse? Why
say the first spouse is “losing the benefit” rather than “military
member and future spouses now retain what they earn together”?
Other Commentaries
... to follow as I find them and have time to analyze them. Please send any you find.
Conclusion
The Litmus Test is a clear way to determine if a division formula is equitable for both parties.
The NDAA law is a DFAS percentage method that is not a DFAS fixed
dollar method.
The NDAA law is simple to implement with a single additional
fraction and has none of the "doom and gloom" implications claimed by
some.
