Division of Military Retirement Pay - Promotion Enhancements

© 2018 Brian Mork, Ph.D. [Rev 2.26]

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military-member Update:  The 2017 National Defense Authorization Act changed the definition of "Disposable Retirement Pay".  The effect duplicatesarguments advocated here since  2010 - one coverture fraction for time or points, and a second coverture fraction for rank/longevity or salary. However, as of January 2018, phone calls with DFAS paralegals confirm the only type of divison they accept for post-NDAA2017 cases is the Hypothetical Method. This is DFAS implementing of the laws intent. The Hypothetical Method percentage they calculate is applied to the old definition of DRP to have the same effect.  Otherwise, the discount is double-applied: once by the ratio of hypothetical salaries and once inside the definition of DRP. When the marriage starts after the military career, or with multiple spouses, the Area Method is still the only way to equitably calculate the marital asset. Additionally, the dual covertures in the Area Method can accomodate both the intent and letter of the new law.  For more information, see the web page tutorial on the USFSPA amendment in the 2017 NDAA law. .

Introduction

This page deals with the issue of dividing military retired pay in divorce cases when the military person may be promoted after the divorce.  For more general issues, please see a different page about Area Method division of military retirement pay, or specifically division of Reserve military retirement pay. 

Military retirements are a significant benefit, earned by both women and men. As of March 2011, there were more than twice as many military women divorcing than men.  Among enlisted, the military women divorce rate is about 3x that of men. The overall military divorce rate in 2011 is 64% higher than it was in 2001. Dollar value of a military retirement in 2012 dollars range from $945,000 for an E-7 to $2,800,000 for an O-8.  Military divorce is a significant social issue affecting both sexes.

This web page includes:

Growing Consensus

The issue at hand is whether the marital asset must be calculated so that any action after the marraige does not chagne the marital asset as expressed in constant year dollars.  Objective parties have weighed in on the issue of promotion enhancements and it is finally being done properly with statutory law.  Six examples:
  1. In 1988, the Michigan Appellate court (Kilbride v. Kilbride) said, "..the pension for distribution in a divorce proceeding is only that value which accrued during the course of the marriage.  Any accrual of value before or after the marriage may not be considered.  Furthermore, the decisions of the parties following the judgement of divorce must not affect the value of the portion to the nonemployee spouse."  This case is normally cited to use a coverture fraction.  However, the Kilbride case had no post-divorce promotions.  The quoted logic makes it clear that a calculation method must not attempt to divide promotion enhancements earned after the divorce.

  2. A 2001 United States Armed Services Committee report to Congress concludes that retirement pay increases attributable to promotions after a divorce and additional time served by a military member after a divorce are the member’s separate property:

    “Assets that accrue subsequently are the sole property of the party who earned them. Post-divorce promotions and longevity pay increases are to military retired pay (which is a defined benefit plan) what post-divorce accruals and contributions are to private, defined benefit and defined contribution plans.” (page 71)

  3. In a 2001 Master's Thesis from the Army Command and General Staff College.  "As far back as April 1995 DOD published a proposed rule to amend the Code of Federal Regulations, Title 32, Section 63.2. This rule would base the award to a former spouse on the member's rank and years of service at the time of divorce. Although [neither] the Code of Federal Regulations nor the U.S. Code was amended to include this proposed rule, DOD recognized that post divorce increases in rank should only be apportioned to the service member."

  4. In 2005, the Florida Third District Appellate Court reversed (case 3D04-1468) and directed that promotion enhancements are not divisible because Florida law considers assets acquired after the dissolution to be non-marital and not subject to distribution.  Section 61.075(5)(a), Fla. Stat. (2003). The circuit court gave the former wife a portion of the former husband’s military retirement pay without expressly excluding contingent, future post-dissolution increases. The appellate court reversed because the overbroad language of the trial court allowed the former wife to receive promotion enhancements post dissolution.

  5. In 2009, a Michigan Skelly v Skelly Appellate reversal of the trial court affirmed that that if work effort is required after divorce to get or keep a benefit, it is not a marital asset and are not to be divided even if monies were received before the divorce.  They also stated that this was an "issue of first impression for this Court."  See the side-by-side text comparison on the webpage discussing statutes and case law.

  6. On 5 May 2012, a new Oklahoma law implemented the 2001 Federal recommendations.  SB1951 Section 3(F) states:

    "If a state court determines that the disposable retired or retainer pay of a military member is marital property, the court shall award an amount consistent with the rank, pay grade, and time of service of the member at the time of separation."

  7. On 28 October 2013 the Pennsylvania House Democratic Committee held hearings on HB1192 which follows the Federal recommendations:

    "If the court determines that the disposable retired pay or retainer pay of a military member is martial property, the court will be required to calculate the amount consistent with the rank, pay grade and length of service of the member at the time separation."

  8. In 2017, the National Defense Authorization Act includes a provision mandating that promotion enhancements outside of divorce will not be divided.  See H.R 4909 Sec. 625 and S. 2943 Sec. 642 and Sec 641 of the final reconciled bill.  This is in response to a Department of Defense report to the Armed Service Committes of Congress, which recommended this as an equitable change. The Senate bill text says,

    "In calculating the total monthly retired pay to which a member is entitled for purposes of subparagraph (A), the following shall be used:
    (i) The memberís pay grade and years of service at the time of the court order.
    (ii) The amount of pay that is payable at the time of the memberís retirement to a member in the memberís pay grade and years of service as fixed pursuant to clause (i)."
while the House bill text says,

“[member entitlement] is to be determined using the member’s pay grade and years of service at the time of the court order, rather than the member’s pay grade and years of service at the time of retirement, unless the same’’

Depending on whether a military career extends before a marriage or after a marriage, this could reduce payments to either of the spouses.  A 2017 NDAA USFSPA educational presentation (slideshow pdf) is available.

Attorney Mark Sullivan ripped into the proposed law via an American Bar Association white paper.  Mr. Sullivan's paper is against military, inciting sexist views that spouses are all females being taken advantage of.  It has three fundmental flaws inconsistent with Mark's reputation as a national expert: 1) he creates a strawman statement that a fixed benefit will be forced on spouses "fixed and locked in time like a fly encased in amber",  where the truth is a percentage formula is how the law would be implemented, 2) he claims that COLA will not be paid to ex-spouses with a resultant "stampede" of court cases, while, in fact, COLA is paid to both parties for any percentage method, and 3) he invokes constitutional arguments that the Federal government should not affect divorce law and therefore (hypocritically) asserts the Federal USFSPA law affecting divorce should be left alone.  You can download a more complete rebuttal to Mark Sullivan's / ABA's cheeky piece against the 2016 NDAA law or a shorter 2-page paper that just demonstrates the 2017 NDAA division formula.

In addition to these opinions, consider the injustice if a military member is re-married and the first spouse gets half of promotion or longevity enhancements earned while married to a second spouse.  It is difficult to argue that a prior divorced spouse deserves what the second spouse contributes toward! Letting a divorced ex-spouse reach into the future and take what they contributed nothing toward is damaging to a silent third party that has no voice in the legal system.

The rest of this web page argues that promotion enhancements after divorce are not to be divided with an ex-spouse.  This page supports that should be done, not how to do it.  Simple methods to implement this idea are introduced elsewhere:
One last point of clarification:  I was asked to assist during a court case in 2016 where the expert witness for opposing counsel tried to separate promotion from longevity.

Remember we are dividing dollars, not rank and not years.  The DFAS Hypothetical Method is about hypothetical base pay.  It is not about hypothetical rank (only) or hypothetical longevity (only).  In order to use a base pay chart to look up dollars, both rank and longevity years must be used together to choose the proper row in the table.  In order to forestall the waste created by this argument that models reality in a logically impossible way, know that whenever I refer to the promotion enhancement, I mean the enhancement of base pay when using an increased rank and/or increased longevity year count.


Promotion Enhancements Require a Dual Coverture

A military retirement is different than civilian retirements because it is calculated from two values, using 1) amount of service (points or duty days), and 2) rank & longevity (value of each point). Reference 10 USC 12739, and 10 USC 1406 or 1407. The formula is essentially the same for an Active Duty or Reserve retirement:
The two factors of service credit and rank are independent, and cannot be captured in one number or fraction; a proper military coverture fraction is the result of two mathematical fractions multiplied together: the time or Duty Fraction, and the Rank Fraction. If only one ratio were used, the non-military spouse would keep benefit all military promotions outside the marriage. This damages a future spouse (innocent third party) and is not equitable to the military member.  In reverse, if duty before marriage is to be excluded as a pre-marital asset with only one ratio, the military member would benefit from excluding the early years at a higher rank.  Using a single time fraction can damage EITHER party.

Unlike time-only-based promotions where promotions and longevity comingled into one coverture ratio, military promotions are always unique, special, or outstanding based on stratification of promotion applicants, limited quotas, deployment records, testing results, advanced school degrees, competitive formal performance reports, and professional military education. In the military, simply having longer longevity does not earn a promotion.

One way to visualize the situation is a 2-dimensional area like the area of carpet in a room.  The total value of the retirement asset is represented by the area of the diagram.  Coverture fractions separate different sections for division or non-division.

area diagram
A single coverture fraction divides the diagram left and right at the time of divorce, giving the slant hash portion only to the military member and making both the clear and dotted sections part of the marital asset (subject to division).  And so the problem is obvious: the dotted portion, which was earned due to actively earned promotions after the divorce, must also be set aside from division. This is what common sense and the quotes above describe, and what a second coverture fraction does.

During the 2001 Congressional study, two prominent national attorneys argued for dividing promotion enhancements after divorce (a.k.a. treat the dotted section as a marital asset).  Perhaps their motivations match one QDRO generating business which would have you believe dual coverture is too difficult and therefore equity should be abandoned for simplicity. Common wisdom says, "follow the money" and I sadly realize that keeping things complicated pays the bills of both the attorneys and the QDRO factory.

In fact, anybody who can figure out the area of a room floor can divide military retirement assets equitably. You simply multiply the total retirement by two fractions to calculate the marital asset -- not rocket science. Although the Dual Coverture method can handle most situations, the precise details for every life situation are discussed in another web page describing the Area Method.

The 2001 Department of Defense report to Congress (which considered input from dozens of National organizations, bar associations, and others) says:

"[Giving ex-spouse a portion of post-marriage promotion benefit] of military retired pay is inconsistent with the treatment of other marital assets in divorce proceedings—only those assets that exist at the time of divorce or separation are subject to division. Assets that are earned after a divorce are the sole property of the party who earned them. Congress should amend the USFSPA to base all awards of military retired pay on the member’s rank and time served at the time of divorce. [It is proper to] base all awards of military retired pay on the member’s rank and time served at the time of divorce. This provision should be exclusively prospective. The pay increases attributable to promotions and additional time served should be the member’s separate property.” (page 4)

“Assets that accrue subsequently are the sole property of the party who earned them. Post-divorce promotions and longevity pay increases are to military retired pay (which is a defined benefit plan) what post-divorce accruals and contributions are to private, defined benefit and defined contribution plans.” (page 71)

"Congress should amend the USFSPA to provide that all awards of military retired pay be based on the member’s rank and years of service at the time of divorce. [After NDAA 2017, this is now a Federal mandage.]  Current laws do not specify one way or the other.] This provision should be exclusively prospective. For example, if a future divorce occurs when the member is an O-4 (i.e., Major/Lieutenant Commander) with 14 years of creditable service, the award of military retired pay must be based on that rank and time served. That the member retires as an O-6 (i.e, Colonel/Captain) with 24 years of service is irrelevant to the award of military retired pay as property. (page 71)

"The pay increase attributable to the promotions and additional time served should be viewed as the member’s separate property. [emphasis added] However, as a matter of equity, the former spouse should benefit from increases in the pay table applicable to the O-4 grade. Thus, as the pay for an O-4 with 14 years of service is increased due to increases in the pay table, so too is the value of the allocation to the former spouse. The objective in this regard should be to provide the former spouse, on a present value basis, with approximately the same amount of retired pay that he or she would have actually received had payments begun on divorce. DFAS should include a formula in its recommendations that could be used by parties who divorce while the member is still on active duty. (page 72)

In response to the last sentence quoted above, DFAS published in their attorney guide what is known as the "Hypothetical [Basepay] Method" formula to divide the retirement.  Unfortunately, the Hypothetical Method requires onerous mathematics and has other limitations such as inability to handle militarly work before marriage. After years of researching legal cases, Mork published the Dual Coverture Value method in 2012 and the Area method in 2015, which are plug-n-play replacements for Hypothetical Method in the situations the Hypothetical Method can be applied, plus they handle all other life situations.

Mork's methods are better than Hypothetical for several reasons: simpler, more lucid, and broader application while backward compatible with all existing methods. For example, Hypothetical gives COLA annual increases to an ex-spouse during the years between divorce and retirement, while giving military paychart raises to the military member.  Why the inequity?  If COLA just happens to be the same as military pay increases, Hypothetical, DCV, and Area Method all give the same answer.  If not, one spouse or the other is being mistreated.  If you are not willing to use DCV or Area Method, that begs issues of intentional inequity and judicial bias -- why should one spouse intentionally get more time-value adjustment when it's trivial to treat spouses equally?

The Report's recommendations are also manifest in statutes (e.g. Oklahoma SB1951 Section 3(F)) and court precedence. The only way to do what is written in the quote above is the DFAS Hypothetical Method or the one of Mork's methods.

If you are interested, you can download numerical examples, comparing single time coverture (such as the California Brown method) to the Area Method.  To insist single coverture is done "because that's the way we've always done it," reflects dishonor on a court system capable of much better.


Promotion Enhancement Can Be Done Simply

Misunderstandings by one New Jersey appellate court reveal how tangled the simple meaning of "during a marriage" can become. The NJ court required the military member to prove that the ex-spouse did not contribute to promotion earned after the marriage  This is a twisted standard of proving something didn't happen rather than having the ex-spouse demonstrate they did contribute to work after the marriage. Mr. Troyan published an opinion that things have gotten more complicated for his business of preparing divison orders because the final result of the NJ Appellate opinion allowed promotions after a marriage to not be divided.  Contrary to Mr. Troyan's opinion, formulaic determination is now much more unified and coherent than ever before, based on DCV methods. Multiplying the total retirement by two fractions to calculate the marital asset is not rocket science.

In order to reduce confusion, and because he did not reply to multiple invitations for conversation, I dedicated an entire section of a white paper response to Mr. Troyan to quantitatively establish that a promotion does or does not increase the marital asset.  Here are short summaries from the much longer white paper, summarizing the character of promotion enhancements:
  1. Chronological sequence of dates are the presumed determination of what is "during a marriage".  Sans compelling reasons why not, dates should be used.  If something accrues chronologically after marriage, it wasn't during a marriage.
  2. Promotion is obviously required for retirement promotion enhancement, but is not sufficient to cause it.  Making a promotion manifest into an increased retirement payment requires 3 years of duty after gaining the increased rank, so an ex-spouse would have to contribute for 3 years after the promotion to contribute to the retirement enhancement (vice the promotion, per se).
  3. Promotions are special, unique, and competitive.  Only a small portion of individuals can accomplish this by specific, difficult, pro-active effort. Promotion enhancements are not the same as passive investment income increases due to passage of time.  "Earning interest" is NOT the same as "Earning retirement". Bluring this issue has been repeatedly done by Mark Sullivan and propagated into the legal system because of his association with the American Bar Association and the  Reserve Officer Association.
  4. The military retirement system is mathematically precise and explicit.  It is easy to quantify and separate events of a person's career. Values are not comingled.
  5. Prior application for promotion during (or soon after) the marriage and NON-selection for promotion is prima facia evidence that what a prior spouse contributed was not sufficient for promotion. Often times, a military member is promoted on subsequent attempts, demonstrating that it's the solo effort or shared effort of a later spouse that made the promotion possible. Honestly, the stress of a divorce can be enough to handicap and military member and forestall or prevent a promotion!
  6. Promotion enhancements after divorce taken by a first spouse will deprive a second spouse of what is rightfully their contribution. Like any other investment, if a spouse divests themselves of the marriage, they should not expect returns after divesting. When stock shares are sold, the second owner gets the returns.

Congressional Report Silences Dissent

Regardless of these qualities of promotion, some continue to argue against the Dual Coverture and Hypothetical methods.  The DoD congressional report tried to show generosity toward these disagreements. They summarized the best arguments to divide promotions after marriage (first paragraph page 59).  The arguments come up short because they are technically faulty and rely on confusing an unfamilar audience.  Here are the three bad arguments and responses:
  1. "Military member would not have attained final rank but for contributions made by former spouse during marriage. Promotion is based on married years."  This argument is vacuous because all things later in life are "based on" prior life and that is an insufficient test to classify anything as a marital assets.  See below or another another web page to read additional rebuttal to the "based on" argument. The phrase "based on" conjurs up a concept of dependecy or comingling, while slipping in words that have no legal definition. Gaining a new benefit "based on" history is NOT the same thing as shared effort creating that benefit.  More indicitive of this argument's hypocrisy is that when military duty is done before marriage, everybody freely allows the marital asset to be "based on" prior solo effort without compensation to the solo effort.

    Example 1 - What if a military pilot later got a civilian pilot job "based on" pilot training and experience received during married military years.  This does not allow the ex-spouse to divide a retirement from the civilian pilot job.

    Example 2 - A person will never attain age 50 but for the first 18 years, yet a parent can't obligate a child's earnings later in life for this reason.

    Example 3 - What if the ex-spouse wrote a book based on being married to a military member?  That would not be possible "but for" the military member's contribution during marriage, and it's definitely "based on" the military members contribution. However, this would not allow the military member to receive part of the book proceeds because they didn't help write the book no matter what it was based on.

    Example 4 - In many cases there would be no military retirement "but for the fact that the military person works more years past the divorce, so why should the ex-spouse get anything?  USFSPA itself dismantled this based on argument when used by the military member, so it should also be refused for the non-military member.

    Example 6 - The claim that "a military member's non-divisible benefit is calculated from the ex-spouse's divisible points (and therefore cheating the ex-spouse)," is a moot point of perspective.  If true, the reverse is equally true: "the ex-spouse's benefit is calculated from the military member's non-divisible points (and therefore cheating the military member)."  It works both ways!  "Calculated from" is simply a mathematical necessity, not a threshold criterion of divisibility, and it is not an appropriate test for a marital asset.

    Example 7 - Divorce decrees use phrases like "earned during the marriage" or "accrued during the marriage".   Words have important legal maning. Division orders (which are legally required to follow the divorce decree) must not introduce vague phrase or fabricate new dependencies such as "base on".

    Example 8 - The duty credit or points (in case of Reservists) are like a basket emptied of value at time of divorce by virtue of dividing it to the parties.  Just like picking a garden, if one party goes out and puts more value (promotion enhancement) back in the same baskets after divorce, that additional value is not a marital asset.

    Example 9 - If a second spouse contributes during promotion years, how can it be equitable to attribute their effort and their half of the promotion enhancements to the first spouse?

  2. "Increasing the denominator of the coverture fraction reduces the share of the former spouse."  This argument is faulty because the share does NOT reduce.  The statement relies on confusing the words - "share" "portion" "fraction" "dollar" "percentage", etc.  One must clarify what is really being said.  When increasing the denominator, does the marital asset change value? No. Does the spousal dollar amount decrease? No.  Does the fractional percentage decrease? Yes, because the overall retirement increases to exactly offset.  For example $50 is 1/2 of $100, but $50 is 1/3 of $150.  The increasing denominator reduces the share of the total retirement, and ensures the proportion of the marital asset does not change (except time-value of money, which both parties would receive for all time after the date of divorce). This is not a capricious quid-quo-pro "smaller piece of bigger pie"; it is a precise and necessary math function to precisely preserve the marital asset as expressed in constant year dollars.

  3. "Spouse must wait until member retires to receive payments and should be compensated."  This  argument obliquely implies that only the ex-spouse has to wait.  In fact, due to Federal Law both parties have to wait to receive anything--and both ARE compensated with Hypothetical and Dual Coverture methods, which recognize rank changes.  This argument attempts to establish a windfall for the ex-spouse when the military member doesn't even have that right yet!  Michigan Appellate Court wrote that that "dividing [potentially] zero retirement is not in error," implying that it would not coerce a military member to continue doing duty.  All methods discussed in these web pages DO compensate both parties, so this argument is a specious distractor.  Only the Mork methods (DC, DCV, Area Method) compensate both parties the same regarding time-value of money.  Hypothetical method compensates one person with COLA during the "waiting months" and compensates the other with military salary increases. There is no reason choose Hypothetical Method over Dual Coverture Value unless one is intentionally choosing inequity.

Based-On Arguments

Even when the DOD report discussed above slammed down the "based on" and "but for" and "built on a foundation" argument, it continues to cause preferential damage to military members.  There is no legal basis to suggest "built a foundation" is a sufficient threshold of determining a marital asset and the argument is an offense to any division order that awards division "earned during" or "accrued during" the marriage.  The asymmetry in how the argument is used belies its purpose to hurt military members.  For example, Courts write:

"The sacrifices of both parties’ incidental to the defendant’s military service during the marriage laid the foundation for the defendant to potentially enhance his pension by achieving promotions after the marriage has dissolved [and therefore promotion enhancements should be divided]."

In comparison, when the roles are reversed (when the marriage effort is based on a prior solo portion of a military career), you'll never see a court write,

"The solo sacrifice of the defendent laid the foundation for the dual sacrifice during the marriage and potential to enhance the pension by achieving promotion during the marriage, therefore spousal award of the marital asset should be less than half."

Also consider if a person remarries and a second spouse actually does sacrifice with the military member during the time of promotions.  Would anybody suggest half the promotion enhancements belong to the first spouse rather than the second spouse?!

This concept is specifically critiqued in the Sullivan rebuttal available in the references section below. The debate is not about how to divide a marital asset because military career records make it easy.  Rather the issue is whether something is a marital asset in the first place.  If an enhanced promotion benefit was "earned" or "accrued" without spousal contribution after the divorce, it is not a marital asset no matter what it is "based on" or how it is calculated. A court must first do a determination if the promotion enhancement is a marital asset.

The phrase "based on" is legally vague and obscures good judgment.   Attorneys and court pride themselves on precise language.  Any use of this word in military retirement divorce proceedings should be replaced with the more precise "accrued during" or "earned during" or "calculated using".   If an ex-spouse wrote a book based on being married to the other person, book earnings are not divided even though it taps into and uses time of marriage or uses the marriage as a foundation and opens the potential of writing a book.   In  my experience, clarity and transparent language helps military members.  To be intentionally vague and confusing dishonors our legal system.

Even USFSPA, which created the ability to divide military retirments, was created to put down the "based on argument".  McCarty v. McCarty was the US Supreme Court pivotal case out of the 1980s that prevented division of military retirements in part because the benefit was "based on" the military member doing more solo work after marriage.  However, USFSPA declared that "based on" was an insufficient legal threshold and not a unitary disqualifier. Retirement that had been partially "earned or accrued" during the marriage was therefore partially a marital asset.  If "based on" future work isn't enough to prevent division, then "based on" past work is not enough to cause division.

Post-divorce work is not comingled; it is easily separate by legal statute, mathematics, and practicality.  See the community post titled "Value of Half or Half the Value?".   An attorney pressed me on an important question regarding a Reserve retirement when there are promotions after the marriage.  Question: "If a marriage earned 4400 points, and half (2200) are given to the ex-spouse, then how come the ex-spouse doesn't get to keep all promotion enhancements (before during and after the marriage) associated with those points?

ANSWER 1: The root of the question is false because it assumes point value is all or nothing; it is not. While retirement points earned during the marriage contain marital asset value, it is an error to assume they contain 100% marital asset value and anybody asserting this should be required to prove it.  Said another way, it is an error to assume the ~first~ earning of value (be it solo before marriage, or during marriage, or solo after marriage, or during second marriage) is the ~only~ contribution of value.  Points are not unity awards to one person or the other.  Points are an accounting instrument like a 401(k) account number. It's the VALUE of the points that is divided, not the points themselves. For example, if you divide the value of a 401(k), great.  But employee contributions put back into that account after the marriage are not divisible just because the account number is the same.  The account itself is never awarded - only value IN the account. For example, military Thrift Savings Plan retirement accounts are handled this way, and military retirement points are the same.  One must calculate what value in the points are marital asset and Federal military retirement formulas make this easy with rank/longevity coverture fractions. 

ANSWER 2: The language of court orders and DFAS example formulas give 50% of marital asset (4400 points).  They do not award all the value of half (2200) the points.  Look at your court order.  It names 4400 points.  It does not name 2200 points.  There is a big difference between "the value of 2200 points" and "half the value of 4400 points," These are NOT the same because the value of a point changes during the years, whereas a divorce settlement must determine value of the points at the divorce valuation date, NOT at any other random time before or after the marriage.  This can only be accomplished/calculated if we talk about "half value of points" not "half the points". 

ANSWER 3: Most courts and attorneys are familiar with civilian retirements which depend on a single variable like "years with the company" similar to "points earned in the military". The military retirement formula, however, is not the same. A military retirement is calculated from TWO variables:  basely (rank/longevity) and amount of duty.

monthly retirement check = 2.5% * (basepay) * (points/360)

Point counting alone can measure the amount of duty, however, the points must be divided in the other dimension to allocate the proper time when rank/longevity was accrued. The two contributing factors are separate and distinct, proven by the retirement formula (which has two variables) and the the fact that a basepay chart table lookup must use rank/longevity.  To commingle points and rank/longevity will damage one party or the other, and they should not be commingled because the military retirement formula itself does not commingle.

ANSWER 4: Doing this wrong damages a second spouse who has a constitution right to not be damaged. Consider a 21-year military career that was 7 years solo at low ranks, 7 years with Spouse 1 at middle ranks, and 7 years with Spouse 2 at highest ranks. Awarding point ownership (instead of value) would make all three marital assets the same, which is incorrect. With a military retirement, the effect of rank is mathematically broken out and not commingled.  When the first spouse divested themselves at middle rank like an ex-dividend date of a stock, the future owner gets the future higher-rank gains.  If you sold your Bitcoin in 2016, you don't get the 1600% gain of 2017!


Clarifying Logic

There are multiple sequential steps to dividing assets that a court must do. If any one of these steps are skipped, court orders are susceptable to successfull appeal, assuming proper documentation was submitted during the original court action. Here are the steps:
  1. Determine if something is a marital asset. USFSPA allows, but does not direct, a court to consider military retirement as a marital asset.  All of the military retirement is a marital asset only if all of the military career was during the marriage.
  2. Determine asset values as of some date.  This is typically the date of separation, the date of filing divorce, or the date of final divorce order.  Determining marital asset value is the entire point of a retirement coverture fraction. An enhanced retirement value does not manifest or acrue until 3 years of continued duty after a promotion date.
  3. Decide how to divide the marital asset. Many courts simply go with 50:50 of the marital asset. USFSPA forbids the military member to be left with less than 50% of the retirement, even if there are multiple spouses.
USFSPA allows a military retirement to be divided as a marital asset, and almost always divorce decrees will specify to divide only "...the portion earned during the marriage" because it's kind of obvious that all the rest of the retirement is not a marital asset.  Portions earned outside the marriage that are quantifiably separate retirement point value do not get past the first step. Only the portion of the retirement actively earned during the marriage is divisible.

It is worth nothing that the Area Method allows proper handling of military duty and promotion before and after the marriage, along with any other combination of multiple marriages, divorces, and military duty.  No other method, including the DFAS Hypothetical Method, is capable of this.

Here are some Q&A that might help.

Q1: Aren't promotion enhancement based on prior contribution by spouse? 

A1: No. Initially, the U.S. Supreme Court forbid division of any military retirement that required additional solo work contribution by the military member after divorce. Subsequent USFSPA law allows for division of military retirement because of co-mingling of duty dates.  There is no co-mingling for a promotion enhancement. The marital asset is numerically and quantifiably separable with simple math, yielding the single number percentage required by DFAS. Blurring dates is done only by someone trying to take more than is equitable.

Q2: Isn't the promotion enhancement based on prior rank and duty, which the spouse contributed to?

A2: No. I think you mean "calculated from" instead of "based on."  Just like some DFAS divisions are calculated from Federal COLA numbers, the promotion enhancement is calculated from solo duty credit and dual duty credit, plus other numbers.  Service credit points are not owned by anybody and division of value calculated from points is based on *earning* points not *calculating* with them. To believe otherwise is analogous to saying 401(k) contributions done years after a marriage are divisible because the 401(k) account existed during the marriage, and is thus "based on" marriage activity.  The divisible portion of the marital asset must not go up or down (as expressed in constant year dollars) because of anything accomplished by either spouse after the divorce. Making the conclusion even stronger, two additional points are relevant:
  1. Often a person is declined promotion for one or more attempts, and if that occurs after an ex-spouse stops contributing, it's even more clear that the ex-spouse contribution did not accrue a promotion.
  2. If a promotion happens after divorce, it's nigh impossible to claim the spouse continued to contribute during the required 3 additional years vesting after promotion.
Q3: The military member is building on the value of points earned during the marriage, so shouldn't the former spouse get a portion of the increased value of those points?

A3: The marital asset (dollar value of the points) was already divided.  The points themselves, stripped of their value by the division order, are not to be encumbered.  They are like a basket or a bank account.  Any post-divorce effort to put additional value back into the empty baskets is not to be divided.  That additional value does not comingle, nor increase, nor decrease the previous value - the only thing that changes the marital asset value at time of divorce is COLA increases while both spouses wait for disbursement of the asset.  The military member should be free and clear to use what they are left with after the divorce in order to improve life for themselves after the divorce.  Any division order implements this truth for 401(k)s and IRAs and military TSPs.  It should also be done for the traditional retirement value, also. See https://www.facebook.com/military.divorce.retirement.division/posts/981378512036088 for a convincing discussion of the analogy.  Note that Federal law NDAA 2017 mandates this for any divorce after 2016 because courts were consistently damaging military members inappropriately.

Q4: Won’t the military member’s income be higher because of duty days earned during the marriage?

A4: No.  Points or duty days have no value in and of themselves.  Use of the points at higher rank was accrued 100% after the divorce.  The litmus test laid out by the Michigan Kilbride Appellate Court for a proper division formula is that nothing either spouse does after the divorce should increase or decrease the marital asset (as expressed in constant year dollars).

"We believe that an equitable distribution under the pension statute requires that the method employed reflect the fact that the value of the pension for distribution purposes in a divorce proceeding is only that value which accrued during the course of the marriage. Any accrual of value before or after the marriage may not be considered. Furthermore, 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."

Q5: Right, but if pre-existing points were not present or the prior rank was not present, then the benefit would be lower for the military member, wouldn’t it?

A5: If the prior points were not present or rank was not present, then benefits would be lower for both parties.  It’s problematic to hypothesize about non-historical non-truth.  Instead, we’re asking the court to make a distinction about what DID happen - between how a benefit is calculated and how it was earned or accrued.  As a precedence, consider that the Skelly Appellate court clarified that even after a benefit is paid and in the bank during a marriage, it is not a divisible marital asset if it was earned and the right to keep it was accrued after the divorce.  We are asking the court to honor the intent of divorce law by dividing what was accrued during the marriage.  Tallies of points and rank cannot be enjoyed as a retirement benefit by anybody and have no value.  The USE of points and rank creates retirement benefit.  The right to USE for promotion enhancement was 100% accrued after the divorce.
 

Dissent of Two Nationally Known Attorneys Fails

A few incalcitrant attorneys in the area of military family law continue to publish against the DoD report recommendation and the NDAA2017 law.  In public forums, they argue that promotions enhancements earned outside the bounds of the marriage are marital assets and should be divided. IMHO, this is a huge disservice to military officers, and I cannot understand why the Reserve Officer Association advocates and promotes one of the attorneys, who has publicly opined in this way against military members.  If you are a ROA member, write the chief ROA legal counsel and ask.  Additionally, the ABA Family Law section has declined multiple attempts to provide balanced content instead of continued railings agains the new NDAA 2017 law.

North Carolina attorney Mark Sullivan disagrees with the Armed Services Committee Report, the Oklahoma legislature, Michigan and Florida appellate courts, the Department of Defense, and the NDAA2017 law.  He believes that retirement contributions made years after a divorce should be divided as marital assets. Mr. Sullivan's critique of the DoD report is available from the Military Committee of the American Bar Association (ABA) Family Law section.

Sullivan's arguments do not hold water; see my rebuttal memorandum in the references below.  Mr. Sullivan's position is analogous to saying 401(k) contributions done years after a marriage are divisible because the 401(k) account existed or was opened during the marriage, and is thus "based on" marriage activity.  In fact, military members can now do a 401(k)-like retirement called TSP.  Because of the juxtaposition, it will be interesting to see where Mr. Sullivan positions himself. There seems to be only 3 choices:
  1. Promotion enhancement and TSP contributions done outside the window of marriage are not marital assets.  This would require a change in his published belief and arguments before court about retirement enhancements.
  2. Promotion enhancements and TSP contributions done outside the window of marriage are marital assets and should be divided.  This is intolerably in conflict with hundreds of other TSP/401(k) divorce cases where contributions made after divorce are never considered marital property.
  3. If a military member increases their retirement with work and merit promotions after the marriage, it IS divisible.  But if they take pay from the work and promotions, and stick it into the TSP then it is NOT divisible.  This seems intolerably hypocritical, and capriciously negates utility of one type of retirement savings from the military person for the rest of their life.
There is more. Another document is a 1999 Official ABA position paper by Nevada attorney Marshal S. Willick which was sent to the DoD committee as input for the committee to consider. There are no documents available on the ABA web page taking the other position, and they have declined to host or link to my material.

Sullivan's document has foundational errors that may have started as simple confusion. In contrast, Willick's work is openly caustic toward military advocates, using phrases like "proposals floated by extremists" to describe the position of the Federal DoD Report to the Armed Services Committee of the U.S. Congress.  Willick makes misleading and sexist statements like "the longer the husband worked after divorce, the smaller the wife's portion became. The court accepted the wife's position that to 'lock in' the value of the wife's interest to the value at divorce, while delaying payment to actual retirement, prevented the wife from 'earning a reasonable return on her interest.'" 

Mr. Willick's claims are technically faulty, while at the same time he emotionally appeals for personal trust in his ABA paper. For example, the above red herring claim about "smaller", "locked in", and "no return on interest" is exactly opposite of the well-research Congressional Report, and is discredited in a rebuttal to Mark Sullivan's editorial.  It appears that Mr. Willick engages in tit-for-tat inflammatory language with the USFSPA Liberation Support Group, such as that found in Willick's 5 December 2011 public web posting.

Ironically, on page 3 of his December 2011 paper, Willick honors the recommendation to Congress to implement what became USFSPA.  He should also honor the DOD recommendations to Congress quoted above that respect post-marriage military effort belonging only to the military member.

Mr. Willick claims:

"[Using rank at time of divorce], if the member delayed the spouse's receipt of military retired pay by choosing to remain in service (accruing further increases in rank and length of service), then the spouse obtains some compensation for that delay, in the form of a few more dollars per month when the benefits do begin, even though the former spouse's share is an ever-smaller percentage of the benefit. This is sometimes called the "smaller slice of the larger pie." I have personally checked the math, and in terms of lifetime collection, the best that a former spouse can do under the time rule, in normal circumstances when the member continues service, is to almost break even."

"I have independently verified the mathematical effects of the various approaches taken by the state courts. Unless Congress is willing to also mandate that the states adopt rules requiring payments to spouses at each members' first eligibility for retirement, regardless of the date of actual retirement, I estimate that a "rank at divorce" proposal would result in a reduction in the value of the spousal share by at least 13%."

Mr. Willick is incorrect:

It's unclear why the American Bar Association published Willick's inflammatory and technically faulty position paper as a statement of their official position.  Doing so makes the ABA distinctly not neutral toward military members.  If you believe the ABA should also make available a different view, please contact them and ask them to post the rebuttal available in the reference section below.  Any attorney should be able to argue for their client.  However, ABA's and Willick's and Sullivan's position are not in defense of a particular client.  The position is taken a priori, in public, advocating to invade military retirement actively earned outside of the marriage. IMHO, there is no way I would hire them if I were a military member.  My true hope is that they are honestly confused, and perhaps my simple yet powerful Area Methods will change their viewpoints.

The pay arm of the military (DFAS) implemented DoD Congressional Report recommendations in their official DFAS Recommendation to Attorneys document in the form of the Hypothetical Method.  The Area Method referenced at the bottom of this page gives the same numerical result (coverture fractions are the same), and is a lot simpler to understand.  Both preserve the ex-spouse dollar amount as a military member works more, and then, on top of that, both methods award COLA or military wage increases for all years after the divorce, up to retirement, and all pay chart increases after retirement. If you want to understand the Hypothetical Method, see step (D)(2)(b), page 9, of the DFAS recommendation to attorneys document, in the Resources section at the bottom of this page. Or, if you want to understand the simpler Dual Coverture method, see the calculations I personally have published, as documented in the Attorney Instructions for Division of Reserve Military Retirement, also in the references section below.  A spreadsheet comparing all 3 methods is available in the Reference section below.

As an example of an attorney damaging Reservists who earn promotion ehancements before or after the marriage, Mark Sullivan's divorce questionnaire page provides for promotion after the divorce for Active Duty retirement (Paragraph (a)(iv)), but does not offer that possibility for a Reservist.  Mr. Sullivan is incorrect to write "ONE of the following methods must be used" (capitalization his).  It is not true that something on his list must be selected. The only thing DFAS requires is a fixed award (dollar amount per month) or a percentage award (percentage per month).  It's disingenuous to pretend the method to generate the percentage must come from his list.  As I said above, I would not hire him to represent a military member unless he first changes his a priori bias against military.

Willick's comments were done before the DoD report. Sullivan's comments are after the detailed DoD report to Congress was completed. Sullivan's credentials are top-notch. However, credentials cannot dispute facts.  He's declined several times to interactively talk through these issues with me.  If you are a military member, before you hire him, ask him, "If promoted after divorce, should the ex-spouse share in the enhanced promotion value?"  Sullivan's arguments represent the epitome of misunderstanding passively accrued vs. actively earned benefits, causing tremendous detriment to military members.


Conclusion

I am open to interactive discussion to clarify any of these issues with spouses, attorneys or others of the legal community.  I continue to strive for equity for both parties of a divorce, integrity exhibited by the attorneys, and lucid clarity for the courts.  Feel free to contact me if I can help your legal situation.

References

  1. DFAS "Guidance on Dividing Military Retired Pay", March 2014, 25 pdf pages with bad formatting, 121 KB pdf. (DFAS.mil, increa copy).
    1. Older copy April 2012, 20 pgs, 119 KB pdf. (DFAS.mil, increa copy).
    2. Older copy "Attorney Instructions - Dividing Military Retired Pay", April 2001, 19 pgs, 74kb pdf. (DFAS.mil, increa copy).
  2. DoD Report to Committee on Armed Services of the US Senate and House of Representatives, 2001. (Defense.gov, increa copy) (84 pgs, 279kb pdf)
  3. Attorney Instructions - Division of Reserve and Active Duty Military Retirement, Mork, 2012. (increa copy)
  4. Marshall Willick position paper to DoD Report committee. 1999.
  5. Marshall Willick position paper December 2011.
  6. Mark Sullivan editorial regarding the DoD Report to Congress. 2001.
  7. Division of Military Retirement Promotion Enhancements Earned After Divorce, Mork, 2012 - a rebuttal to Mark Sullivan's 2001 editorial against the Armed Services Committee report.
  8. Appellate Court of Illinois Marriage of Wisniewski, 675 N.E.2d 1362, 1369 (Ill. Ct. App. 1997).
  9. Oklahoma state SB1951, signed into law 5 May 2012 (6 pages).
  10. "Simple Division Orders after New Jersey's 2011 Decisions" - a reply to Mr. William Troyan web posting.
  11. Numerical comparison of single coverture vs. DCV.
  12. Mark Sullivan's August 2016 "hit piece" against the 2017 NDAA amendment.
  13. Supporting the 2017 NDAA law, rebutting Mark Sullivan's paper.
  14. Demonstration of the 2017 NDAA law division formula.
  15. National Defense Authorization Act (NDAA) amendment to US Former Spouses Protection Act (USFSPA) - a slideshow primer.

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The shell of this document was created using AbiWord under the Linux Gnome desktop. Content was edited using Kompozer. © 2017 Brian Mork, Ph.D.