| |
LEGAL NOTICE TO ALL READERS:
The materials provided within are for your personal
information, education, and communication, but should
not be construed as legal advice between an attorney and
client; mere reading, review or other use of this
information does not create an attorney-client
relationship with the author or any other person who
assisted in creating this web-site. Furthermore,
neither the attorney nor those who helped create this
web-site are liable for any damages you may suffer if
you use it; that includes direct, incidental,
consequential, indirect, or punitive damages arising out
of your access to, or use of, this site. Some
jurisdictions may not permit the exclusion of implied
warranties, so some of the above exclusions may not
apply to you, depending upon where you reside. No
viewer should act on the basis of any information
contained in this web-site or provided through links
from this web site without seeking appropriate legal
advice from an attorney. No prediction of results
should be inferred from the information provided within.
This article is reprinted with permission of The
Florida Bar Journal; the original article appears in
the December 1997 issue of the Journal.
By
Peter Cushing (click here),
Esquire, Orlando, Florida
I n the early 1980's Congress enacted legislation
overturning the U.S. Supreme Court decision in
McCarty v. McCarty, 453 U.S. 210 (1981), which held
that a military pension was the separate property of the
service member and not subject to division in a
dissolution of marriage action. In the 15 years since
the enactment of the Former Spouse Protection Act (FSPA),
controversy surrounding the fairness of this
legislation, and the implementation of the FSPA by the
various states, has raged in Congress. This article will
discuss the McCarty decision and its merits, the
FSPA and its several amendments, Florida's approach to
division of military pensions, and a brief overview of
application of the FSPA in other states.
The McCarty Decision
On June 26,1981, the Court held that, in a
dissolution of marriage, federal law precluded a
California court from dividing military nondisability
pay pursuant to state community property laws. The Court
found that dividing a military pension in state court
threatened grave harm to "clear and substantial" federal
interests such as providing for the retired service
member in old age, encouraging enlistment and
reenlistment, orderly promotions, and encouragement of a
youthful military. Military pensions were viewed by the
Court as different from other pension systems, because
the retired officer is subject to recall to active duty
at any time, continues to be subject to the Uniform Code
of Military Justice, and is restricted in post-service
activities, including employment. Because of these
factors, military retirement had not historically been
considered a "pension," but rather reduced pay for
reduced services. Not even a limited "property" concept
had ever existed in military compensation laws or the
Court's own precedents. As early as 1881, the U.S.
Supreme Court had ruled that when a military member
retires or leaves active duty, compensation is
continued, with reduced duties and responsibilities.
U.S. v. Tyler, 105 U.S. 244 (1881).
The McCarty Court also noted that dividing
military pensions made it less likely that the retired
service member would choose to reduce his or her
retirement pay still further by purchasing an annuity
for the surviving spouse and children. Since the
military retirement laws contained nothing permitting
the states to divide a military pension in a dissolution
of marriage, the California superior court was
reversed. Congress was invited to change the law if it
so desired.
The Former Spouse
Protection Act
Congress did act shortly after the McCarty
decision by enacting the Uniformed Services Former
Spouses' Protection Act. The USFSPA, or FSPA or FSVA, is
found at 10 U.S.C. §§1408 et seq. (1982),
effective date February 1, 1983, retroactive to
June 25, 1981, one day prior to the McCarty
decision. Sponsored by Rep. Patricia Schroeder (D-CO),
the FSPA reversed the McCarty decision, rejecting
the Court's concerns regarding military retention,
enlistment, and the economic needs of older veterans.
Also known as the Former Spouse Victim act by military
retirees, the FSPA has been a source of confusion and
controversy at both the state and national level.
The FSPA applies to the "uniformed services,"
defined to include the Army, Navy, Air Force, Marine
Corps, Coast Guard, commissioned corps of the National
Oceanic and Atmospheric Administration, and the
commissioned corps of the Public Health Service. The
FSPA applies to active duty, retired, and reserve/guard
(whether active duty, inactive status, or retired), pay
and nonpay categories. 1
Since the FSPA is a federal statute, its provisions
and the regulations thereunder preempt or supersede
state laws. A state court order that contradicts the
FSPA will not be enforceable. The FSPA, with
limitations, allows state courts to treat a military
pension either as property solely of the service member,
or as property of the member and his or her spouse in
accordance with the law of the jurisdiction for pay
periods beginning after June 25, 1981. In the unlikely
event that a state court order divided military
retirement pay before June 26, 1981, in conformity with
the FSPA, the order will be honored. 2
A 1990 amendment to the law addressed the
retroactivity problem of former spouses returning to
state court on "old" divorces seeking division of the
military pension. The FSPA now specifically provides
that a state court may not treat retired pay as property
in any proceeding to divide or partition it if a final
decree of dissolution, annulment, or legal separation
(including property settlement cases) was issued before
June 25, 1981, and that decree did not divide or reserve
jurisdiction to divide the member's retired pay. 3
Special Federal
Jurisdictional Rules
Special federal jurisdictional rules apply to
divide a military pension. A state court may not divide
a military pension unless the court has jurisdiction
over the member by reason of his or her 1) residence,
other than because of military assignment, in the
territorial jurisdiction of the court; 2) domicile in
the territorial jurisdiction of the court; or 3) consent
to the jurisdiction of the court. It is entirely
possible for divorce, child support, and alimony
jurisdiction, but not pension jurisdiction, to exist in
a case where the service member declines to participate
and does not seek affirmative relief. 4
The Ten Year Rule
A state court may not effectively order direct
payments of the pension benefit from the Defense Finance
and Accounting Service unless the former spouse was
married to the service member for 10 years or more,
during which time the member performed at least 10 years
of service creditable for retirement purposes. A state
court is not prohibited by the FSPA from dividing a
military pension in a marriage of less than 10 years;
however, direct payment of the pension benefit to the
nonmilitary spouse by Defense Finance is not permitted.
5 There is no 10-year marriage requirement
for garnishment from Defense Finance of child support,
alimony, or both.
The FSPA also defines the pension benefit that is
available for division. Net disposable retirement pay,
not gross retirement pay, is subject to division.
Subtract from gross retirement pay any debts owed the
U.S. government, survivor benefit plan premium (if any),
court martial fines and forfeitures, and amounts waived
to obtain disability pay. Net disposable retirement pay
is the remaining amount. The order dividing retirement
benefits must provide specifically for payment of a
fixed amount expressed in U.S. dollars or payment as a
percentage or fraction of disposable retired pay. 6
Percentage orders automatically award the same
percentage of cost of living increases to the former
spouse. 7 Certain formula orders are now
being accepted by Defense Finance. 8 Taxes
and Social Security obligations of each retirement pay
recipient are separately withheld, and separate 1099's
are issued to each party for divorce decrees effective
after February 2, 1991. 9 The total amount of
the disposable retirement pay of a member that may be
paid to a former spouse or spouses may not exceed 50
percent.
Downsizing or "right-sizing" of the military forces
in the 1990's has resulted in many members receiving
voluntary separation incentive or special separation
bonuses. See 10 U.S.C. §§1174a, 1175. The Florida
Supreme Court has held that these programs are
sufficiently similar to retirement benefits that an
agreement or court order distributing military
retirement may be enforced against these benefits.
Kelson v. Kelson, 675 So. 2d 1370 (Fla. 1996). No
direct payment regulations have been issued, so
enforcement at law is problematic. A former nonmilitary
spouse may receive unlimited retirement splits from
former military spouses. Although rare, documented
instances of former military spouses receiving two or
three pension interests exist. The former nonmilitary
spouses' retirement benefits are not reduced or
eliminated upon a remarriage, as they are in many other
federal pension programs. 10 However,
payments do terminate on the death of the service
member. Therefore, insuring the military pension is an
important consideration when representing the
nonmilitary spouse. 11
The regulations also provide that the member's
retirement pay may be garnished to satisfy a court order
that provides for the division of retired pay as
property, not to exceed 50 percent of disposable retired
pay for all court orders, or 65 percent of disposable
retired pay for all court orders and garnishments for
child support and/or alimony. 12 In the
event Defense Finance receives multiple orders for
payments to former spouses in proper form, they are
honored in the order received.
Application by Former Spouse
Upon obtaining a final decree dividing a military
pension, the decree is forwarded by certified mail to
Defense Finance, which has now completed consolidation
of the various centers. 13 DD Form 2293,
"Request for Former Spouse Payments From Retired Pay,"
is completed and included with the certified copy of the
final decree. If the member was on active duty at the
time of dissolution of marriage, the decree must
certify that the Soldiers and Sailors Civil Relief Act
of 1940, as amended, was complied with, and evidence
that the parties were married for 10 years during which
time the member was on active duty earning retirement
credits must be provided. Recently, Defense Finance has
been requesting a copy of the marriage certificate even
if the decree recites the 10-year marriage
requirement. Husband and wife must be identified with
addresses and Social Security numbers. Certification
that the decree has not been amended or set aside must
be made. 14 A formal military qualified
domestic relations order is not required.
Defense Finance is allowed 90 days to respond in
writing regarding whether the order will be honored. It
is the policy of Defense Finance to honor orders that
meet the requirements of the law. Defense Finance will
not commence payments prior to the date of service on
that office. Defense Finance will hold disputed amounts
in a suspense account in the event of an appeal. The
member may request reconsideration of any administrative
decision reached by Defense Finance concerning honoring
court orders.
Florida's Application
of the FSPA
Practitioners familiar with military dissolution
cases, and many military retirees, believe that state
courts in general and Florida courts in particular
approach the FSPA and Florida's equitable distribution
statute by automatically awarding the nonmilitary spouse
a mathematical portion of the military retirement
utilizing the Deloach formula. 15 If
courts do automatically award pension benefits,
miscarriages of justice and errors of law are occurring.
The following language from the Fifth District Court of
Appeal concerning a merchant seaman's pension is
instructive:
No case from any court has ever held that one spouse
must automatically be awarded some portion of the other
spouse's pension benefits, irrespective of all other
equities and the apportionment of other assets and
liabilities. Such a myopic approach to equitable
distribution of pension benefits and joint liabilities
would conflict not only with Diffenderfer and
Bujarski, but with the admonition in Canakaris
that the trial court has broad discretionary power to
utilize various and interrelated remedies to achieve an
overall equitable result.
Hallman v. Hallman, 575 So. 2d 738, 739 (Fla. 5th
DCA 1991). Thus, marital assets may be offset by
marital liabilities, or other assets may be awarded to
the nonmilitary spouse to achieve equitable
distribution. See Johnson v. Johnson, 602 So. 2d
1348 (Fla. 2d DCA 1992). Although the Florida Supreme
Court has said that it is generally preferable to treat
a military pension as a marital asset, and F.S. §61.076
(1988) says all pensions are marital assets-- they may
also be treated as a stream of income from which alimony
may be paid. Retirement plans should not be treated
simultaneously as both assets and sources of income.
16 The Johnson court also found that
a lack of sufficient assets or other circumstances exist
which leave the court no choice but to utilize pension
benefits in calculating permanent, periodic alimony.
Finally, a court can consider lengthy periods of
separation of the parties as justification for not
including pension benefits in the marital distribution
scheme or in choosing a date to value assets.
Sheffield v. Sheffield, 522 So 2d 986 (Fla. 1st DCA
1988); Temple v. Temple , 519 So. 2d 1054 (Fla.
4th DCA 1988); Bobb v. Bobb, 552 So. 2d 334 (Fla.
4th DCA 1989). If the military pension is treated as an
asset, the factors contained in F.S. §61.075 should be
considered and findings of fact made. The parties'
contributions to child rearing must be considered,
especially where the military member is a "geographic
bachelor." Days v. Days, 617 So. 2d 417 (Fla.
1st DCA 1993). However, in a childless marriage where
the parties live in separate states for most of a
long-term marriage, pursuing their own careers but
"dating" on holidays, the pension should not be divided,
but rather treated solely as the property of the member
in accordance with the FSPA and Florida case law.
Whether the nonmilitary spouse should share in
"non-passive" post-dissolution increases in pension
plans based upon the "foundation of marital effort"
theory should soon be decided by the Florida Supreme
Court because of a conflict among circuits. See
Boyett v. Boyett, 683 So. 2d 1140 (Fla. 5th DCA
1996).
Whatever the outcome on this important issue, if
courts fail to include findings of fact in military
pension cases and simply divide the pension using the
Deloach formula, the impression is left that the
division is accomplished automatically as a matter of
law, instead of equitably as the law requires. Florida
is not a community property state. The general
perception of unfairness drives proposals for reform in
Congress by both former spouses and military retirees.
Federal Proposals for Reform
Spearheaded by the American Retirees Association on
behalf of military retirees and Ex-Partners of
Servicemen for Equality, bills seeking to amend the FSPA
have been introduced on a regular basis since 1982. The
popular or unpopular suggestions for change have been:
• H.R. 572--Terminates the nonmilitary spouse's
property interest in military retirement benefits in the
event of a remarriage.
• H.R. 3776--Creates a presumption that the
nonmilitary spouse should receive a pro rata division of
retired pay if the couple were married at least 10
years; eliminates 10-year requirements for direct
payments.
• H.R. 2200--Restricts awards under FSPA to an
amount or percentage of the military member's pay at the
time of divorce, not retirement; establishes a two-year
statute of limitations for former spouses to seek a
division of retired pay from time of divorce; reaffirms
current prohibition on division of veteran's disability
pay.
• H.R. 3574--provides former spouse entitlement to
separation bonus payout benefits connected to military
"right-sizing."
Conclusion
The FSPA is complex and controversial. Only the
broad outlines of the current debate can be presented
here. Surprisingly, there is a perception of unfairness
by both the military retiree and the nonmilitary spouse
concerning both the substance and the application of the
law. With the recent draw downs and rightsizing of all
branches of the military, it seems clear that the
fundamental promise of a 20-year, half-pay retirement
benefit to service members should be acknowledged as
withdrawn by the United States and eliminated from all
recruitment materials. Given the high divorce rate in
the military, the provisions of the FSPA should be
explained to all members upon enlistment and
reenlistment. Our volunteer soldiers and sailors deserve
to know the facts concerning this important area of
military compensation so that they can intelligently
decide whether to assume the risks and obligations of
military life.
As required by our equitable distribution statute,
findings of fact by state courts concerning
contributions of both spouses to the acquisition of the
retirement asset and to the marriage would serve to
explain both equal and unequal distributions of the
military retirement to the parties so that the fairness
of the court's decision can be understood and
evaluated. Whether to treat the military retirement as
property solely of the member, as property of the member
and his or her spouse, and whether a division should be
equal or unequal remains the prerogative of the state
family court judge The fair exercise of discretion by
the court largely determines whether the FSPA will
protect former spouses or victimize military retirees.
1 32 C.F.R. Part 63 (1986).
2 32 C.F.R. Part 63.6(c)(7) (1986).
3 Act Nov. 5, 1990, Pub. L. No.
101-510, Div. A, Title V, Part E, §555(e), 104 Stat.
1570; interestingly, the 1990 amendment required
military members to continue to make payments for a
period of two more years until November 5, 1992. For an
example of a retroactive suit see Lewis v.
Lewis, 695 F. Supp. 1089 (D.C. Nev. 1988), where
the wife sued to reopen a 1974 state divorce, the
controversy was removed to federal court, and wife
prevailed. She was aided by N EV . R EV . S TAT .
§125.161 (1987), allowing the reopening; this did not
offend old FSPA. Same scenario in California; see
In Re Marriage of Potter, 224 Cal. Rptr. 312, 179
Cal. App. 3d 73 (Cal. Ct. App. 1986). The controversy
is not settled in Texas; see Trahan v. Trahan,
894 S.W. 2d 113 (Tex. App. 1995), holding that the FSPA
amendment did not destroy wife's retroactive award that
was res judicata in Texas. Florida never passed
legislation allowing reopening so the retroactive issue
appears closed here.
4 10 U.S.C.A. §1408 (c) (West Supp.
1994). In Bernhard v. Bernhard, 22 FLR 1089 ( Pa.
Super. Ct. 1996), a lower court order dismissing an army
colonel's divorce petition was reversed. Although the
couple had purchased a home in Maryland and resided
there for 15 years, the wife failed to prove that the
husband had abandoned his Pennsylvania domicile since a
service person's domicile is presumed not to change from
that person's domicile at time of enlistment and is
largely a matter of intention. Thus "domicile" cannot be
assumed simply by establishing a family in a particular
state since military personnel have no choice concerning
where they may be stationed. Had the wife filed in
Maryland, the husband could have raised a jurisdictional
defense or done nothing and defended any pension
division administratively at Defense Finance. Note,
however, that express consent to pension jurisdiction is
not required; participating in the case on the merits or
requesting affirmative relief is sufficient. Allen v.
Allen, 484 So. 2d 269 (La. Ct. App. 1986), cert.
den., 488 So. 2d 199, 107 S. Ct. 178. See also
Sheppard v. Sheppard, 286 So. 2d 37 (Fla. 1st D.C.A.
1973) (as to military domicile), and Miller v. Miller,
222 Cal. Rptr. 652 (Cal. Ct. App. 1986); FSPA prevents
"forum shopping" by nonmilitary spouse.
5 Deloach v. Deloach, 590 So.2d
956, 968 n.8 (Fla. 1st D.C.A. 1991), 10 U.S.C.A.
§1408(d)(2) (West Supp.1994).
6 10 U.S.C.A. §1408 (a)(2)(C) (West
Supp. 1994).
7 32 C.F.R. §63.6 (h)(2) (1994).
8 Defense Finance and Accounting Service
FSPA Bulletin dated October 24, 1995.
9 See 10 U.S.C.A. §1408(c)(4)
(West Supp. 1994).
10 Foreign Service Retirement and
Disability System (FSRDS) payments of retirement
annuities to former spouses end upon remarriage of
former spouse before age 55 if remarriage occurred on or
after November 8, 1984; Under the Foreign Service
Pension System (FSPS), for employees who began service
after January 1, 1984, payments to former spouses end
upon remarriage of former spouse before age 55. See
22 U.S.C.S. §§4068, 4071j (a) (1)(B) (Law. Co-op.
1993); Central Intelligence Agency (CIA) annuities
payable to former spouses are terminated upon remarriage
of former spouse before age 55. 50 U.S.C.S §403. (Law.
Co-op. 1993). Social Security System benefits for
former spouses terminate upon remarriage of the former
spouse. 42 U.S.C.A. §§402(b)(1)(H) and (c)(1)(H) (Law.
Co-op. 1993).
11 32 C.F.R. §63.6(h)(3) (1990); See
also
Cushing,
The Ten Commandments of Military
Divorce: Representing The Non- Military Spouse,
69 F LA . B.J. 66 (July/Aug.1995), 69 F LA . B.J. 84
(Oct. 1995).
12 32 C.F.R. Ch. I §63.6 (1986).
13 Current address of Defense Finance
for retirement split applications is:Defense Finance and
Accounting Service
Cleveland Center, Code LF- Room 1417
Garnishment Operations Directorate
P.O. Box 998002
Cleveland, OH 44199-8002
14 32 C.F.R. Part 63 (1990); F LA . S
TAT . §61.076 (1988).
15 See Deloach v. Deloach, 590
So. 2d 956, 968 n.8 (Fla. 1st D.C.A. 1991).
16 Diffenderfer v. Diffenderfer,
491 So. 2d 265 (Fla. 1986). |
|
