When a married couple divorces in North Carolina, marital property is subject to statutory equitable distribution rules. When one of the spouses has a military pension, federal law also applies and complicates application of those rules. If you are considering divorce and your marital property includes a military pension, it is essential to consult with an attorney with skill and knowledge to handle the division of military retirement benefits.
North Carolina’s divorce laws include pensions or retirement benefits of both spouses as marital property subject to the equitable distribution rules, to the extent a spouse earned the benefit during the marriage. While equitable distribution often results in a 50-50 division of property, the statute authorizes the court to divide marital property in a manner the judge determines as fair and equitable. (You can read a more detailed explanation in an article written by our family and domestic law attorneys at The Twiford Law Firm, Equitable Distribution in North Carolina.)
When marital property includes military retirement benefits, federal law must also be applied in dividing the marital portion of the benefits. Prior to 1981, states could not access military pensions for purposes of property division in a divorce case. However, passage of the Uniformed Services Former Spouse Protection Act (USFSPA) in 1981 enabled states to divide military pensions in a divorce proceeding, if one of these three requirements is met:
An amendment to the law, effective in 2017, permits state courts to distribute only the portion of a service member’s final retirement benefit that would be paid to the member if he or she retired on the date of entry of the divorce, plus any cost of living adjustments occurring between the divorce and actual retirement. North Carolina courts apply this requirement along with other federal regulations in conjunction with the state statutory provision regarding classification and calculation of pension benefits in a state court divorce proceeding.
Calculation of the amount of military retirement benefits in equitable distribution is extremely complex, especially since both federal and state rules apply. If your divorce includes military retirement benefits, whether you are the service member or the spouse of the service member, the only way to protect your interests and assert your rights is to have an attorney knowledgeable in military divorce handle your case.
Any court distribution to a divorcing spouse of a service member’s retirement benefits is subject to the requirements of the USFSPA. The Act limits pension division awards to the service member’s disposable retirement pay, which does not include VA disability pay.
The USFSPA prohibits state courts from ordering a service member to retire in order to divide the retirement benefits. However, a North Carolina court may take into account the present value of the pension, the value of disability pay, and value of medical benefits in determining what other property the non-military spouse receives when dividing marital property.
In addition, the USFPA establishes standards to determine options for payment of an award. If the marriage lasted at least 10 years, and during the marriage the service member had more than 10 years of creditable service for retirement purposes, the court may order that the benefits be paid directly to the former spouse from the Defense Finance and Accounting Services (DFAS). Direct pay is not available if the 10-year test is not met. Even if it is met, the court order must include direct pay provisions for it to be implemented.
Finally, the USFSPA provides that a former military spouse’s right to a portion of military pension benefits ends when the military spouse dies. However, payments may continue if the service member elected the Survivor Benefit Plan (SBP), which allows payments to a non-military spouse after a service member’s death.
As part of equitable distribution during a divorce proceeding, the court can order the military spouse to provide SBP coverage for the non-military spouse. A court order that includes this provision is only effective if served on DFAS within one year after the divorce.
If you are a service member or spouse of a service member considering divorce, an important first step is finding an attorney knowledgeable in both North Carolina equitable distribution law and the federal law relating to military retirement benefits.
As discussed above, calculating the value of retirement benefits for inclusion in equitable distribution is very complicated under applicable federal and state laws. The terms for payment of a military pension benefits award are also are at issue in a divorce proceeding.
If direct pay provisions are available and preferable, the court order must specifically address direct pay. The court order also may address the issue of SBP coverage. Those are two important examples of why negotiating and writing a military pension division order in a North Carolina divorce proceeding requires the specialized knowledge of an experienced military divorce attorney.
If you are a service member or spouse of a service member considering separation or divorce, our experienced domestic and family law attorneys at The Twiford Law Firm are here to help. We advise and represent clients in all aspects of North Carolina and federal law relating to a military divorce, including equitable distribution of military retirement benefits.
With offices in Elizabeth City and Moyock, we serve clients throughout northeastern North Carolina, including the Outer Banks. Contact us today at 252-338-4151 or 252-435-2811 to schedule an initial consultation.