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Hidden Money for Non-Military Spouses in Divorce

One overlooked source of money has to do with insurance. Many military members, including Guard and Reserve, choose USAA for their insurance needs. A little known fact about USAA is that members have a Subscriber's Account (formerly called a "Subscriber Savings Account") which contains monies contributed through premiums for property and casualty insurance (such as car insurance) and distributed from time to time to the subscribers. These periodic distributions amount to a refund of money not needed for operating reserves and they come as a credit on the quarterly or yearly premium, thus saving money for the customer. If one of the parties will be retaining USAA membership and benefits, including the balance in the Subscriber's Account, then it makes sense to ask how much is in the Account and allocate the sum to that party, even though it is money which can't be spent at present.

A Subscriber's Savings Account (SSA) is not a bank account. A member cannot make withdrawals from, or deposits to, an SSA. Since SSA funds are an integral part of USAA's capital structure, they remain with the association as long as the member has at least one property and casualty policy. If a member terminates all property and casualty policies, the balance of the SSA is paid out approximately six months later.

Here is an outline of the rules for the Savings Account:

· The Savings Account (formerly known as the Subscriber Savings Account) at USAA is only for the sponsor, that is, the one who has served in the military. A spouse or eligible child would not have such an account (assuming no military service)

· Thus there is no "division" of the Savings Account or allocation of it by USAA when parties divorce - it always stays with the sponsor.

· The refund of Savings Account money each December is proposed and approved by the Board of Directors, depending on how the company has done in the past year; if there are excess funds, then USAA pays out refunds.

· The refunds are paid out according to the premiums paid by a sponsor in the prior year. Thus if John had paid $2,000 in premiums for his family, while Jane - a single sponsor paid only $1,000 for her own car, then John's refund would be twice what Jane receives.

· Before divorce, as afterwards, the spouse/former spouse can maintain vehicle coverage through USAA. After divorce, she or he would be known as a "legacy." The only difference is that with a spouse or former spouse who has no independent eligibility for USAA through prior military service there would be no Savings Account.

· When a sponsor has been with USAA for over 40 years, he or she is eligible for a Senior Bonus (10% of the Savings Account) if approved by the Board of Directors. This can be paid to the sponsor in February of each year, or else it can be left in the account.

Because military divorce requires special knowledge of laws that do not apply to civilian divorce, it may be wise to speak with an experienced divorce lawyer who handles military divorce cases.

Contact the Law Offices of Renee Lazar at 978-844-4095 to schedule a free one hour consultation.

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Law Offices of Renee Lazar
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