As a military family law divorce attorney in Massachusetts, I am frequently asked by former military spouses what they need to do if their divorce decree requires the servicemember to provide survivor benefit plan coverage (SBP).
The military retirement system does not end with the pension and the survivor benefit plan. Not to be overlooked is the third deferred compensation attribute to the system, the Thrift Savings Plan (TSP). This can be a valuable asset in property division, potentially containing tens of thousands of dollars of marital funds.
Military families are much like their civilian neighbors. Many need dual incomes to meet their financial goals; are concerned about pay and benefits; worry about childcare and education; and want to establish roots and contribute to their community's well-being. However, the unique demands of military service result in exceptional issues and challenges for service members and their families.
Married couples who both serve in the military would continue to receive two basic housing allowances in fiscal 2016 under the final bill approved by House and Senate conferees.
You can save money for Col Smith in several ways in negotiations over his pension. The first one to use a set dollar amount in specifying the pension share for his wife upon divorce. This means that the spousal entitlement is calculated (usually with 50% of the marital share as the model) and then converted in today's dollars to a specific monetary amount, such as: "Mrs. Smith shall receive $495 a month from the disposable retired pay of Col Smith." This method of dividing the pension, if accepted by the other side, means that all future increases in Col Smith's pay belong to him and, upon retirement, the cost-of-living adjustments (COLAs) which are applied to retired pay go solely to him. She receives none of these benefits. The COLA, when applied solely to Col Smith's pension, will roughly double its value over twenty years.
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.
In a military divorce case, the nonmilitary spouse will often be concerned about pension share payments and taxes. She will invariably want to receive pension division payments direct from the retired pay center.