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American Bar Association - Defending Liberty, Pursuing Justice

WINTER 2011

Vol. 7, No. 2

 

FAMILY LAW

 

The Ten Commandments of Military Divorce: Representing the Nonmilitary Spouse

By Peter C. Cushing

Representation of the nonmilitary spouse in a dissolution action requires specialized knowledge. Federal law and regulations frequently govern or limit the relief available in state court. Jurisdiction, pension splits, insurance, and health benefits involve the application of complicated rules. The following suggestions seek to advance the interests of the nonmilitary spouse.

1. Thou Shalt Obtain Personal Jurisdiction

Assuming that dissolution subject-matter jurisdiction exists, it still is necessary to personally serve the active-duty member with a summons and petition for dissolution of marriage to obtain jurisdiction. If the respondent is overseas or deployed, service can be extraordinarily difficult. It is not possible to compel military authority to serve the summons and petition on an active-duty member. It is possible to request that military authority serve the active-duty member, but service is allowed only with that consent. If the member will not consent, one solution is to have the court appoint a process server as an officer of the court to serve the papers. However, service aboard any ship or shore installation must be done in accord with military regulations. In addition, service in the territorial jurisdiction of many foreign nations may be regulated by the Hague Convention. With some Hague Convention signatory countries, it is possible and preferable to serve the summons and petition abroad by mailing the documents to the “Central Authority,” who will then accomplish service in accordance with the law of that jurisdiction.

When the case also involves child support, service of process on members with children who are stationed overseas may be easier. Federal agencies and the uniformed services have designated officials who are responsible for facilitating service of legal process involving child support, regardless of the location of the members’ duty station.

2. Thou Shalt Proceed Without Personal Jurisdiction to Obtain Child and Spousal Support

In Rem Orders: Uniform Code of Military Justice

Despite diligent efforts, in some cases one may not be able to accomplish service by foreign authority, military authority, or court-appointed process server. In that event, provided subject-matter jurisdiction and long-arm jurisdiction exist, one may proceed after publication and issuance of notice of the action to obtain the appropriate in rem orders, subject to personal enforcement when the active-duty member may be personally served, or against the respondent’s real property or other assets within the state, specifically described in the notice.

One also may serve the in rem order by certified mail on the active-duty member’s commanding officer, pointing out that in the U.S. military, failure to support dependents constitutes “service-discrediting” misconduct. Under military regulations, the servicemember must be counseled regarding his or her obligations and informed that administrative or disciplinary actions under the Uniform Code of Military Justice (UCMJ) may be initiated if such service-discrediting conduct continues.

In Rem Support Orders: Involuntary Allotments

Although letters to the active-duty member’s commanding officer are ordinarily effective, there is good reason to exercise restraint in taking action that could jeopardize family income and assets. In many cases, obtaining an involuntary allotment may be a better solution. The basic requirement for such an allotment is a state court support order and an arrearage equal to or exceeding support required for a two-month period. If your client is seeking only alimony, involuntary allotment is not available. If the client needs alimony and child support, involuntary allotment is available and preferable to garnishment because the definition of “disposable earnings” includes basic pay, basic allowance for quarters, basic allowance for subsistence, sea pay, special pay, and other allowances. These allowances are not included within the definition of “remuneration for employment” utilized by the federal garnishment statute.

The order is sent to the military finance center with a statement from a court or support agency official stating that the requisite arrearage exists and requesting a mandatory allotment. The finance center notifies the member’s commander and the member concerning the request. Absent presentation of an adequate defense by the member, an involuntary allotment is started. Arrearages may be collected in a similar fashion. The maximum amount of the allotment is generally 60 percent of disposable earnings, or 50 percent if the member is supporting other family members, including allowances. Utilizing involuntary allotments thus increases the net monthly support amounts received by your client, in many cases avoiding the need for the extraordinary remedy of contempt.

3. Thou Shalt Penetrate the Civil Relief Act

The mere mention of the Servicemembers Civil Relief Act (SCRA) is enough to make most attorneys cringe. Under the Act, an initial stay of proceedings for at least 90 days is available to the servicemember who meets certain conditions in his or her petition to the court. After that, further stays depend on whether the member’s military duties materially prejudice his or her ability to appear and participate in court proceedings. One can argue that a “temporary hearing” will not prejudice the rights of the servicemember since an interim order is always subject to a full hearing when the member returns and is available. When only income is involved, such as a hearing on “guidelines child support,” one can argue that the presence of the servicemember is unnecessary since his LES (leave-and-earnings statement) can be faxed to the court for full consideration at the support hearing. If the member is in knowing and willful violation of an order, one can argue that good faith and “clean hands” are required for a successful motion to stay the proceedings, and noncompliance with agreements or orders related to family responsibilities is presumptive evidence of bad faith.

Successful implementation of the Act often requires volunteers to make themselves available to act as attorney ad litem for the absent servicemember who has not filed a written response to the action or who has demanded appointment of counsel. There is no basis in the SCRA for the attorney ad litem to demand fees directly from the member, from the moving party, or from the court.

4. Thou Shalt Split the Military Pension

In a long-term marriage involving years of active-duty service, the pension often is the major asset of the marriage. Senior enlisted personnel frequently retire in their forties after 20 years’ active service and receive a lifetime pension of one-half of their basic pay. Not including general officers, payments range from about $1,200 to several thousand dollars per month. Assuming a 40-year life expectancy after retirement, a military pension can be worth from $500,000 to more than $2 million, not reduced to present value and not including cost-of-living or inflation increases. The client usually is entitled to equitable distribution of this asset under state property division laws and the Former Spouse Protection Act, 10 U.S.C. § 1408.

However, special federal jurisdictional rules apply to splitting a military pension. Personal jurisdiction of the servicemember based on residence other than by military assignment, based on domicile, or based on consent is essential. Under no circumstances should a default be taken against an out-of-state active-duty military member followed by entry of final judgment. Omitting the pension as an asset or erroneously distributing it could have equally disastrous results. Both open the practitioner to grievance and malpractice claims, and both can be avoided by associating competent co-counsel.

A final judgment distributing a military pension in the case of an active-duty member must certify that the Civil Relief Act was complied with. Also, to divide a military retirement pension at the source, the parties must have been married for 10 years, during which time the servicemember was on active duty or earning retirement point credits, and this fact must be certified in the judgment or by separate documentation.

The mechanics of the pension split involve preparing the final judgment in proper form and completing DD Form 2293, “Application for Former Spouse Payments From Retired Pay,” and forwarding the documents to the Defense Finance and Accounting Service (DFAS). In the event one cannot meet the 10-year rule, it is possible to split the pension as marital property. However, enforcement may be a problem because payments cannot be obtained directly from DFAS under federal law and regulations.

5. Thou Shalt Insure the Military Pension

As the population ages, many military pensioners will die and, unless insured, valuable pension benefits for both spouses will lapse. The pension stops when the retiree dies. Failing to advise the client to obtain appropriate insurance is likely legal malpractice in a case involving a long-term military marriage.

Oddly, there is general reluctance on the part of the judiciary to order appropriate insurance benefits to secure pension interests even when life insurance has been canceled shortly before the initiation of divorce proceedings. Unlike life insurance to secure child support or health insurance benefits for children, ordering life insurance to secure alimony or pension benefits in many states is discretionary, subject to review for abuse of discretion. Therefore, the burden is on the practitioner to explain to the court the insurance benefits available, the costs, who should pay, and why insurance is considered essential in a particular case.

Private Life Policies

Insuring the military pension may involve private life insurance. On the plus side, this insurance may have been maintained for many years and may have a cash surrender value. If it insures the life of the member, with the former spouse as beneficiary, then counsel should determine whether the premium is affordable, whether the former-spouse beneficiary is willing and able to pay it (if the insured cannot be counted on to make the premium payments), and how to change ownership of the policy to the beneficiary (to prevent the insured from changing the beneficiary or attempting to cancel the policy). On the negative side, many former spouses feel that the cost or the inconvenience make this course undesirable.

Servicemembers’ Group Life Insurance (SGLI)

Sanctioned by federal law and regulations, SGLI typically provides $400,000 of life insurance benefits for the member’s designated beneficiary. The military member may name his or her parents, children, spouse or former spouse, or others as beneficiaries. The cost is quite reasonable. Because nearly all active-duty service persons carry SGLI, on the surface SGLI appears to be an ideal method of providing insurance benefits to secure at least part of the military pension or to provide for the former spouse or children of the servicemember. The difficulties of enforcement are found below at “7. Thou Shalt Be Aware of the Doctrine of Federal Preemption.”

The Survivor Benefit Plan (SBP), 10 U.S.C. § 1447 et seq.

The Survivor Benefit Plan is available to active-duty members. Also, every few years “open enrollment” for retired members has become available. Divorcing parties may enter into marital settlement agreements to provide for an annuity to the surviving spouse in the event of the servicemember’s death. Such agreements, by federal statute, may be approved by state courts, and orders may be entered sufficient to bind the servicemember and DFAS to provide the annuity. Benefits may be paid to the surviving widow or widower, surviving dependent children, former spouses, or other natural persons. Significantly, a court may order a person to elect SBP to provide an annuity to a former spouse or a former spouse and a child.

The downside to SBP is that premiums are somewhat expensive. The SBP premium is 6.5 percent of the selected base amount (from $300 up to full retired pay), to provide a benefit of 55 percent of the base amount. Payments are made out of retired pay, and both parties share in the cost in the same ratio as they do in the military pension. Various manipulations of the parties’ percentages of the pension are possible to make one side pay all or none of the premium, but in most cases the parties simply let the statute make the allocation.

6. Thou Shalt Enforce the SBP Award

The most likely area of legal malpractice is in the enforcement of the Survivor Benefit Plan award. Given the complexity of the SBP statute and regulations, many SBP awards lapse and cannot be reinstated. Typically, counsel serves on DFAS the final judgment of dissolution of marriage, which equitably distributes the military pension and orders SBP coverage. The safest method is by certified mail, return receipt requested. Occasionally DFAS loses documents. The servicemember may have already named the spouse as SBP beneficiary at the time of retirement before the divorce. However, sometimes the nonmilitary spouse is not designated as “former spouse beneficiary” in the divorce decree, thus disqualifying her. Often the attorney misses the deadline. The decree must be sent to DFAS by the member within one year of the divorce. If the former spouse sends it, DFAS must receive it within one year of the order providing SBP coverage. If the problem is discovered years later, the ex-spouse’s only hope may be that Congress creates an open enrollment period for SBP, during which time the servicemember can be compelled to sign the necessary forms or petition the Board for the Correction of Military Records.

The Deemed Election Provisions

One of the SBP nightmares described above can be eliminated by utilizing the “deemed election” provisions of Title 10 U.S.C. § 1448. The statute provides that if the court has ordered SBP coverage and the servicemember fails to elect this, then the member shall be deemed to have made such an election if DFAS receives a written request from the former spouse, asking that such an election be deemed to have been made, along with a copy of the court order requiring same. Merely serving a certified copy of the final dissolution judgment and marital settlement agreement on DFAS is not sufficient. The order should be served with a letter specifically requesting that the servicemember be deemed to have made the election. It is preferable to serve it by certified mail, along with the SBP order or incorporated agreement, the divorce or dissolution decree, and DD Form 2293, available at the DFAS website, www.dod.mil/dfas, at “Money Matters.” This important procedure secures payments for the former spouse upon the member’s death.

Advantages of Survivor Benefit Plan

(1) Income for life—When the retiree dies, the former spouse receives benefits for life unless he or she remarries before age 55, which terminates benefits. (2) Available without qualifying—The SBP is available even if the military member could not qualify for commercial insurance due to health reasons. (3) Tax-free—Deductions from retired pay to fund the SBP are from gross retirement pay. Thus, they are tax-free, and the premiums are paid by the retiree and former spouse who receives a share of the pension. (4) Guaranteed—SBP cannot be terminated by the retiree and does not lapse as commercial policies do. (5) Cost-of-Living Adjustments—SBP benefits increase with the cost of living.

Disadvantages of Survivor Benefit Plan

(1) Inflexibility—The SBP, once chosen, cannot be canceled except by death of the eligible spouse and a few other exceptions. (2) Premiums are expensive and may increase—Although both spouses usually pay and premiums are tax exempt, premiums are expensive and do go up. (3) No cash value—The SBP does not have a cash-value buildup. If there is no payout of benefits because the former spouse dies first, premiums cannot be returned. (4) Dependency and Indemnity Compensation (DIC) or Social Security reduction—A complex set of rules may reduce SBP plan benefits by up to 40 percent when the beneficiary reaches age 62 or if the beneficiary receives DIC payments from the Department of Veterans Affairs related to the retiree’s death. The former reduction, known as the “Social Security offset,” is being phased out over a four-year period.

7. Thou Shalt Be Aware of the Doctrine of Federal Preemption

Although many servicemembers have signed marital settlement agreements to maintain their former spouses as the irrevocable beneficiaries of Servicemembers’ Group Life Insurance (SGLI) and such agreements have routinely been approved by the courts in final judgments, this purported protection is illusory and unenforceable. The U.S. Supreme Court in Ridgway v. Ridgway, 454 U.S. 46 (1981), held that this area was preempted by federal law, and a military member is free to name his new spouse or anyone with an insurable interest as the beneficiary of SGLI proceeds, despite a valid contract approved by the court, designating a former spouse and/or children.

Later lawsuits predicated on fraud, breach of trust, or contract violation have met with little success in both state and federal courts. After the death of the servicemember in such a situation, suit against the estate is possible, but the estate may be insolvent. The remedy of contempt during the servicemember’s life is not available, since the member has a statutory right to designate whomever he or she wishes and such right cannot be infringed upon by a state family court judge.

Attempting to obtain private insurance involves the problems discussed above. All too frequently, the practitioner obtains military pension benefits for the spouse and then obtains court-ordered SGLI benefits, but the insurance beneficiary designation is secretly changed or the policy lapses before the death of the servicemember.

The client’s next remedy may be suit against the attorney, perhaps many years later.

8. Thou Shalt Plan for Early Retirement, Defense Draw Down, Medical Retirement, or Merger With Other Benefits

When representing the nonmilitary spouse, an attorney must be aware that military personnel cutbacks in all branches of the U.S. military have resulted in “early outs.” Often, the servicemember receives a separation benefit, referred to as Voluntary Separation Incentive (VSI) or Special Separation Benefit (SSB). Most state courts have found that this benefit is subject to equitable distribution, because it is similar to the pension benefit it replaces. In the event that the servicemember comes into possession of such funds, the judgment should require that the appropriate portion of the proceeds be held in trust for the nonmilitary spouse.

Another common scenario involves the medical disability retirement of the active-duty member. Medical disability payments are, in general, not subject to equitable distribution under federal law. If there is even a remote possibility that the servicemember may medically retire, jurisdiction should be reserved in the final judgment to award permanent alimony as medical disability benefits may be considered a stream of income from which alimony may be paid to a needy former spouse. Without such a reservation of jurisdiction, a military retirement split may be defeated by conversion of the property asset to a disability benefit. Recent legislation providing for “concurrent receipt” of both disability benefits and regular retirement pay for retirees with more than 50 percent service-connected disability has partially solved the problem of conversion of the regular military pension into a disability pension.

Finally, be aware that the retiring military member may, under a complex set of federal regulations, merge his or her military retirement benefits with another federal retirement plan. Careful drafting of the marital settlement agreement and final judgment is essential to preserve the nonmilitary spouse’s interest in the transmuted asset.

Failure to include the “magic words” will result in DFAS returning the order with a polite letter declining to honor the attorney's fees garnishment writ.

9. Thou Shalt Obtain and Collect Your Attorney’s Fees

In representing the nonmilitary spouse, it often is necessary to look to the active-duty member to pay at least some of the attorney’s fees incurred. Also, given the substantial responsibility taken on by the attorney seeking to obtain insurance and pension benefits for the client, it is important that the attorney understand how and if he or she will be paid.

Obtaining a fee award is a matter of state law, requiring a significant disparity in income or assets between husband and wife. Without such a disparity, look to your client for payment. Assuming sufficient financial disparity does exist, the issue is one of enforcement. To garnish an attorney’s fee award, the order must meet the requirements of 42 U.S.C. § 659 and be legal process brought for the enforcement of a legal obligation to provide child support or make alimony payments. Further, the legal process must expressly provide for inclusion of attorney’s fees and/or court costs as (rather than in addition to) child support and/or alimony payments.

Lastly, the order must be within the authority of the court. It will be deemed to be within the court’s authority if the order is not in violation of or inconsistent with state or local law, even if state or local law does not expressly provide for such an award. Failure to include the “magic words” will result in DFAS returning the order with a polite letter declining to honor the attorney’s fees garnishment writ. Correct drafting results in enforceability of the award, regardless of the geographic location of the obligor.

10. Thou Shalt Be Aware of Federal Health Benefits

It frequently is in the best interest of the nonmilitary spouse to delay entry of the final judgment of dissolution of marriage until either the requirements of the 20/20/20 or the 20/20/15 rules can be met. (For an explanation of these rules, see Grandjean, page 38.) Vesting of health benefits or health benefits and commissary, theater, and exchange benefits are important.

In both 20/20/20 and 20/20/15 situations, substantiating documents and information to support an application for a military ID card (DD1773) must be submitted.

Military COBRA Plan

Effective October 1, 1994, divorced spouses of servicemembers will be eligible for three years of TRICARE-type coverage if they have not remarried and do not fall within either the 20/20/20 or 20/20/15 rule. The statute requires that the services provide appropriate notification and a 60-day election period to former spouses. A person receiving continued health care coverage is required to pay into a military health care account the necessary premiums for the 36 months of available coverage. Responsibility for premium payments should be negotiated or ordered in cases that fall within the rule.

Conclusion

These suggestions were written with the interests of the nonmilitary spouse in mind. Compelling arguments can be made for a different approach in the pension division area and for different tactical considerations when representing the active-duty or retired servicemember. Controversy surrounding the interests of the nonmilitary spouse and the active-duty or retired member continues in Congress.

Peter C. Cushing is a Board Certified Marital and Family Attorney and a retired captain, Judge Advocate General’s Corps, U.S. Naval Reserve. He is co-vice chair of the section’s Military Committee. A longer version of this article appeared in 1995 in The Florida Bar Journal. This article has been shortened and updated for inclusion in GPSolo Law Trends & News.

Published in Family Advocate, Vol. 28, No. 2 (Fall 2005) p. 18. © 2005 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

© Copyright 2011, American Bar Association.