Military pensions that are calculated from years of service and amount of salary rather than points accumulated are divided by the time rule. The Uniformed Services Former Spouse Protection Act (USFSPA), 10 U.S.C. §1408, authorizes state courts to apply state law to divide military retirement benefits at divorce. Thus, under California law, military pensions are generally divided using the time rule. (Marriage of Poppe (1979) 97 CA3d 1, 8.)
Under the time rule, the community is entitled to have its share based on the length of service performed on behalf of the community in proportion to the total length of service necessary to earn those benefits. (Marriage of Judd (1977) 68 CA3d 515, 522.) In other words, the community interest in a pension is based on the length of service performed on behalf of the community in proportion to the total length of service necessary to earn those benefits. (Id.)
Under the time rule, if the employee spouse continues to work after the parties separate, contributions to the retirement plan continue to grow. But, the employee’s ex-spouse’s portion of the retirement gradually shrinks as a percentage of the whole. HOWEVER, there is new legislation that may go into effect this year (2017) that will change how military pensions are divided at separation. Under the new bill, the non-employee spouse gets 50% of the community portion but the amount of that interest is “frozen” as of the date of divorce or separation. Thus, the retirement “pie” does not continue shrinking post-separation if the employee spouse continues working.
Use of the time rule is not appropriate when retirement benefits are based on a points system—for example, Naval reservists—that is correlated to the nature and frequency of the service rendered, not the number of years served. (Marriage of Poppe (1979) 97 CA3d 1, 8.) Apportionment on the basis of the time rule is only appropriate where the amount of the retirement benefits is substantially related to the number of years of service. (Marriage of Thorne and Raccina (2012) 203 Cal.App.4th 492.)
The court can only treat 50% of the “disposable retired pay” as community property. (10 USC § 1408(c)(1).) “Disposable retired pay” is the net monthly amount payable to the military member after certain mandatory deductions. 10 USC §1408(a)(4). Section 1408(a)(4) deductions include:
Post 9/11 GI Bill Benefits may not be treated as marital property, or the asset of a marital estate, subject to division in a divorce or other civil proceeding. (38 USC §3020 (f)(3).) The legislative history explains the motivation for the GI Bill:
(3) The United States has a proud history of offering educational assistance to millions of veterans, as demonstrated by the many G.I. Bills enacted since World War II. Educational assistance for veterans helps reduce the costs of war, assist veterans in readjusting to civilian life after wartime service, and boost the United States economy, and has a positive effect on recruitment for the Armed Forces.
(5) The people of the United States greatly value military service and recognize the difficult challenges involved in readjusting to civilian life after wartime service in the Armed Forces.
(6) It is in the national interest for the United States to provide veterans who serve on active duty in the Armed Forces after September 11, 2001, with enhanced educational assistance benefits that are worthy of such service and are commensurate with the educational assistance benefits provided by a grateful Nation to veterans of World War II. (Pub.L. No. 110–252, Title V, § 5002 (June 30, 2008).)
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