Dividing Military Retirement Benefits Can Be a Complex Process
Questions pertaining to the division of military retirement benefits are among the most frequently asked questions in the area of property division. One of the common misconceptions surrounding military retirement benefits is that these assets are somehow “special,” or exempt from division in divorce. This is not the case: in the case of In re Marriage of Gallo (1988), the Supreme Court of Colorado determined that military retirement benefits are like any other type of property, and consequently may be divided to the extent that these benefits are classified as marital assets. Importantly, this decision does not apply retroactively to benefits accrued prior to 1988, and so benefits accrued prior to 1988 are treated differently. But, currently, the status of the law is that these benefits are indeed classifiable as marital property and may be divided accordingly.
Although there is no question that military retirement benefits are classifiable as marital property, these assets still present issues which are unique when compared to other types of assets. One of the first things to know which can provide some clarification is that the procedure for dividing these benefits depends on whether the military spouse is either active or retired.
Dividing Benefits with an Active Military Service Member
Consistent with the 2017 National Defense Authorization Act, the State of Colorado follows something referred to as the “frozen benefit rule” whenever a divorce occurs involving an active military service member. This means, essentially, that the benefits which are eligible to be included as marital assets are those which accrue to the point of the dissolution. In other words, the other spouse will not have a claim to retirement benefits which accrue after the divorce, at least not without a separate private agreement. Furthermore, the current federal law also states that only the “disposable pay” of the benefits may be divided in divorce; in this context, there are specific rules which determine precisely how to calculate disposable pay.
Dividing Benefits with an Already Retired Service Member
When a divorce involves a spouse who has already retired from the military, and therefore has a defined benefit plan, Colorado follows the formula provided in the well-known case of In re Marriage of Hunt (1995): the total months of marriage overlapping with the military service is divided by the total months of military service at the time of retirement. So, for instance, if a spouse was in the military for a total of 10 years, and the marriage overlapped with 6 of these years, the formula would yield the following results: 72 months / 120 months = 60% of the total military benefits qualify as marital property. Therefore, the other spouse is entitled to 50% (by default) of the disposable pay of this 60% share.
Colorado is a “Default 50% / 50%” State for Military Retirement Benefits
Another important fact to point out is that Colorado is a “default” 50% / 50% state when it comes to the marital share of military retirement benefits. In other words, the portion of military retirement benefits which is classified as marital property is automatically granted to each spouse in a 50% / 50% fashion. A court cannot simply decide to grant one spouse a lesser share of the marital portion because one spouse makes such a request. Spouses can, of course, freely negotiate property division privately, and so spouses can privately agree to take a greater or lesser share than 50%. But, without private negotiation, 50% is the default share necessarily granted in Colorado.
Contact the Drake Law Firm for Additional Information
Readers who want to learn more about the division of military retirement benefits in a Colorado divorce, property division in Colorado in general, or any other aspect of the divorce process, contact one of the family law attorneys at the Drake Law Firm today by calling 720-790-4023.