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Deferred Military Retirement and AZ Divorce | Hildebrand Law, PC

Wed 1st Aug, 2018 Arizona Community Property Laws

Dealing with military retirement pay in an Arizona divorce can be a complicated matter.

So, it is important for you to know how increases and decreases in military retirement pay are handled in an Arizona divorce.

The Arizona Court of Appeals in a published decision in the case of Barron vs. Barron addressed those issues.

The husband was serving in the military with his wife filed for divorce.

At trial, the court issued orders dividing the husband’s military retirement between the two spouses.

The court, coincidentally, also ordered the husband to begin making payments to Wife upon his eligibility to retire in the same amount as Wife would have received for her share of the military retirement if Husband continues to work and, therefore, elects not to begin his retirement until a later date.

Federal law provides that a military personnel’s military retirement can be treated as community property. As such, a state court has the authority to divide that retirement upon a divorce.

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Can a Court Order Military Personnel Pay a Spouse if Retirement is Delayed

The issue for the Arizona Court of Appeals pertained to the legality of the trial court’s order requiring the husband, in this case, to begin making payments to wife equivalent to what she would have received as her share of his military retirement pay when he first becomes eligible to retire but, instead, chooses to forgo retirement payments to continue working in the military.

The Arizona Court of Appeals began its analysis in this case by referencing the prior United States Supreme Court decision in Howell vs. Howell.

In Howell, the appeals court held that a court may not employ “equitable principles” to reach results that are not consistent with federal law.

The United States Supreme Court in Howell overruled a trial judge’s order that required husband to pay wife directly for any portion of wife’s share of her military husband’s military retirement that was reduced because the husband converted his military retirement to a partial disability benefit; which reduced the amount each spouse would receive of the original military retirement.

Simply stated, the wife’s retirement benefit will decrease if the military spouse makes elections that reduce the retirement benefit in the future.

Wife relies on the prior Arizona Court of Appeals decision in the case of Koelsch vs. Koelsch.

The decision in the Koelsch case, the Arizona Court of Appeals held that a trial judge could order a spouse to begin paying the other spouse for his or her share of retirement benefits if the spouse who has those retirement benefits chooses not to retire and to continue working.

That ruling, however, was distinguished by the Arizona Court of Appeals in the case of Boncosky vs. Boncosky which said that rule only applies if the person who is eligible to retire has a retirement eligibility date that is close to the date the parties are getting divorced.

Regular Retirement Versus Military Retirement

Regular Retirement Versus Military Retirement

This Court of Appeals, however, distinguished all of the cases cited above because none of those cases deal specifically with military retirement pay.

Unlike military retirement pay, the retirement plans in those other cases were not governed by the federal law that applied to military retirement pay.

The United States Supreme Court in the Howell case interpreted federal law to prevent a state court from either granting a former spouse any interest in future military disability pay or from ordering military personnel to make payments to a former spouse to make up for the decrease in the military retirement pay that occurs when the service member elects to receive military disability pay.

In this appeal, the Arizona Court of Appeals concluded that ruling in Howell precludes a state court from ordering a spouse to make up his or her spouse’s interest in a military retirement plan by having to make payments to his or her spouse when he or she is eligible to retire from the military but, instead, chooses to defer retirement, including delaying receipt of both spouses’ retirement payments, to a later date.

Simply stated, a court cannot order military personnel to make payments to a spouse when he or she continues to work past their military retirement date.

What happens if a military service member postpones retirement after an Arizona divorce?

If a service member delays retirement, both spouses typically wait longer before retirement benefits begin. Arizona courts generally cannot order the military member to pay the former spouse the amount they would have received had retirement started earlier.

Can an Arizona court force a military member to retire?

No. Arizona courts cannot require a military service member to retire for any reason, including simply to allow a former spouse to begin receiving retirement benefits. The decision to retire remains with the service member, subject to applicable military regulations.

Is military retirement considered community property in Arizona?

Yes. Military retirement benefits earned during the marriage are generally considered community property under Arizona law and may be divided during a divorce. Federal law allows state courts to treat disposable military retired pay as marital or community property.

Does federal law affect how Arizona divides military retirement?

Yes. While Arizona courts can divide military retirement benefits, federal law limits what state courts can order. Arizona courts must follow the Uniformed Services Former Spouses’ Protection Act (USFSPA) and applicable U.S. Supreme Court decisions when dividing military retirement pay.

Can a former spouse receive military retirement payments before the service member retires?

Generally, no. A former spouse usually begins receiving their awarded share only after the service member actually retires and military retirement benefits become payable.

Does delaying military retirement reduce a former spouse’s benefits?

Delaying retirement usually delays when benefits begin rather than permanently reducing the former spouse’s awarded percentage. However, future benefit amounts may be affected by changes allowed under federal law or the terms of the divorce decree.

What Arizona court case addressed deferred military retirement?

The Arizona Court of Appeals addressed deferred military retirement in Barron v. Barron. The court concluded that Arizona judges cannot require a military member to make payments to a former spouse simply because the member chooses to continue military service instead of retiring.

How did the U.S. Supreme Court’s Howell decision affect military retirement in divorce?

The Supreme Court’s decision in Howell v. Howell limited state courts’ authority to compensate former spouses for certain reductions in military retirement pay caused by federally authorized benefit elections. Arizona courts have applied that reasoning when addressing delayed military retirement.

Is military retirement treated differently than civilian pensions in Arizona?

Yes. Military retirement is governed by federal statutes that limit state court authority. Civilian pensions generally do not have the same federal restrictions, making military retirement cases more complex during an Arizona divorce.

Can an ex-spouse receive direct payments from military retirement?

Yes, if the divorce decree awards a portion of disposable military retired pay and applicable federal requirements are met. Federal law also provides a mechanism for enforcing qualifying court orders through the Department of Defense.

What laws govern military retirement division in an Arizona divorce?

Military retirement division is governed by both Arizona community property law and the federal Uniformed Services Former Spouses’ Protection Act (USFSPA). Courts must comply with both state and federal legal requirements when dividing military retirement benefits.

Can military disability elections affect an ex-spouse’s retirement payments?

Yes. Certain military disability elections may reduce disposable retired pay, which can affect the amount available for division. Federal law limits a state court’s ability to require reimbursement for those reductions.

Why is deferred military retirement an important issue during divorce?

Deferred military retirement can significantly affect when a former spouse receives retirement benefits and whether a court can require interim payments. Because military retirement is subject to unique federal rules, these cases often involve legal issues that do not apply to civilian retirement plans.

Should I consult an Arizona attorney about military retirement in divorce?

Yes. Military retirement division involves a combination of Arizona family law and federal military retirement statutes. An attorney experienced in military divorce can help evaluate how deferred retirement, disability elections, and retirement benefit calculations may affect your case.

Arizona Community Property Attorneys Dividing Military Retirement Pay

If you have questions about deferred military retirement in an Arizona divorce case, you should seriously consider contacting the attorneys at Hildebrand Law, PC. Our Arizona community property and family law attorneys have decades of combined experience successfully representing clients in community property and family law cases.

Our family law firm has earned numerous awards such as US News and World Reports Best Arizona Family Law Firm, US News and World Report Best Divorce Attorneys, “Best of the Valley” by Arizona Foothills readers, and “Best Arizona Divorce Law Firms” by North Scottsdale Magazine.

Call us today at (480)305-8300 or reach out to us through our appointment scheduling form to schedule your personalized consultation and turn your Arizona community property or family law case around today.

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