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Retirement Increase After Divorce in Arizona | Hildebrand Law, PC

Tue 19th Apr, 2016 Arizona Community Property Laws

In the unpublished Arizona Court of Appeals case of Binder v. Binder, there was only one argument presented upon appeal, but the Arizona Court of Appeals had several factors to determine whether regarding the treatment of a military retirement pay allotment in an Arizona divorce decree. Is military retirement pay community property? How is military retirement pay divided? Can the plain terms of a settlement agreement be argued during a modification request?

A History of Binder v. Binder

Roger A. Binder (Husband) and Shirley A. Binder (Wife) ended their marriage of 18 years in 1999. During the course of their marriage, Husband completed over 10 years of military service. At the time of the divorce decree, Husband was a Lieutenant Colonel in the United States Air Force Reserve with his earliest retirement date 15 years in the future.

In the marital settlement agreement the parties agreed to an order apportioning Husband’s future military retirement pay awarding Wife a portion according to a designated formula: MRP (disposable military retired pay) times 50% the fraction in which 4,849 points credited for MRP as the numerator and all points credited to Husband for MRP as the denominator.

The order also awarded Wife with a “Former Spouse-type” Reserve Component Survivor Benefit Plan (“RCSBP”) based on the Husband’s full retirement pay. The decree was filed with the Defense Finance and Accounting Service (DFAS), which is the agency that administers military retirement payments.

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After the divorce, the Husband continued his service in the Air Force Reserve receiving a promotion to Major General and the coinciding pay raises. Prior to retiring in 2013, the Husband changed his status from reserve to active duty.

Due to the change in status, the DFAS was not able to process the original order produced from the 1999 divorce decree and settlement agreement. This resulted in all the military pay being distributed directly to Husband rather than a portion to Wife.

In April 2014, Wife filed a petition requesting enforcement of the 1999 Order. Husband argued that Wife’s share of the retirement pay should be calculated based on the rank he was at the time of the divorce decree rather than his rank at the point of retirement.

The court heard the argument then issued an order awarding Wife 25.8% of Husband’s full retirement pay as a Major General and was entitled to Husband’s Survivor Benefit Plan (“SBP”). The husband filed a motion for a new trial and was denied. Husband appealed.

Binder v. Binder: On Appeal

According to the Uniformed Services Former Spouses’ Protection Act, 10 U.S.C. Section 1408 (2016), state courts are authorized to divide military retirement as community property. Arizona’s community property law designates military retirement benefits earned during the marriage as community property and, as such, they are subject to an equitable division.

In Binder v. Binder, both parties agreed on the formula to be used for the division of military retirement pay, but do not agree on what constitutes the MRP (or disposable military retirement pay). The husband argues that the Wife’s allotment should be calculated based on his pay and rank at the time of dissolution (Lieutenant Colonel) while Wife argues that calculations should be completed using his rank and pay at the time of his retirement (Major General).

The husband argues that any increase in pay/rank post-divorce is his sole and separate property and should not be considered. The appeals court notes that the use of the word “eventual” in the 1999 Order referencing disposable military retired pay plainly indicates that the agreement intended the calculations to be completed based on the amount of retirement pay the Husband would actually receive at the time of his future retirement rather than the amount he would have received had he retired at the time of the dissolution.

Additionally, Husband’s request for modification of the plain terms of the 1999 Order is in direct contradiction to the general rule stating that a dissolution decree’s provisions regarding property distribution may not be modified or revoked unless the court finds conditions that exist justifying the reopening of a judgment under Arizona state law.

For all practical intents and purposes, this means that property settlements are not subject to termination or modification. Husband argues that the occurrence of unforeseen events alters the rule. The appeals court disagrees and finds that the rule favoring the finality of the allocation of property in a divorce decree supports the enforcement of the 1999 Order as determined by the superior court.

In relation to Wife’s entitlement to receive “her portion” of the Husband’s SBP, the Husband again argues that the allotment should be dependent upon the rank and pay at the time of their dissolution. For the same reasons as set forth above, the appeals court agrees with the superior court’s findings that the Wife’s SBP should be calculated based on the Husband’s rank and pay at the time of his actual retirement.

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The Court of Appeals of Arizona Concludes

The Court of Appeals of Arizona affirms the superior court’s order, except to vacate the portion holding that the Husband was in error by not taking steps to ensure that the Wife received the SBP benefits allotted to her by the decree. The wife’s request for attorney’s fees was declined on appeal in accordance with A.R.S. Section 25-324 (2016).

Insufficient evidence was provided with respect to the two parties’ financial circumstances to make an award and the Husband’s positions on appeal were not unreasonable. Wife’s costs on appeal are granted dependent upon compliance with Arizona Rule of Civil Appellate Procedure 21.

If you need information about what happens if a retirement account increases after a divorce in Arizona, you should seriously consider contacting the attorneys at Hildebrand Law, PC. Our Arizona divorce attorneys have over 100 years of combined experience successfully representing clients in divorce cases in Arizona.

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.

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