The Voluntary Separation Incentive (VSI)
The VSI is a particular kind of military retirement benefit that sometimes enters into military divorce settlements.
VSIs are one of the two main types of military early retirement programs. VSIs and Special Separation Benefits (SSBs) are two ways the military eliminates officers whose careers are not advancing.
For divorce purposes, the single most important distinction in classifying military severance benefits is determining whether they are voluntary or involuntary. If an officer leaves the military voluntarily, his severance benefits are often considered lost retirement benefits; when he or she leaves involuntarily, his benefits are more likely to be considered compensation for lost future wages.
VSIs are periodic payments over time; SSBs are lump-sum payments. Both the VSI and SSB are voluntary, and "[f]or this reason, most court decisions to date have held that VSIs and SSBs are essentially alternative forms of retirement pay, and as such are divisible by state courts."
Both VSIs and SSBs are alternative forms of retirement, but that in itself does not mean they are always marital. If the owning spouse accumulated the benefits with service before marriage, his or her retirement benefits are partly non-marital.
A service person who leaves the military with less than 20 years of service receives no retirement benefits. When an officer leaves involuntarily, his benefits are considered compensation for lost future wages.
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PROPERTY DIVISION -- The Uniform Services Former Spouse Protection Act (USFSPA) allows state courts to treat disposable retired pay either as property solely of the military member or as property of the member and his spouse. The USFSPA authorizes direct payment of a portion of a military retirees pay to the former spouse and extends some base privileges to certain former spouses. Although up to 50% of a military member’s retired pay may be awarded, state law determines the exact division of the retired pay.
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