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Unvested Military Retirement Benefits
© 2004 National Legal Research Group, Inc.
NEBRASKA: Longo v. Longo, 266 Neb. 171, 663 N.W.2d 604 (2003).
Under federal law, the fact that a military pension is unvested does not alone prevent state courts from treating it as marital or community property. Under state law, a military pension was marital property to the extent it was earned during the marriage, even though it was unvested at the time of divorce.
Following the grant of a divorce to the parties, the issue on appeal was whether the trial court was authorized to award the wife a portion of any military pension which the husband might receive in the future.
Looking first to federal law, the Nebraska Supreme Court responded to the husband's argument that because he had not yet served on active duty for 20 years he was not presently "entitled" to a pension benefit and therefore the district court lacked the authority to divide his future military pension. The husband relied upon the Uniformed Services Former Spouses' Protection Act (USFSPA), 10 U.S.C. 1408(a)(4), which defines "disposable retired pay" to mean "the total monthly retired pay to which a member is entitled" (emphasis added). This, he asserted, was "plain and precise language," as understood under Mansell v. Mansell, 490 U.S. 581 (1989), which prohibited any division of military pension benefits to which a spouse may be entitled in the future. The court rejected such a construction of the statute under federal law. It considered other provisions of the USFSPA, 1408(c)(3) and (d)(1), which indicated that future benefits could be distributed. Noting that neither party's briefs, nor its own research, had disclosed any case construing the USFSPA as preempting the power of a state court to treat a future military pension entitlement as a marital asset in a dissolution proceeding, the court concluded that federal law does not preempt the power of a state court to treat the future nondisability pension entitlement of a spouse currently on active duty as a marital asset in a dissolution proceeding.
The court next considered whether such a pension benefit could be distributed under Nebraska law. The court likewise declined to accept the husband's contention that because he had no guarantee of receiving a military pension in the future, having only served for 18 years at the time, he had no ownership interest under the Nebraska statutory provisions. Neb. Rev. Stat. 42-366(8). Relying upon prior Nebraska case law construing the code section, the court held that while military personnel do not make monetary investments in a pension plan they invest time and personal sacrifice in order to qualify for a nondisability military pension plan. Spouses of such personnel share in this investment to the extent that the duration of the marriage coincides with the period of military service. As one court has noted, the future retirement pay of a career military service member who is not yet eligible to retire is a contractual right, subject to a contingency, and is a form of property. Pointing out that Neb. Rev. Stat. 42 366(8) also specifically requires the inclusion of retirement benefits "whether vested or not vested" in the marital estate, the court concluded that the district court did not err in awarding the wife herein a share of the husband's future nondisability military pension entitlement, payable only if and when such benefits should become payable to the husband.
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