Federal Benefits and Financial Management to Consider in the Negotiation Process of a Military Divorce

Key Points

Just as in a civilian divorce, there are financial factors that must be considered when divorcing a servicemember. Years of service, years married matter for servicemembers and spouses; this is not a consideration for civilian divorces.
Housing allowances are afforded to servicemembers and this benefit may be lost to the non-military spouse once the divorce becomes final. Losing this benefit may affect the quality of living for the non-military spouse.
Financial aspects in a military divorce can be significantly different from a civilian divorce.

Divorcing before the service member has attained 20 years of creditable service for retired pay purposes can be detrimental to the non-military spouse. It is only after leaving the Service that many people find out how good life really was, and how they took for granted many benefits that civilians never enjoy. For couples who are close to the 20-year point, we recommend that you remain married until you attain the 20 years overlap, so that the spouse can qualify for benefits under the 20/20/20 rule, which is: 20 years of marriage, during which the service member served 20 creditable years, and for which there was an overlap of 20 years between the two.

As benefits are lost, both the service member and spouse may find themselves facing some serious financial difficulties. Knowing what some of these are will help when planning pre- and post-divorce strategies for your economic well being.

Such planning is akin to the planning that should take place when any couple is happily married. For example, the service member may receive special allowances and pays (e.g., because of location, job duties, or specific activities). These special monies do not last forever, and running your family as if they did will undoubtedly end in economic disaster.

When a certain benefit will not be available to either the service member or the non-military spouse after the divorce (and in some cases, before the divorce but after separation), then the parties must determine whether it can be replaced and how it will be replaced--which most likely means, what will it cost to replace that benefit. Such issues need to be discussed with your legal counsel.

What are some benefits that may not be there when the divorce is final?

Housing allowance-
Losing this benefit at the "with dependents rate" can greatly reduce the quality of living for both parties. This allowance is not taxable, and often exceeds $1000/month.
Subsistence allowance-
This is another non-taxed benefit, the loss of which will reduce the non-military spouse’s monthly food allowance by over $100.
Relocation allowance-
If the non-military spouse plans to relocate after the divorce, that move could cost the couple thousands of dollars. With some careful planning, such expenses can be reduced.
Child care-
Couples who use the child care services on a military installation are actually subsidized by the rest of us taxpayers. These savings will be lost if the non-military spouse retains physical custody of minor children and relocates to a non-military area.
Medical and dental benefits-
Perhaps the largest cost for most people is health insurance, and losing such benefits will most certainly be devastating for the non-military spouse who is not employed or who cannot obtain health insurance through an employer. Negotiating for the loss of such an important benefit as medical care requires the skill of an experienced attorney and, perhaps, the advice of insurance professionals to analyze our options.
Educational benefits-
Service members attending college using GI bill benefits receive a higher amount of assistance if they are married. There will most likely be a drop in the amount of assistance once the number of dependents changes.
Special pays-
Active duty service members may be eligible for and currently receiving any number of special pays by virtue of job duties, such as whether they are hazardous, or in a combat zone. When the member is away from home duty station, the family receives additional monies, The change in marital status may change some of the receipt of such special pays.

These are just a few of the many benefits and aspects of financial management military couples must consider, Other issues, as well as the ones mentioned, are discussed in depth in the book, Divorce and the Military II, Indeed, the list can serve as a basis for discovery by your attorney.

In summary, both parties, and particularly the non-military spouse, need to know exactly what their financial picture is--the basic pay, additional pays, tax savings, and whether such monies and benefits will remain or disappear after the divorce. The bottom line reality is this: It costs money to get a divorce and it costs money to maintain two separate households. Divorcing military couples must accept that some things are unlikely ever to be as good as they were while married. Failing to account for your entire financial and economic picture will result in challenges you may never overcome.

Information Provided by: Marsha L. Thole

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