DFAS deducts the SBP premiums directly from the retired pay, prior to distribution. This has two consequences: (1) the premium is paid with pretax money, which reduces the SBP costs, and (2) absent a reimbursement mechanism, the parties are effectively splitting the SBP costs in accordance with the percentage of retirement each receives.

Despite the DFAS distribution, state divorce courts are permitted to allocate the SBP premiums as they deem appropriate. In Colorado, SBP is not a property interest, but an equitable means of preserving the former spouse's right to military retirement. In re: the Marriage of Payne, 897 P.2d 888 (Colo. App. 1995). That's legalese for saying that a Colorado divorce court has the authority to (and almost always does) order the servicemember to pay some or all of the SBP costs, even though only the former spouse benefits from the SBP.

In El Paso County, Colorado, the family law judges typically order the spouses to divide the SBP premium costs equally.  The theory is that if the former spouse dies, the military retiree gains by receiving the entire military retirement, including the former spouse's share, at no cost to the retiree, so it is not fair to make the surviving former spouse alone pay for a benefit which is not even as generous.

If a court orders one spouse to pay all, or a disproportionate share, of the SBP premium, when DFAS pays the former spouse directly the decree should contain a reimbursement mechanism to compensate the spouse who was not ordered to pay a proportional share of the premium.

Example: After a 12-year marriage, a court divides a military retirement with 70% to the servicemember and 30% to the former spouse, but orders the spouses to share the SBP premium costs equally.  The servicemember is effectively paying 70% of the premium because it is deducted from the retirement prior to receiving his/her share. If one assumes the total premium is $200 per month, the servicemember's share of the retirement is reduced by $140, versus the $100 it should be if the costs were spit equally.  So the former spouse owes the servicemember the excess $40 per month paid by the servicemember.