The Military Divorce Guide was created by Carl O. Graham, a Colorado Springs divorce lawyer and former Army JAG officer who focuses exclusively on Colorado divorce, military divorce issues, child support, grandparent rights & visitation, common law marriage, child custody, legal separation, annulment, etc. To learn more about our Colorado Springs family law firm, visit our web site at: www.carlgraham.com.
Under the Survivor Benefit Plan (SBP), the military pays monthly benefits to the survivors of deceased retirees. To protect a surviving former spouse's share of military retirement after a Colorado divorce or legal separation, family relations courts can require a servicemember to elect former spouse SBP coverage. One effect of this is that coverage for a subsequent spouse or the children of a subsequent spouse is precluded if the servicemember remarries.
Former Spouse & Child Coverage
When child coverage is added to former spouse coverage, only children resulting from the marriage to that former spouse are covered, including natural born, adopted, or stepchildren. If the former spouse is alive and eligible, he/she receives the annuity instead of the children.
A child is entitled to receive the annuity as long as the child is unmarried, and either:
1. Under 18,
2. Under 22 and a full-time student in an accredited school, or
3. Disabled and incapable of self-support, as long as the disability occurred while under 18 or a full-time student under 22.
Eligible children divide the annuity in equal shares, and in the event of a child's death or loss of eligibility, the remaining eligible children divide the benefit equally.
The premium for the former spouse portion of the coverage is calculated as normal. The additional premium for the children's portion, a fairly nominal amount (as low as a few dollars a month), is calculated based upon the ages of the servicemember, the former spouse, and the youngest child.
Amount of SBP Coverage
In the event of the servicemember's death, the former spouse receives a monthly payment of 55% of the designated base amount until age 62, and 35% thereafter. The designated base amount is an amount not greater than the servicemember's full gross retired pay, and not less than $300 per month. Spousal consent or a court order is required to elect less than maximum coverage. 10 U.S. Code §1448(a)(3)(A).
SBP Premium Costs (Spouse/Former Spouse)
Unlike active duty personnel who receive the coverage for free, retired servicemembers must pay a monthly premium for SBP coverage. The federal government subsidizes part of the program costs (theoretically 40%), and the remaining premium is 6.5% of the designated base amount.
Servicemembers who are retiring for disability, or who entered active duty before 2/28/1990, have another option for the SBP premium. They can utilize the lesser of the 6.5% formula, or 2.5% of the first $616 ("threshold amount" as of January 1, 2005, which increases annually with active duty pay), plus 10% of the remainder of the designated base amount.
It might sound complicated, but the premium currently works out cheaper under the second method if the elected base amount is $1,320 or less.
Example: assuming a designated base amount of $1600, the premium cost under each method would be:
1. $104 ($1600 x 0.065)
2. $113.80 ($616 x .025, or $15.40, plus the remainder of $984 x 0.10, or $98.40)
To simplify things, you can also use this SBP Cost/Annuity Estimate Form, which also calculates the premiums for Spouse & Child coverage, and Child coverage.
Premium Payment Responsibility
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 courts are permitted to allocate the SBP premiums as they deem appropriate. In Colorado, SBP is not a property interest, but an equitable mechanism to preserve the former spouse's right to military retirement. 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 the event 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 former spouse to pay the full SBP premium. 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 $100 per month, the former spouse owes the servicemember the $70 per month paid by the servicemember for the premium.
Election by Servicemember
To cover a former spouse, the parties must fill out a DD Form 2656-1, Survivor Benefit Plan (SBP) Election Statement for Former Spouse Coverage at the time of retirement, and indicate whether the election is being made pursuant to a court order, a written agreement, or voluntarily. This distinction is significant, as it affects the circumstances under which former spouse coverage can be changed.
A servicemember already retired at the time of dissolution must, within one year of the dissolution, submit a DD Form 2656-1 to convert the coverage from spouse to former spouse. A needless-sounding bit of bureaucracy, but an important one - unless this is done, the former spouse will not be covered.
Deemed Election by Former Spouse
A former spouse can receive SBP coverage if servicemember fails to make the election upon retirement, or fails to convert spouse coverage to former spouse coverage as long as it is within one year of the order or agreement which requires the servicemember to provide SBP coverage.
Apply in writing to DFAS, at the address below, and include (1) a certified copy of the court order or agreement obligating former spouse coverage, (2) the servicemember's name, SSN and status (active or retired), and (3) the former spouse's name, SSN, date of birth, and address.
If the election is not done within one year of the order, it could be irretrievably lost despite the divorce court's order. Therefore, the former spouse should do a deemed election for his/her protection any time the servicemember's retirement is more than one year from the court's order.
Suspension or Termination of SBP
Coverage for a former spouse is suspended if he/she remarries while under 55, during the period of the remarriage. The premiums are also suspended, effective the first day of the month after remarriage, as long as the servicemember provides DFAS with written notification and a copy of the former spouse's marriage certificate.
If the former spouse's remarriage terminates by death or divorce, the coverage and premiums resume the first day of the month after termination. The servicemember must provide DFAS with written notification and a copy of the divorce decree or death certificate terminating the former spouse's remarriage.
Remarriage by a former spouse over 55 does not affect coverage or premiums.
Only a former spouse's death terminates SBP coverage. Since federal law preempts state law, any decree which purports to terminate, rather than suspend, coverage upon a former spouse's remarriage is unenforceable.
Changing Former Spouse Coverage
DFAS can change former spouse coverage only under following circumstances:
1. If election was made pursuant to court order, provide DFAS with a certified copy of a subsequent court order relieving the servicemember of the obligation to cover the former spouse.
2. If the election was made by written agreement between the parties not adopted by a divorce court, provide DFAS with the former spouse's written acceptance of the change.
3. If the election was made voluntarily by the servicemember, and not as part of an agreement or dissolution, the servicemember can change it without the consent of the former spouse. However, DFAS will provide the former spouse with notice of the change.
4. Upon the death of the former spouse, provide DFAS with a copy of the former spouse's death certificate.
Contact DFAS
Written submissions pertaining to SBP, including the DD Form 2656-1, go to DFAS at:
DFAS
U. S. Military Retirement Pay
PO Box 7130
London, KY 40742-7130
FAX: 1-800-469-6559
This web site is an advertisement intended for informational purposes, and is not a substitute for individual legal advice from one of the many Colorado Springs law firms, Colorado Springs lawyers or Colorado Springs attorneys. Only a signed agreement with this Colorado Springs family law attorney can create a Colorado lawyer-client relationship. We assist clients in Colorado Springs / El Paso County courts, exclusively in Colorado family law (Colorado divorce, military divorce issues, child support law, grandparent visitation & rights, common law marriage, child custody law, legal separation law, annulment, alimony law, etc).
