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Just before Christmas, President Obama signed the National Defense Authorization Act for 2017 into law. What does this have to do with family law? Well, not a lot – except for one thing. One of the Act’s provisions completely changes the methodology for dividing a military pension.
Generally speaking, pension benefits, whether vested or unvested, are considered to be marital property and subject to equitable division in a dissolution action. While the division can vary depending on the overall property distribution award, a spouse can expect to receive one-half of the marital portion of the pension or retirement benefit. It is often necessary to consult financial experts to value the pension or ascertain the exact amount the participant spouse can expect to receive upon retirement. With military pensions, the non-participant spouse has traditionally been awarded one-half of the marital portion of the retiree’s final retired pay. Under the new provision, which is rapidly becoming known as the “frozen benefit rule,” the divisible portion of the pension of a servicemember who is still currently serving will be limited to the pay the servicemember would receive if he or she retired on the date the division order is entered rather than the servicemember’s actual retirement pay. In other words, the retirement benefit is cut off as of the date the judgment of dissolution is entered. While specific regulations have yet to be drafted, the potential ramifications of the “frozen benefit” rule will likely affect all pending and future dissolution actions involving any active duty servicemembers.
For more information regarding the special concerns inherent in dissolution actions involving servicemembers, contact the Nally Law Group today.