Military Divorce & The Split of Retirement Benefits

Military personnel in our community, including Marine Corps Air Station Cherry Point, should consider how divorce could affect their taxes and retirement rules. If you are receiving, or will one day receive VA benefits, it may reduce your retirement pay. In the event of a divorce, your retirement could be split consistent with state law, leading to a sticky situation down the road.


Veterans Benefits


This kind of military retirement division case was first seen in Alabama in 1998, when an Alabama couple filed for divorce. The Court odered that one half of his military retirement pay go to his ex, but after he started receiving VA benefits, his retirement pay was reduced. The ex-wife’s half of the retirement benefits was subsequently reduced.


The Court ruled that the ex-wife had a vested interest in one-half of the taxpayer’s military retirement pay, and that as a property settlement, it could not be reduced. The ex-husband was ordered to pay his ex-wife the difference between the reduced military retirement she had received and the amount she would have received without the VA benefit reduction.


Further legal proceedings, however, ruled in favor of the ex-husband when the Alabama Court of Civil Appeals found that the substantive nature of the award given in a divorce decree took precedence over the label applied in the decree.


If you’re pursuing a legal divorce and are planning to receive military benefits that may be split between you and your ex-spouse, consult your divorce attorney at Schulz Stephenson Law of Carteret County. A law professional will help you create a plan for your divorce agreement that explicitly addresses what happens if your retirement is reduced due to veteran benefits.


Schulz Stephenson Law represents clients regarding Family Law, Domestic, and Divorce matters in Carteret County, NC including Beaufort, Morehead City, Atlantic Beach, Cape Carteret, and Emerald Isle as well as New Bern and other areas in Craven County, Pamlico County and surrounding areas. Contact us today for a consultation so we can discuss the next steps in your family law matter.

Be Sociable, Share!