Dividing the military pension in divorce – who gets to be the survivor plan beneficiary?

Husbands and wives in the military who divorce will be making decisions about what happens to the service member’s retirement pay. Under the Uniform Services Former Spouses’ Protection Act, military retirement pay is marital property that can be divided as an asset by state courts.

One aspect that shouldn’t be overlooked in any agreement is what will happen when the retired service member dies. The military retirement system offers a survivor benefits plan that will continue a percentage to the surviving spouse as a lifetime annuity. Coverage isn’t free – there are monthly premium deductions – but it could mean a more financially secure future for the surviving spouse.

So what happens when the couple divorces? Don’t make the assumption that doing nothing in planning for survivors’ benefits is OK. Only one spouse can be named as beneficiary. If the service member remarries, will annuity benefits go to the former spouse or the current spouse?

The Defense Finance and Accounting Service, which is part of the U.S. Department of Defense, follows regulations about former spouse coverage and who can be named as a beneficiary.

If the service member is already receiving retirement pay, survivor benefits coverage will automatically stop upon divorce. Want it to continue? The Defense Finance and Accounting Service will need to be notified of the divorce and the plan simply will change to “former spouse coverage.”

Once the former spouse is named as beneficiary, the designation is often irrevocable but there are special circumstances when changes are allowed. One instance can occur when the service member named the beneficiary without being compelled to do so by a court order or written agreement. That designation is considered to be “voluntary” and can be changed.

There’s a time limit for notifying the Defense Payment and Accounting Service that former spouse coverage is being elected. Sending in the proper paperwork must occur within one year of the divorce decree.

The service member can do this – but regulations also allow the former spouse to take the initiative and guarantee that the time frame is met by sending the notification and paperwork, too.

There is a lot to consider when divorcing because many details will have important implications for your future. Consulting a family law attorney who understands the special circumstances of military divorce is always recommended.

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