2017 NDAA USFSPA Litmus Test Case Studies

A Guide to Clarity for Attorneys

© 2016 Brian Mork, Ph.D. [Rev 1.0]

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Introduction


If a military retirement divorce asset could be disbursed at the time of divorce, it would be.  Only because the Federal law prevents immediate disbursement or valuation of the final retirement value, do military divorces become problematic.  Even though you cannot value the total retirement at time of divorce you CAN always value the marital asset portion, using methods that were first published 6 years ago at increa.com.  Now, in 2016, the NDAA 2017 amendment captures these methods.  The intent of the 2017 NDAA amendment to USFSPA can be concisely captured with a litmus test:

“The marital asset must be calculated so that any action taken by either spouse after the marriage does not change the asset expressed in constant year dollars.”

Methods advocated here are:
As the NDAA bill moves toward law, there are an increasing number of attorneys taking notice, with reports and commentary showing up.  Many are misleading.  What follows is a chronological listing of articles or publications I've become aware of, along with analysis.  Remember, as far back as 2001, a report funded by the 1998 NDAA from the Department of Defense to the Armed Services Committees recommended this change.


19 June 2016 “Military Update: House-Senate Conferees to Negotiate Key Benefit” by Tom Philpott


Mr. Philpott accurately writes that the previous situation “creates a windfall for ex-spouses that should be eliminated. … The former spouse law (Sec. 1408, 10 U.S.C.) will be changed so retired pay to be divided is based on a member's rank and years of service at time of divorce, plus cumulative military pay raises up through retirement.”  Yes, see a slideshow tutorial for attorneys and clints.


26 August 2016 “Military Pension Division and the Radical Rewrite," by Mark Sullivan, signed by Mary Vidas ABA Family Law Section Chair


What a misleading title.  There is nothing radical about the NDAA 2017 proposal.  It can be implemented simply with a second coverture fraction.  This paper incorrectly identifies the NDAA method as a DFAS fixed method and therefore predicts all sorts of false foreboding implications.  A point-by-point rebuttal to the ABA NDAA white paper is available.  I’ve been in correspondence with the ABA Family Law Chair, but so far she has been unwilling to publish a correction or a rebuttal.



21 December 2016 “Military Retirement Division To Exclude Post-Divorce Promotions?” by Carl O. Graham


There are several concerns with this analysis.

The ABA paper referenced at the bottom of this blog entry is the biased 26 August 2016 paper referenced above.  Misleading another attorney is a prime example of why the ABA should not continue publishing a faulty document.

The first example (officer) has the numbers correct.  The marital asset portion is $3842.50, whereas the faulty time-based coverture incorrectly calculates the marital asset as $5662, giving the ex-spouse a 47% windfall, taken from a second spouse or the military member themselves.  He  does a Hypothetical Method-like calculation, but it’s much easier to get to the same answer with Area Diagrams shown on a spreadsheet.

The second example (enlisted) ends with an exasperated exclamation point showing that the spouse payment is only 46% of the prior (incorrect) method.  Such an outcome is correct since the first spouse only spent 5 years of a 28 year career and contributed nothing to FOUR competitively earned promotions during years 6 to 28!  Why in the world would anybody take 23 years of longevity and 4 promotions from a second spouse who rightfully deserves it and give it to the first spouse?!  With the old methods, the marital asset was incorrectly identified as $846 whereas the NDAA methods give a correct marital asset of $400.35.  The error was a 111% windfall taken from a second spouse and given to a first spouse simply because the wrong division method was never questioned!  Retirement division is not welfare or spousal support.  It is dividing an asset and can be done with mathematical precision.  An Area Diagram spreadsheet shows the enlisted mathematical details.

Interestingly, Mr. Graham failed to show an example where the ex-spouse benefits from the new law.  This follows the biased precedence of every single author and commentator I have found.  I’ve made my analysis clearly available to the ABA and each of the others, yet nobody acknowledges this fact.  Any example where the military member does duty/promotions before marriage would show this.  Why does nobody acknowledge this?  It’s disingenuous to misrepresent the new law as biased in only one direction.  Not raising this issue while representing an ex-spouse is cause for malpractice.

Lastly, Mr. Graham points out that the new military retirement calculations respecting the marital asset at divorce may now be different than other civilian plans.  That is a red herring.  There is no way we should continue to incorrectly value marital assets in order to match other incorrect calculations.  Military retirements are unique in that longevity/rank/duty credit are NOT commingled in the mathematics and there is no reason to intentionally do so.  Perhaps other civilian retirement plan calculations should be improved – certainly any court is free to follow the good guidance of the NDAA 2017 law for civilian retirements also.  In any case, the litmus test stands true:  marriage assets should not change up or down (in constant year dollars) based on anything done by either party after divorce.

Overall, Mr. Graham’s post is numerically accurate but misleading and biased.  For example, why ask how to “make up the loss” rather than celebrate that marital division will stop “giving windfall” to the first spouse by stealing from the second spouse? 
Why say a first spouse “lost $909” when, in fact, it rightfully belongs to a second spouse?  Why say the first spouse is “losing the benefit” rather than “military member and future spouses now retain what they earn together”? 


Other Commentaries


... to follow as I find them and have time to analyze them.  Please send any you find.

Conclusion

  1. The Litmus Test is a clear way to determine if a division formula is equitable for both parties.
  2. The NDAA law is a DFAS percentage method that is not a DFAS fixed dollar method.
  3. The NDAA law is simple to implement with a single additional fraction and has none of the "doom and gloom" implications claimed by some.
 

Additional Engagement Opportunities


https://www.facebook.com/military.divorce.retirement.division
Many web pages and documents – publicly available without subscription
Lunch-time seminars – telephone consult – confidential case analysis
Understanding yields good mediation and avoids litigation
Pro-bono education with attorneys or clients
Reserve Military specialty!
email me
 

References

  1. DoD Report to Committee on Armed Services of the US Senate and House of Representatives, 2001. (Defense.gov, increa copy) (84 pgs, 279kb pdf)
  2. December 2016 “Military Retirement Division To Exclude Post-Divorce Promotions?” by Carl O. Graham (local copy)

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The shell of this document was created using AbiWord under the Linux Gnome desktop. Content was edited using Kompozer. © 2016 Brian Mork.