Source: http://www.increa.com/articles/division-military-law-and-statute/index.html
Timestamp: 2019-04-18 21:19:54+00:00

Document:
This page is an accumulation of Statutes and Case Law relevant to dividing military retired pay in divorce cases. For related discussion, see different pages about promotions after divorce, general division of military retirement pay, or specifically division of Reserve military retirement pay.
Military retirements are a significant benefit, earned by both women and men. As of March 2011, there were more than twice as many military women divorcing than men. Among enlisted, the military women divorce rate is about 3x that of men. The overall military divorce rate in 2011 is 64% higher than it was in 2001. Military divorce is a significant social issue affecting both sexes. Dollar value of a military retirement in 2012 dollars range from $945,000 for an E-7 to $2,800,000 for an O-8.
This is a huge social issue that is not men vs. women. See the video of Lt Col Patricia Larrabee question SecDef Rumsfeld for an example of a woman being taken advantage of. This issue is about military members serving a nation vs. a legal system that struggles to understand a unique retirement system. The goal of my web pages is to spread understanding and equity. When Lt Col Larrabee received a reply letter to her query, the answer was essentially, "The Military has done all it can to describe and advocate equity. Now it is up to Congress to make it law." Write your favorite legislator. Educate your favorite attorney. Things have gotten much better after NDAA 2017 if you ignore the misleading blather about "fixed benefits" promoted by Mark Sullivan.
Here is a table of some notes, to be expanded and clarified when I have time. Let me know if there is a case you think should be included.
Disability may not be divided. Prohibits circumvention by awarding an “offsetting award”. If member waives retirement to get disability, then waived retirement portion is NOT divisible.
“Non-military spouse is permitted to share in increases in retirement due to post-separation efforts which were built on the foundation of marital effort”. The court was talking about passive financial interest amounts on the value of a retirement, which was dated at the time of divorce rather than the time of receiving the award. Be careful to not cite this regarding enhancements due to active effort such as promotions or additional duty, which are easily, numerically, separable.
See below for complete write-up.
Court interest to preserve "family financial security" allows division of pre-marital assets. Pivotal logic: Law says, "divide what was accrued during marriage" but it does not say, "don't divide what was not accrued during marriage."
Builds on Kilbride - can divide only assets accrued during marriage.
Builds on Kurz - can divide only asets accrued during marriage.
Resolved opposing precidence (Rogner v. Kilbride) by saying "Rogner was better-reasoned" than the "nothing divisible outside of marriage" stance of Kilbride.
Non-military Judgement of Divorce that said former spouse, "shall be entitled to .. . one-half of Plaintiff's pension payable upon his retirement. Appealed 7.5 years later. However, this is different than an order requiring “50% of pension earned during the marriage”. Joined Rogner noting"divide what was accrued during marriage" does not say, "don't divide what was not accrued during marriage."
"family security" or "need" of the former spouse allows invasion of pre-marital assets for division.
Mostly, only marital assets are divisible. Pre-marital assets can be divided in either of 2 cases: 1) former spouse demonstrates need, or 2) former spouse contributed to accumulation, improvement, or accumulation."
DFAS “hypothetical method” (prorate with TWO coverture fractions of time, and rank promotions) implicit. Only debate in this case was about fixed-dollar (old chart with no COLA), or fixed-rank (which gives COLA because military officers get raises each year). Indiana Overholtzer case argues that COLA was NOT part of the divided asset, so military member retains it all (not divided).
Retirement treated as income, not as divisible asset. Appeal court decides against “he keeps funds he contributed to” and “she keeps funds she contributed to”.
ONLY because of the intended 60:40 split. A non-50:50 bias is an argument why most cases should NOT divide post-divorce promotions.
Quote: “Any additional retirement/retainer benefit which accrues to [retiree] as a result of his continued active service with the United States Air Force, such as increases in military rank, increased time in service, and annual adjustments authorized for active duty personnel, shall be the sole and separate property of [retiree] and shall not be subject to any interest of [spouse] and shall not be included in the calculation.” They even give all COLA to only the military member.
Awarding what wasn't part of original property at time of divorce is in error.
S.W.3d (Ky. App. 2009). Ex-spouse was "accidentally" awarded 46% of ALL retirement rather than 46% of marital asset portion of retirement. While fixing this problem, COA recommended Hypothetical Method to accommodate that promotions had been earned after divorce.
See below for extensive writeup. You can't divide something that is neither marital asset or separate asset because it doesn't exist. A.k.a. can divide some pre-marital accrual (per Reeves and Bachran), but cannot divide post-divorce accrual that hasn't been earned yet, even if it's been received.
Heavily cited. “Valuation at the time of divorce” says promotion benefits go only to retiree.
Secondarily, the opinion got into what can be considered a marital asset.
Introducing this section of the opinion, the court stated an examination of 1408(a)(4), "..convinces us that it was not intended to limit the states' power to characterize only "disposable" military retired pay as a marital asset."
At the end of the discussion, they wrote, "We hold that the Federal Uniformed Services Former Spouses' Protection Act, 10 U.S.C. § 1408, does not limit the amount of military retirement pay which may be characterized and apportioned as a community asset under our marital property system. We conclude that the USFSPA provisions are intended only as a limit on the amount of disposable retired pay...paid out by the service secretaries.."
The entire section is clarifying "disposable" pay. Notice the (a)(4) reference is about defining disposable pay and (a)(4) is the topic when they say "This section of FUSFSPA is not concerned with limiting the amount of retired pay available for division by state courts, but is instead designed to limit the amount of retired pay which can be garnished and paid out by the service secretaries..."
Notice no statement of the court denies the percentage limits in (e)(1) of the of award type defined in (c) (asset division). The whole court discussion is about what can be considered a marital asset, not what award percentage is made after delineating that asset. The only recognition of an "obligation further" than 50% is in reference to (e)(6), which we all agree is possible when talking about more than asset division. And in this same sentence, the Grier court recognizes that any NON-(e)(6) award (aka asset award of para (e)(1) and (c)), does have a "maximum amount of 50%".
Yes, the court lays out the limits of what can be apportioned as a marital asset. And when that apportionment is decided - ignoring (e)(6) awards - it must be 50% or less taken as an asset. In this case, they decide on 37.45% (less than 50%).
All future divorce orders must not divide post-divorce longevity and promotion enhancements. DFAS has implemented this by saying all orders must be the Hypothetical Method.
The cases below are in reverse chronological order. Remember the USFSPA has been in effect since 1982.
"If a state court determines that the disposable retired or retainer pay of a military member is marital property, the court shall award an amount consistent with the rank, pay grade, and time of service of the member at the time of separation."
In other words, retirement enhancements after a divorce, due increased rank, pay grade, or time of service are not marital assets and are not to be divided. This seems so simple of a concept, yet over and over again, military members are forced to divide enhancements earned after divorce. A second spouse, if there is one, is deprived of all their marital contribution because the first spouse takes it. Reviewing court opinions, I find the causal factor is that lawyers and courts simply do understand the military system. I want to spread understanding, which will save court time and expense, and reduce the vitriolic attitudes surrounding this isssue.
A January 2011 New Jersey Appellate Court ruling confirms the inability of time-only or point-only coverture fractions to equitably divide a military retirement asset. A blog entry from the lead defense attorney in the NJ case questions whether the single time coverture fraction is viable any more for military situations. Other contract firms that generate military division orders for attorneys have picked up on the same court case and discuss it on their web pages, claiming everything is too confusing now, however, a rebuttal numerically shows how the author is confused and highlights the equitable simplicity of the Dual Coverture Value method.
The Dual Coverture method was considered and sanctioned by a New Jersey Appellate Court in January 2011, and advocated by the DoD report to Congress, and later Oklahoma law. The non-military spouse payment is the same as provided by the DFAS-published Hypothetical Method in their “Instructions to Attorneys” document, while being much simpler to calculate, except differences of how "time value of money" is calculated (national COLA vs. pay chart raises). If there were military duty before marriage, Dual Coverture Value methods would have to be used because no other method accommodates this case.
Note the New Jersey Court made a huge factual error, spending 2 pages of their opinion incorrectly claiming dual coverture methods deprive COLA to the non-military member. With the above formula paragraphs, there is no requirement to mention COLA for either person in order to get COLA for both. The two above paragraphs create fractions, and because these fractions will be applied to charted base pay values that go up each year, COLA automatically happens for both people as the base retirement pay goes up each year.
The premise asserted in the italicized part is factually incorrect. The third sentence is also factually incorrect. The court was wrong to assess this as a concern of present-value and future-value dollars. The two pages following the above quote in their opinion become irrelevant discussion because they are based on a faulty factual assertion. Once the factual mistake was made, judicial arguments took them down the incorrect path. They claim this method does "...valuing in present-day dollars and then delaying distribution to a date in the future." This is false, in contradiction to many Federal government accountants that looked at dual coverture methods before publishing the Dept Defense report to Congress and Senate Armed Services Committees. The Appellate Court misunderstood, and based on factual inaccuracy, made a faulty judicial decision. The method proposed by the Defendant does give time-value of money to the non-military spouse for all the intervening years between valuing and distribution, and it does give calculable precision. Using Dual Coverture, both parties will get increases each year when the military pay charts reflect increases in military pay.
The New Jersey court opinion is analogous to the Appellate Court saying, "1+1=3, and because the answer is an odd number, we reject the defendant's claim" (fact is wrong so conclusion is wrong). Sadly, the Appellate Court is where Circuit Court errors are suppose to be corrected (at great cost to the petitioner I might add). A state Supreme Court is more worried about the law, per se, not the application of law to any individual case. At present time, it is not clear to me that the court system has any remedy process to fix individual Appellate court factual mistakes that material damage. If there is honor among the judges of the NJ Appellate panel, they should vacate their own decision and issue a new opinion.
Both the Hypothetical Method and the Dual Coverture Method both yield only a fraction, which is then applied to continually increasing present-day military pay charts, so both parties get COLA. If you have trouble understand that both parties get time-value of money or have been confused by attorneys (or the NJ court opinion) claiming otherwise, I encourage you to read my memorandum titled "Attorney Instructions - Division of Active Duty and Reserve Military Retirement" and "Division of Military Retirement Promotion Enhancements Earned After Divorce". The first document gives mathematical proofs and quantitative examples down to the dollar. BOTH methods give increases for time value of money. If anybody tells you otherwise, ask them for mathematical proofs and quantitative examples, as I have done.
The NJ court recognized that to equitably divide a military retirement based on pay tables (time and rank lookup), the formula requires a dual coverture fraction of time and rank, but they stumbled when trying to implement the idea.
"When a claim is made to exclude post-dissolution sums, the employee-spouse seeking exclusion bears the burden of proving with calculable precision what portion of the increase in the pension's value is immune from equitable distribution."
It's not clear why the burden of proof would exist to prove that post-marital earnings are not part of a marriage. Shouldn't the burden of proof be on the person trying to take them even though the marriage was dissolved? For example, earnings deposited into a 401(k) after marriage, for example, are presumed to belong to only the earner.
Fortunately, such proof is straitforward because the structure and precision of military retirement formulas and pay tables leave little ambiguity. Suitable arguments are developed in my web page about promotion enhancements. The burden of calculable precision is easy. Be sure to reference the DoD Report to Congress and the Defense Finance and Accounting Service (DFAS) publications because they are authoritative non-biased sources that have already considered dozens of competing interests in America. Both the DFAS and DoD documents are available below. The DoD Report to Congress distills input from a dozen different military and legal National organizations concerned about these issues (see references at bottom). The publications document calculable precision (even provide example calculations) and clearly state that their formula accomplishes the desired goal.
Although the military member in the NJ case proposed a dual fraction method (and specific numbers to put into the fractions) that give results identical to the DFAS recommended formula, the NJ court rejected the proposed specific implementation, claiming incorrectly that it did not give the ex-spouse passive "earnings" or present-value to future-value (COLA) adjustments from the date of divorce up to retirement.
"We apply retired pay COLAs to the hypothetical retired pay amount up to the member’s actual retirement date to find a “present value” of the hypothetical retired pay as of the member’s actual retirement date."
This adjustment does not result in the former spouse benefiting from the member’s additional service time or promotions after the hypothetical retirement date. It simply provides the former spouse with the amount he or she would have received had the member actually become eligible to receive retired pay on the hypothetical retirement date.
Notice the last two sentences mitigate the concern that it's biased because it sounds too generous to the non-military member! There is no way to read this quote and claim, as the NJ Appellate Court did, that present value or time-value of money (in the form of COLA) was being withheld from the non-military spouse.
"Congress should amend the USFSPA [laws] to provide that all awards of military retired pay be based on the member’s rank and years of service at the time of divorce. This provision should be exclusively prospective. For example, if a future divorce occurs when the member is an O-4 (i.e., Major/Lieutenant Commander) with 14 years of creditable service, the award of military retired pay must be based on that rank and time served. That the member retires as an O-6 (i.e, Colonel/Captain) with 24 years of service is irrelevant to the award of military retired pay as property.
"The pay increase attributable to the promotions and additional time served should be viewed as the member’s separate property. [emphasis mine] However, as a matter of equity, the former spouse should benefit from increases in the pay table applicable to the O-4 grade. Thus, as the pay for an O-4 with 14 years of service is increased due to increases in the pay table, so too is the value of the allocation to the former spouse. The objective in this regard should be to provide the former spouse, on a present value basis, with approximately the same amount of retired pay that he or she would have actually received had payments begun on divorce. DFAS should include a formula in its recommendations that could be used by parties who divorce while the member is still on active duty.
I would again emphasize that the only way to do what is written in the quote above with a formula in a court order is the Hypothetical Method or a Dual Coverture method, and the Dual Coverture Method is much simpler and better for both parties. This Federally authoritative passage directly opposes the NJ Appellate Court claim of fact, with a specific example almost identical to the NJ case. It must be that the Appellate Court judicial panel didn't read this document or were horrendously biased against the military member.
According to the last sentence recommendation quoted above from the Congressional report, DFAS did include a formula, and this formula gives results identical to the dual fraction method requested by the defendant in the New Jersey Appellate Court case. The New Jersey Appellate Court erred by making factual assertions outside their area of expertise, and in contradiction to facts asserted by the Department of Defense, vetted through the Senate Armed Services Committee, House Committee on Armed Services, and Defense Finance and Accounting Services.
Bonuses earned after the divorce may not be divided. This would apply to both military Promotion Enhancements and military Reserve Early retirement Payments before age 60 because both are retention methods used by the military. Together, I'll refer to these enhancements as "PEEP" (Promotion Enhancements and Early Payments). In Michigan, separate assets cannot be invaded unless the receiving party demonstrates the property otherwise awarded is insufficient for suitable support and maintenance (MCL 552.23), or the prior spouse provides assistance in the acquisition or growth of the asset (MCL 552.401). If the prior spouse has extra money to spend on benevolence, gifts, and trips, then need is not demonstrated. While there is no assistance in acquistion or growth of either benefit, there may be assistance in acquiring some prior existing retirement point value. However, if there is zero assistance in active acquisition of un-comingled additional benefit, then none of the enhancement is a marital asset.
It's good to specifically rebut two arguments often made againt the military member: 1) note both types of enhacement are not passive growth of value like earning interest on monies, and 2) note simply because the Federally mandated formulas are calcuated from, or "based on" the marital portion of point values, this is not the same as contributing to the separate and increased value thus calculated. Marital retirement points are used to calculate enhanced benefit but are not the earned value. The enhanced benefit is above and beyond and separate and not comingled and does not devalue the divisionable portion at all.
This decision affirms that such pension enhancements do ~not~ meet the threshold of MCL 552.18(1) and MSA 25.98(1). In other words, the additional value is ~not~ "Any right in and to vested pension, annuity, or retirement benefit, or accumulated contribution in any pension, annuity, or retirement system, payable to or on behalf of a paty on account of service credit accrued by the party during the marriage.."
The decision also clearly relegates the "two exceptions" of Reeves/ Booth/ Rogner/ Bachran to divide accrual from before the marriage, but the exceptions do not apply to post-divorce accruals.
Here, the retention bonus was not earned during the marriage; thus, no portion of the retention bonus was marital property. Plaintiff had not yet earned the $ 180,000 retention bonus at the time of the parties' divorce. It is undisputed that plaintiff was required to work until May 31, 2009 in order to receive the [***7] $ 180,000 bonus. Although two installation payments were made during the marriage, plaintiff had not earned that money when it was disbursed because he had not satisfied the condition subsequent (i.e., remain employed until May 31, 2009) required by the agreement between him and his employer. If plaintiff had not remained employed by Ford until May 31, 2009, plaintiff would have been required to repay the installments he had previously received. Consequently, plaintiff did not earn the retention bonus until May 31, 2009, which occurred after the judgment of divorce was entered even though part of it had been advanced to him. Unlike in Byington where the compensation package was earned before the entry of the judgment of divorce, no portion of plaintiff's retention bonus was earned during the marriage. The trial court erred when it determined that any portion of the retention bonus was marital property.
[*584] Furthermore, the trial court erred when it concluded that the third payment was separate property subject to invasion. A party's separate estate is the property the party generally takes away from the marriage separate from the marital assets, Reeves, supra at 494. However, [**372] plaintiff [***8] did not take his retention bonus away from the marriage because he had yet to earn it. Therefore, the third installment of the retention bonus should not have been considered as separate property, and, as a result, was not subject to division by the trial court at all. We reverse the trial court's award of any portion of the retention bonus to defendant.
Here, military promotion enhancement and early payments (PEEP) retention bonuses were not earned during the marriage; thus, no portion of the PEEP was marital property. Member had not yet earned the PEEP at the time of the parties’ divorce. It is undisputed that the plaintiff was required to work for 3 years past attaining new rank and for duty past January 28th, 2008 in order to receive PEEP. No payments were made during the marriage and military member had not earned the money because the necessary work earning PEEP was not satisfied until years later. If military member had not continued duty with the Air Force, military member would not have received any PEEP. Plaintiff did not earn PEEP until years after the divorce was finalized. Unlike in Byington where the compensation package was earned before entry of the judgement of divorce, no portion of the military member’s PEEP was earned during the marriage, and the divisible retirement value (amounts and dates of payment) that were earned during the marriage are in no way reduced or burdened by using them to calculate the separate property value. The trial court erred when it determined that any portion of the PEEP was marital property.
Furthermore, the trial court erred when it conclude that PEEP was separate property subject to invasion. A party’s separate estate is the property the party generally takes away from the marriage separate from the marital assets. However, military member did not take his PEEP retention bonus away from the marriage because he had yet to earn it. Therefore, PEEP retention bonus should not have been considered as separate property, and, as a result, was not subject to division by the trial court at all. We reverse the trial court's award of any portion of the retention bonus to ex-spouse.
Whether or not a future, unearned bonus can be divided in a divorce judgment is an issue of first impression for this Court. [bold added] Any future bonuses paid to plaintiff in this case will not have been earned during the marriage, and should not have been considered a part of the marital estate.
Like the retention bonus previously discussed, future, speculative bonuses do not fit into either the category of marital assets, or separate assets, because they do not yet exist. These bonuses were not earned during the marriage and are based solely on the potential occurrence of future events unrelated to the marriage. Thus, the trial court clearly erred when it granted interest in any future bonuses earned over the course of a prospective career. The trial court erred in granting division of any bonuses that may be earned in the future from an employer.
In November 2015, Joseph Cunningham, JD, CPA wrote a “tax trends and developments” article in the Michigan Family Law Journal about Skelly being a bad decision by the COA. He claims it’s at odds with MCL 552.18. Cunningham’s claim is that contingent, or unvested rights SHOULD be divided and he creates a theoretical case about unvested stock options to raise concern among his readers. Notice, in order to accomplish this, he relies on the “..but for the prior married portion of career,” (Observation #2) which is why it’s so important to read the sections I've written against this post hoc ergo propter hoc logic, designed to take everything from a military member. Military retirements are quantitative and specific and do not commingle, so the "based on" logic is faulty. See my extensive writing elsewhere.
MCL 552.18, in order to divide a pension, requires the post-divorce benefit happen, “…on account of service credit accrued by the party during marriage,” and only then, "..when just and equitable." As an aside, notice 1997 Reeves COA and others expanded this to mean they are authorized to divide benefit outside of marriage because it doesn’t say they can’t. However, that logic belies the entire reason 552.18 was created – if you don’t need an MCL authorizing division, then why was 552.18 even necessary?!
In military post-divorce promotions and Reserve early retirements, the benefit happens on account of service credit AFTER the divorce. This line of thought is why it’s important to know that military service credits earned during the marriage authorize NOTHING after divorce. Nothing happens or is earned “..on account..” of them. Upon division of marital asset, they are like an empty bank account riding off into history, stripped of all value … UNLESS and UNTIL and ONLY based on if the military person does more and additional work after divorce. Then that additional value goes back into the empty point accounts and is not divisible. There is nothing passive like investment interest or stock option vesting.
It’s important to realize military cases do not include contingent rights, or unvested rights – rather the benefits we are talking about (early Reserve retirement or military promotion enhancements) did not exist a priori divorce, even in future right, expectation, latency, contingency or vesting. The benefit was created (not just developed or vested or matured) by post-divorce work. NDAA 2017 Federal law agrees with this analysis.
Trial court awarded plaintiff “one-third of Defendant’s total military retirement benefits available to him at the time of his retirement" when they were married about 8 of 24 military years (1/3). OOPS! It seems someone forgot to remember the spouse get's HALF of the marital asset! The military member reminded the court it was suppose to be 1/6 of the benefit, and also valued at time of divorce, not time of retirement. Sadly, the court action devolved into a debate of whether accruals outside of marriage can be divided.
Builds on Reeves case. Previously Reeves allowed some invasion of pre-marriage real-estate assets when one of two exceptions were met, and Bachran extended this Reeves "by analogy" to other investments and a military pension.
Appellate Court remanded the decision back to the trial court. Supsequent appeal to the MI Supreme Court vacated the Appellate Court and sent back to Appellate Court to consider Reeves v. Reeves, which awarded pre-marital property for division. Reeves did allow pre-marital accrual upon one of 2 exceptions, but did not address post-divorce accrual. In turn, the Appellate court remanded back to the trial court to explain why they awarded more than accrual during marriage. Trial court changed nothing.
The Appellate Court wrote, "It is well established that pension benefits accrued before and after marriage may be subject to distribution depending on the equities of the circumstances presented. MCL 552.401; Boonstra, supra; Booth v Booth, 194 Mich App 284, 291; 486 NW2d 116 (1992), modified on other grounds by Eddie v Eddie, 201 Mich App 509, 512; 506 NW2d 591 (1993)."
In Boonstra, the trial court JOD said to divide the pension without any restrictions of years or "during marriage" or any coverture fraction, so it's not relevant in any case with division restrictions. Booth and Rogner (referenced by Booth) specifically dealt with only pre-marriage accrual. Neither citation deals with post-DIVORCE accrual, which must be what they meant when the Appellate Court wrote "after marriage".
Remanded back to the trial court (again) to enumerate why it awarded the spousal portion, "plus some of defendant’s portion of that pension."
After revisiting the trial court, trial court decided that after considering all factors, awarding 1/3 of the retirement even though they were married for 1/3 of the military career was appropriate. "The plaintiff established one of the [Reeves] exceptions to the doctrine of noninvasion of separate estates." Appellate court agreed that several factors justified, "awarding plaintiff a larger than equal share of defendant’s military pension."
I would emphasize that the only way to do what is written in the quote above with a formula in a court order is the Hypothetical Method or a Dual Coverture method or the Area Method. The Dual Coverture Method or Area Method is much simpler and better for both parties.
1998 Michigan COA opinion Vanderveen v. Vanderveen requires a single coverture time fraction method, often referred to as "Kilbride Method" in Michigan (1988 Kilbride v Kilbride, 172 Mich App 421). Kilbride is fine as applied to the original Kilbridge case, but is not extensible to many other cases. In fact, the underlying logic of Kilbride (not just a quoated passage) supports not dividing early Reserve retirement payments or promotion enhancement earned outside of the marriage - and therefore a single time coverture cannot be used in those cases. This case demonstrates careless citation of Kilbride.
In V v. V, the ex-spouse was married only during the later years and so wanted to not comingle with earlier years of the spouse's job (to get a larger portion by not averaging down). In other words, the ex-spouse wanted to separate the promotion enhancements of later years. The COA said they will comingle all work years and not give credit preferentially for high-value years.
The court fallaciously wrote, "...there is no dispute that had defendant begun working with Consumers Power at the time of their marriage and realized the same earnings, he would have only accrued $41,943.15 as a pension [and therefore that lower number is the marital asset]." The court blatantly disregarded the fact that their version of events did not happen. The ex-spouse DID choose to marry a senior worker and ~that~ is the estate she married into and was entitled to divide. It is an egregious offense for the court to set up a fake employer start date and then deny for that reason.
Sadly, the Vanderveen COA held tightly to what they were familiar with - a single time coverture - even when they had to change reality to justify it. Inappropriately comingling separable promotion enhancements is not supported by Kilbride.
In comparison, in military situations, DFAS Hypothetical Method allows a way to honor what actually did happen. It uses actual dates of divorce and pension dates when actual payments begin. DCV-Area method is even better by also allowing variations in when the marriage and enlistment actually did happen (Hypothetical assumes the marriage started before starting military service).
If the early and late years are inextricably comingled so that separation could not happen, that would be a different reason to do comingling, but that is not the argument the COA could stand on to deny because experts in the V v. V case did establish value to allow separation. Therefore, to "hang onto" a single coverture fraction, the COA inappropriately comingled when they should not have. For a military retirement, published pay scales make the numbers perfectly not comingled and easily separable, leaving no reason to comingle. The pay tables even automatically do COLA corrections.
VanderVeen COA critiqued the petitioner, observing she is "..effectively asking the trial court to credit her with the value in defendant's pension that defendant built before the marriage but did not realize until during the marriage." In fact, as pointed out above, such a credit should have been done because that later-in-life, higher paid worker is who she married. It is not appropriate to comingle work years when they can be separated. It is even less appropriate in military cases when periods of time are separated by distinguishable events such as a promotion event.
Militarly retirement arguments are reversed when the marriage occurs during the early part of the career. In this case, the ex-spouse wants to comingle because the actual early years are the years of lower reward. It is not appropriate to give credit for after-divorce becasue that is a future abandoned by the ex-spouse at divorce. VanderVeen is "based on" history that did occur. Trying to use the same "based on" argument to comingle post-divorce military promotion enhancements into the marital asset relies on a future that has not happened at the time of the divorce and therefore violently opposes the Michigan Kilbride litmus test (nothing in the future after divorce should make the marital asset go up or down).
Who you divorce IS who you divorce - a younger person with less rank and less longevity. There is no equity to reach forward into the future and tap into what a military member may become after divorce. In V v. V the marital asset should have credited value built on before marriage because that's what DID happen happen before the marriage started. In case where divorce occurs during the career, the marital asset should not receive post-divorce longevity or promotion credit because divorce DID happen.
The VanderVeen opinion reveals the sad truth that the court's familiarity with the single time coverture caused them to pound a square peg pounded into a round hole. The VanderVeen COA so badly wanted the familiar territory of a a simple time coverture, that they distorted reality and the Kilbride precedence to their whims. In fact, a more suitable dual coverture, hypothetical, or DCV-Area method should have been used, and this is what the underlying logic of the Kilbride citation really mandates!
Mark Sullivan uses this case to claim that retirement enhancements earned after a marriage should be divided as a marital asset - conflicting with the 2009 Skelly case and DoD recommendations in 2001. Sullivan's claim reflects a misunderstanding of the difference between passively earned income which is created by simply waiting for a time (interest from investment capital) vs. enhancements to retirement earned by active effort (such as competitively earned military promotions). Mark's argument is assumed to be correct because of his presence in the legal community, so it was worth writing a a detailed rebuttal to his claim. See also another dedicated web page about division of promotion enhancements.
The key argument Mark uses is that any later promotions are "based on" or "but for" earlier promotions during the marriage. As pointed out in the above rebuttals, the intentionally vague phrase "based on" causes all the trouble. But even if his argument were legitimate, as a point of decency, it seems blatantly hypocritical to then not use the same argument to deprive an ex-spouse of promotion enhancements during the marriage "based on" promotions that were accomplished before the marriage. The DoD report recommendation is the only fair conclusion.
Mark used this civilian retirement court case to argue that military promotion enhancements actively earned after the marriage are divisible. To use this civilian case in this manner relies on judicial unfamiliarity and an opposing attorney who doesn't know the difference. This, in turn, causes judicial confusion and inequity against military members. I would value correspondence with anybody from the legal community who sees error in my analysis, and can help correct the legal precidence.
The COA opinion demonstrates that any case with promotion enhancements or Reserve early retirement checks needs an alternative to the single time coverture. Hence Dual Coverture, Hypothetical, or DCV-Area come into play. The marital portion must be calculated so that additional effort after the divorce will not raise or lower the marital asset expressed in constant year dollars.
"[Because] statute directs the courts to treat pensions as part of the marital estate, that is to say, as property, we believe that the value of that property, the pension, must, as with any other property, be valued at the time of divorce and a fixed distribution achieved between the parties. To equitably distribute the pension, it is necessary for the trial court to determine the value of the pension at the time of divorce."
The Kilbridge opinion intended to LIMIT (not expand) the marital asset by a single coverture fraction. When there are more other post-marital enhancements, the intent is that the division should be further limited to leave only the marital part as a marital asset. Remember the court's statement that, "the portion of a pension attributable to service credit earned before the marriage or after the divorce is not distributable as part of the marital estate." The Kilbride court found an error that a marital asset was not reduced to a sum "..certain at the time of divorce.." and found error that the amount of the marital asset, "..is contingent upon actions and choices made by the parties following the divorce."
"We offer the following guidelines for the trial court in determining the present value of the pension in accordance with the statute. To begin, we believe that an equitable distribution under the pension statute requires that the method employed reflect the fact that the value of the pension for distribution purposes in a divorce proceeding is only that value which accrued during the course of the marriage. Any accrual of value before or after the marriage may not be considered. Furthermore, the decisions of the parties following the judgment of divorce must not affect the value of the distribution of a portion of the pension to the nonemployee spouse."
The discussion about present value at the time of divorce directly indicates that the Hypothetical Method (or DCV-Area which is identical but more versatile) should be used when there are future promotions. This method became Federal law with 2017 NDAA and can be implemented with a single coverture in the division order becasue DFAS will now automatically do the other coverture fraction. If a division order is before 2017, both coverture fractions must be named or combined in the division order.
"Where the pension benefit is based upon an average of the employee's salary for a certain period of time prior to leaving his employment, rather than the amount of salary at the time of leaving employment, then it would be the average of the employee spouse's salary for the required period of time immediately preceding the divorce." This directly addresses a post-divorce military promotion: The higher rank 3-year average at retirement must NOT be used; instead the 3-year average directly ahead of the date of divorce must be used.
At the time of Kilbride, there were no known ways to do this (the DFAS methods including the Hypothetical Method cannot), so the teachings and mandates of Kilbride tend to be lost in history. However, Kilbride's requirements are now trivial using a Dual Coverture method or the Area Method. For court division orders in 2017 and after, the rank/longevity based coverture fraction is automatically done by DFAS. If before that date or for orders not paid by DFAS, both coverture fractions must be specified in the division order. This can be done with 1) a time (or Reserve point) coverture and 2) a coverture based on a ratio of pay chart values taken from the ~same~ year pay chart.
In 2012, Mike McCarthy used this as an expert witness against military members to deny a Dual Coverture or Hypothetical Method (either of which properly handles promotions after a divorce). In VanLoan, after 19.4 years of married military duty, the military member argued that nothing should go to the ex-spouse because retirement was only an expectation. Instead the court mandated a time-based coverture fraction to determine what portion of the military retirement was a marital asset. A time(only)-based single coverture is fine if there is NO promotion after the divorce, otherwise, it is inequitable against the military member (see the 2011 New Jersey Appellate decision discussion).
This 1977 case is superceded by passage of USFSPA, but a defense attorney may need to argue against it if opposing counsel cites it in a misleading way, suggesting to use single fraction methods, inappropriately claiming promotion enhancements after divorce are a marital asset. Van Loan is silent on the issue of promotions after divorce, because there were no promotions after divorce in the Van Loan case. All Van Loan implies is (my words) "Rather than give nothing to an ex-spouse after 19.4 years, retirement must be prorated according to time when there is no post-divorce promotion." They used a time-only Single Coverture fraction of (17 yrs) / (total years).
Incidentally, the court ordered spousal support payments to stop when retirement payments were awarded.
I am open to interactive discussion to clarify any of these issues with spouses, attorneys or others of the legal community. I continue to strive for equity for both parties of a divorce, integrity exhibited by the attorneys, and lucid clarity for the courts. Feel free to contact me if I can help you work through your legal situation.
Defense Finance and Accounting Services' publication "Guidance on Dividing Military Retired Pay", 2 April 2012, 20 pgs, 119 KB pdf. (DFAS.mil, increa copy) This replaces the prior edition titled "Attorney Instructions - Dividing Military Retired Pay", April 2001, 19 pgs, 74kb pdf. (DFAS.mil, increa copy).
Marshall Willick position paper to DoD Report committee. 1999.
Mark Sullivan editorial regarding the DoD Report to Congress. 2001.
Division of Military Retirement Promotion Enhancements Earned After Divorce - a rebuttal to Mark Sullivan's editorial against the Armed Services Committee report.
Appellate Court of Illinois Marriage of Wisniewski, 675 N.E.2d 1362, 1369 (Ill. Ct. App. 1997).
Oklahoma state SB1951, signed into law 5 May 2012 (6 pages).
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