Equitable Distribution and Community Property

• Military retirement is an issue of great importance in a service member's proceeding for division of community property or equitable distribution of marital property. Family courts can distribute the pension in one of two ways. One common distribution involves calculating how much of the pension is marital property by dividing the total time in service during the marriage by the total time in service overall. This fraction, or the "coverture fraction," is then divided according to the laws of equitable distribution or community property. Depending on the state, the non-member spouse may begin receiving her share of the pension upon the service member's retirement. In a minority of states, she can begin receiving it directly from the service member at the point where he becomes eligible for retirement. In some situations, a state court may find it more appropriate to award the entire pension intact to the service member and compensate the nonmember for her share out of other marital assets. This requires a present value calculation of the future pension entitlement.
  
  

Child Support

• In cases where the service member has already retired, his military pension will be considered income to him for purposes of calculating child support. Monthly amounts ordered by a state court for the support of a minor child can be withheld from the retiree's pension check. This withholding will occur after taxes, and amounts paid for child support are not considered taxable income to the recipient nor deductible to the payor.
  
  

Spousal Support

• Military retirement also plays an important role in proceedings involving spousal support. As with child support, pension payments are income to the retiree and some state courts may order wage withholding to secure payment. Unlike child support, however, amounts paid from military retirement are taxable income to the recipient and deductible to the payor. As such, the payor can claim spousal support payments as a deduction from his income on his tax return.
  
  

Collateral Issues

• Military retirement can influence divorce cases in indirect ways, as well. A former spouse's eligibility for free health insurance and other benefits may eliminate or reduce her need to receive alimony from the service member. Furthermore, her eligibility to receive a portion of the member's pension upon retirement may influence a state court's decision regarding the duration of an alimony award and the amount of alimony the pensioner must pay after he retires and the former spouse begins receiving benefits.