Military retirement and Texas divorces

Military pensions, or military retirement, is a complex and tedious part of a Texas divorce. Generally, dividing retirement plans in divorces can be complex legal and financial undertakings; but military pensions carry unique functions that affect how they fit into a divorce in Texas. What works in one divorce may not be remotely close to the right course of action in the next. The flexibility of military retirement can be extremely useful to both parties in a Texas divorce. It allows the parties to craft a unique division that works in the overall property division. (Private employer plans, governed by ERISA, are typically very rigid in the permitted division formulas.)

The flexibility is a double edged sword because the nuances to successfully dividing the military retirement plan can result in a property division unintended by the parties or unenforceable in the manner expected. Often these unintended consequences are incurable by Texas family courts because too much time passed between the date of divorce and the date pension payments begin.

Valuing military retirement benefits in a Texas divorce

A critical aspect of property division is effectively valuing the retirement benefits for each party. Often unknown variables exist in the formula to value of the benefit. The rank and pay of the servicemember will only be known if the servicemember retired or close to retirement. That can greatly affect the amount of the monthly pension payments.

Additionally, life expectancy of both parties can affect the value of payments the servicemember and the alternate payee could receive. That will affect the expected benefit to each side in dividing the military retirement.

A present value formula creates a present value of the future stream of income. That value can change depending upon the interest rates used in present value calculations.

Suffice to say, this is a complex issue. It’s more than dividing the DVD collection or the furniture. Even many family law attorneys run for the hills when military retirement is part of a Texas divorce. Due to the complexity of issues involved, it is not always in the best interest of one or both parties to divide the military retirement. It may be more fruitful (and easier on the parties) to trade off other financial assets in exchange for the expected value of the alternate payee’s share of the military retirement.

However, just to assess that issue the parties need to have an understanding of the present value of the pension benefit and how the benefit could and would divide in the property division portion of the divorce. On the other hand, it may be the biggest asset in the divorce and there is no way to fairly divide the marital property without also dividing the military retirement.

Hire a Texas divorce attorney for military retirement benefits in your divorce

Dealing with military retirement in a divorce is extremely risky for a party unrepresented by counsel. Without understanding how to properly value a pension benefit and without understanding the rules around dividing a military pension, it is virtually impossible for a party to accurately assess his or her marital property and produce a fair and just division of the marital estate. It is, however, easy for the other party’s lawyer to massage numbers and fleece you out of a fair deal. Even in a fair deal, the rules may still leave the alternate payee chasing the retired servicemember down for payments. Hardly a win in anybody’s book.

If you are preparing for a divorce or in the middle of a divorce with a military retirement then you need to hire a divorce attorney with expertise in evaluating and dividing retirement plans.

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