Eisenberg, Middleditch & Spilman, PLLC

Property division and military pension payments

For many Michigan couples, many decisions regarding their divorce agreement revolve around financial concerns. Even after all the details have been worked out and agreed to, future decisions can sometimes have a significant financial impact on both parties. In addition to child support, and alimony, property division can play an important role in the post-divorce finances of each individual.

The division of retirement accounts and pensions can be an important financial concern to each individual. For many couples, these funds were accumulated throughout the course of the marriage and account for a significant portion of the marital estate. When a couple divorces, these accounts are often a significant concern for the future well-being of each individual.

One area of recent concern to many involves military pensions. This is typically treated as a marital asset and is thus divided as such. However, if the military member later is eligible for disability pay, it is possible that this can affect the amount of the pension. Yet, this disability pay is often not treated as a marital asset. As a result, it is possible that as the pension portion of the member's pay goes down, the former spouse's portion also is reduced; this obviously can have a negative impact on the financial well-being of the spouse.

To combat this issue, some states have ordered military veterans to make up this loss of income to the former spouse in the form of extra payments. However, the U.S. Supreme Court has recently ruled that this cannot be done. In an effort to guard against this issue becoming a concern for Michigan couples seeking divorce, the possibility of a reduction in pension payments can be addressed in the property division portion of the divorce process.

Source: military.com, "Supreme Court Ruling May Cut Spouses' Divorce Pension Payments", Amy Bushatz, May 18, 2017

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