The most common questions attorneys have about military divorce are about the Frozen Benefit Rule (FBR) and how it will affect pension division. To avoid a call to the malpractice carrier, attorneys must understand the FBR, and when it does – and does not – apply to their case.
By Kris Hilscher, Military Divorce and Family Lawyer
Sam Jones walks into the office for a consultation. During your initial interview, you discover Mr. Jones is an active duty member of the armed services. His soon-to-be ex-wife Tina Jones knows she “has rights” and has already demanded “everything” from Sam. As the Counting Crows in the eponymous song said, “Mr. Jones and me / Looked into the future.” Sam can reasonably anticipate equitable distribution, and he needs to be prepared to address pension division.[1] To avoid a call to the malpractice carrier, counsel for Sam must understand the Frozen Benefit Rule (FBR). We receive many inquiries about military divorce and this is one of the most common. It makes sense to dive into this to help counsel in their military cases.
The Frozen Benefit Rule: Is Your Client In or Out?
Any military pension case either is “in” or “out” for the FBR. What does Sam’s lawyer need to know to determine this? There are two questions to answer:
- Was the divorce entered before December 23, 2016?
- Was the servicemember receiving retired pay on the date of divorce?
If the answer to both questions is “no,” then the rule applies. If the divorce was entered prior to that 2016 date, the rule does not apply. This is of course more and more unlikely as time marches on, making the second question more relevant for most lawyers. If Mr. Jones was receiving retired pay on the date of divorce, the rule does not apply pursuant to Chapter 29, Vol. 7B of the Department of Defense Financial Management Regulation (DoDFMR).
When the Frozen Benefit Rule Applies
If the FBR applies to your military divorce case, the benefit payable to the spouse under 10 USCS § 1408 is fixed or “frozen” as of the date of divorce, e.g., the benefit measured by the hypothetical retired pay of the servicemember on that date. Additionally, data points are required by the retired pay center, usually Defense Finance and Accounting Service (DFAS), for a military pension division order (MPDO) to be honored under the FBR.[2]
Practice tip: Pay careful attention to the intersection of this rule and any applicable statute, such as N.C. Gen. Stat. § 50-20.1(d)[3], which was revised in 2019. The updated language in this statute directly addresses the time rule as applied to a pension in the FBR case. The attorney handling such a case will need to pay close attention to the marital fraction, which is ordinarily marital pension service divided by total pension service.[4] Since the retired pay that is divided is fixed (except for COLAs, or cost-of-living adjustments) on the date of divorce, the court order needs to contain a fixed denominator pursuant to N.C. Gen. Stat. § 50-20.1(d), ending on the date of the divorce. This may run contrary to applicable case law, but fixing the denominator is the only way to provide for a fair division of a benefit that is fixed on the divorce date; anything else would constitute a double dilution of Tina Jones’ share of the pension.[5]
When the Frozen Benefit Rule Does Not Apply
If the FBR does not apply, the share of the spouse should be divided pursuant state law, typically what is often referred to as the “time rule” or “coverture fraction” for pension share: the numerator is marital months of service and the denominator is total pension service. Many states have similar laws – such as the Seifert fraction under NC law.[4] The revised N.C. Gen. Stat. § 50-20.1(d) would not apply in this situation because the FBR does not restrict the benefit if it does not apply. A military pension division order should be honored by the retired pay center upon review, and a finding that it meets all criteria, without the data points required under the FBR. There are several types of awards that the government will accept. If all variables are known such as Sam Jones’ retirement date, a percentage award is commonly used. When all variables are not known, a much more complex hypothetical award
[1] Note: There are many other things Sam and his lawyer must prepare for; this article is limited to the Frozen Benefit Rule.
[2] For further information, see the several Silent Partner info-letters found at the website of the military committee of the N.C. State Bar, www.nclamp.gov. For Lawyers and The Military Divorce Handbook, 3rd Edition, Mark E. Sullivan, ABA 2019.
[3] N.C. Gen. Stat. 50-20.1(d) states in relevant part: “When a pension, retirement, or deferred compensation plan, program, system, or fund, or an applicable statute limits or restricts the amount of the benefit subject to equitable distribution by a State court, the award shall be determined using the proportion of time the marriage existed (up to the date of separation of the parties) simultaneously with the total time of the employment which earned the benefit subject to equitable distribution to the total time of employment, as limited or restricted by the plan, program, system, fund, or statute that earned the benefit subject to equitable distribution.”
[4] Seifert v. Seifert, 319 N.C. 367, 354 S.E.2d 506 (1987).
[5] See Note 1 supra.
Kris Hilscher is a board-certified family law specialist practicing in Raleigh, NC. He works with attorneys nationwide on military divorce issues, drafting military pension division orders, and tackling many other military family law issues. He is the author of several articles on military divorce and serves as Vice-Chair of the Military Committee of the ABA Family Law Section. www.ncfamilylaw.com
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