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military dicorce

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poohjag10

Junior Member
What is the name of your state (only U.S. law)? Virginia

My divorce decree says my ex spouse gets 30% of my retired pay based upon the rank of MAJ which was what I was at time of divorce. ANyone know how to calcualte this? I ma now a COL not retired and trying to stucture a house sale settlement with ex to get her to waiv my retiremnt basically as it wont be much at all to her based upon an 04 in 2002. any help is appreciated
 


LdiJ

Senior Member
What is the name of your state (only U.S. law)? Virginia

My divorce decree says my ex spouse gets 30% of my retired pay based upon the rank of MAJ which was what I was at time of divorce. ANyone know how to calcualte this? I ma now a COL not retired and trying to stucture a house sale settlement with ex to get her to waiv my retiremnt basically as it wont be much at all to her based upon an 04 in 2002. any help is appreciated
My guess is that you would figure out what you would have received as a major, when you actually retire, not based on if you had retired in 2002. I am sure that info is available somewhere. You then calculate 30% of that, based on your life expectancy.

Its probably going to add up to significantly more than you think. Even 500.00 a month for say, 30 years, would add up to 180k.
 

mistoffolees

Senior Member
My guess is that you would figure out what you would have received as a major, when you actually retire, not based on if you had retired in 2002. I am sure that info is available somewhere. You then calculate 30% of that, based on your life expectancy.

Its probably going to add up to significantly more than you think. Even 500.00 a month for say, 30 years, would add up to 180k.
This is far too simplistic. I would suggest hiring an accountant to determine the net present value of that pension based on all the factors involved.

Then, when OP reaches an agreement with ex, it needs to be approved by the court. If he just signs a document without court approval, then ex could take the money now and STILL go back for the pension later.
 
What is the name of your state (only U.S. law)? Virginia

My divorce decree says my ex spouse gets 30% of my retired pay based upon the rank of MAJ which was what I was at time of divorce. ANyone know how to calcualte this? I ma now a COL not retired and trying to stucture a house sale settlement with ex to get her to waiv my retiremnt basically as it wont be much at all to her based upon an 04 in 2002. any help is appreciated
How long were you married while you were in the service...and how long have you been in the service? Military pensions (actually thats an inaccurate term because it is totally unfunded, they don't vest in the common sense, and if you die before retirement your hiers get nothing) can be very confusing to attorneys and ERISA appraisers who are unfamiliar with them. Points accumulated after the mandatory 20 years increase substantially if you stay for additional years. You also get a COLA and a survivor benefit for your spouse which can be extended to ex spouses...subject to additional regulations under the USFP ACT. Ex spouses can recieve benefits directly from DOD on a deferred payout plan if they were married to a serviceman for 10 years concurrent to their service.

Now..you should go online and search for military retirement pay calculators to give you an idea of the kind of money you are looking at. I find it hard to believe that a MAJ's ret. pay will be insignificant. Keep in mind that just because the DOD won't split your retirement pay unless your spouse was married to you for 10 years concurrent with your service...does not mean a state court won't order you to do so out of other assets, or your retirement pay itself AFTER you recieve it from DOD as they appear to have done here. So...your benefits need to be valued properly and paid out in an agreed manner (immediate lump sum offset or deferred interest) just to cover all your bases. Hope this helps
 
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LdiJ

Senior Member
This is far too simplistic. I would suggest hiring an accountant to determine the net present value of that pension based on all the factors involved.

Then, when OP reaches an agreement with ex, it needs to be approved by the court. If he just signs a document without court approval, then ex could take the money now and STILL go back for the pension later.
Go back and re-read his original post. He says his divorce decree gives her 30% of a major's pension.
 

mistoffolees

Senior Member
Go back and re-read his original post. He says his divorce decree gives her 30% of a major's pension.
Sure it does. But your calculation involved taking his entire future pension and giving her 30% of it. That means turning FUTURE payments into current payments. It doesn't work that way.

Let's say that he's going to retire in 2010 and will make $1000 per month. Her 30% would be $300 per month - starting in 2010.

He wants to convert that into a lump sum and give her an equivalent amount now in place of the future pension. You can't just add up all the money she would have earned in the future and give her that amount today since that doesn't allow for the present value of future earnings.

He needs an accountant to factor in all of the following:
1. His anticipated retirement benefit at retirement
2. Anticipated increases in pension over time (if any)
3. Anticipated retirement date.
4. Number of years that he would receive retirement benefits based on life expectancy
5. Estimated interest that would be earned on a current lump sum payment

From that (and probably a couple of things I've forgotten), he can calculate the current value of his future pension benefit. She is entitle to 30% of THAT number. Simply multiplying the anticipated future benefit times the number of months she would receive it would significantly overestimate net present value.

Once he calculates the net present value and offers her 30% of it, she is free to accept it or reject it. I doubt if the court would order her to take a lump sum payment in lieu of future earnings. Of course, there's no guarantee she'd take it.

Now, if he simply does what you're suggesting and gives her 30% of projected future earnings without discounting for present value, she'd be an idiot NOT to take it.
 

LdiJ

Senior Member
Sure it does. But your calculation involved taking his entire future pension and giving her 30% of it. That means turning FUTURE payments into current payments. It doesn't work that way.

Let's say that he's going to retire in 2010 and will make $1000 per month. Her 30% would be $300 per month - starting in 2010.

He wants to convert that into a lump sum and give her an equivalent amount now in place of the future pension. You can't just add up all the money she would have earned in the future and give her that amount today since that doesn't allow for the present value of future earnings.

He needs an accountant to factor in all of the following:
1. His anticipated retirement benefit at retirement
2. Anticipated increases in pension over time (if any)
3. Anticipated retirement date.
4. Number of years that he would receive retirement benefits based on life expectancy
5. Estimated interest that would be earned on a current lump sum payment

From that (and probably a couple of things I've forgotten), he can calculate the current value of his future pension benefit. She is entitle to 30% of THAT number. Simply multiplying the anticipated future benefit times the number of months she would receive it would significantly overestimate net present value.

Once he calculates the net present value and offers her 30% of it, she is free to accept it or reject it. I doubt if the court would order her to take a lump sum payment in lieu of future earnings. Of course, there's no guarantee she'd take it.

Now, if he simply does what you're suggesting and gives her 30% of projected future earnings without discounting for present value, she'd be an idiot NOT to take it.
I actually misinterpreted your post to indicate that you didn't realize that he was already divorced. I thought that you thought that he was still negotiating the divorce settlement.

I wasn't suggested that he should pay out the entire lump sum based on projected future earnings. I was telling him to make note of what those projected future earnings could be.

I should however, have gone into more depth. Yes, of course, a lump sum payout should always be less than it would be projected to be over time. However, if she is financially savy at all, she isn't likely to accept just 30% of present value, he would likely need to sweeten the pot just a little.
 

mistoffolees

Senior Member
I actually misinterpreted your post to indicate that you didn't realize that he was already divorced. I thought that you thought that he was still negotiating the divorce settlement.

I wasn't suggested that he should pay out the entire lump sum based on projected future earnings. I was telling him to make note of what those projected future earnings could be.

I should however, have gone into more depth. Yes, of course, a lump sum payout should always be less than it would be projected to be over time. However, if she is financially savy at all, she isn't likely to accept just 30% of present value, he would likely need to sweeten the pot just a little.
Right. The divorce was years ago but he's trying to negotiate an arrangement with her to give her a lump sum payment in lieu of the pension (note: again, he needs to make sure to get court approval of everything they agree to or the lump sum may be considered a gift and she could still try to collect the pension later).

As for the lump sum vs. extended payment, it really depends. There are a number of situations where you might prefer the lump sum (if, for example, she was buying a business and needed the money now. Or had unusual college expenses, but had sufficient funds for her own retirement. Or has some reason to believe that he will live considerably less time than his actuarial life expectancy. Or any number of other reasons). He very well might have to sweeten the pot, but then again, some people are much happier with $10 K now rather than $20 K between 2010 and 2030- even if the two options have the same NPV. I would start by offering her exactly the 30% of NPV (or maybe even less) and see what she says.

Well, actually, I'm not sure I'd want to do it at all. If he has the cash in hand, he very well might be better off by investing it and paying her out of his future pension. There are just too many factors to determine the best solution without spending hours discussing his situation. He should really see a financial planner.
 

mad in ga

Junior Member
Ok Col.
Here's my take on this. Under Uniformed Servicemen's Former Spouseses Protection Act, USFSPA: A former spouse may be entitled to a portion of a retired serviceman's retainer/retirement pay: Dfas will directly pay to the awardee up to fifty percent of a members disposable pay with proper documentation and provided that the former spouse was married to the servicemember for at least 10 years of creditable service. State courts may supercede/exceed these rules, but dfas will not pay it directly. If you have any leverage over the former spouse, use it to take a lump sum/ alimony agreement! I lost 50% on the first go round with my ex but got her back to the table to take a different deal.
 

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