Divorce requires careful consideration and potential division of retirement assets. When one spouse is a police officer, military service member, veteran or firefighter, they may have a valuable pension that could be subject to division.
These pensions often represent a significant source of financial stability for both parties. It can be very helpful to have a basic understanding of the legal framework for how these pensions are handled during the divorce process.
Below, we will break down the legal basics for these types of pensions and considerations for addressing them in divorce.
Military pensions: The Uniformed Services Former Spouses’ Protection Act
Pensions for military personnel come with unique rules and regulations. The Uniformed Services Former Spouses’ Protection Act (USFSPA) governs the division of military pensions in divorce. This federal law authorizes state courts to divide military retirement pay pursuant to divorce. However, there are specific conditions that must be met in order to do so.
Unlike private pensions or retirement assets, military pensions cannot be divided with a qualified domestic relations order (QDRO). Instead, the division is accomplished through a Military Retired Pay Division Order.
In addition to military pensions, service members may participate in the Thrift Savings Plan (TSP), a defined contribution plan similar to a civilian 401(k). The TSP can be divided in divorce through a Retirement Benefits Court Order (RBCO). An RBCO is a legal document specifically designed to facilitate the division of TSP accounts without incurring tax penalties. This order must be carefully crafted to comply with federal regulations and to protect both parties’ interests.
Police and firefighter pensions: State and local regulations
In Florida, publicly funded pensions for police officers and firefighters are governed by state-specific laws that differ significantly from those applicable to private pensions. If the officer or firefighter is employed by the state or a county, their pension falls under the Florida Retirement System (FRS). This system operates under the stipulation that FRS benefits are not “subject to assignment, execution, or attachment or to any legal process whatsoever.” Consequently, Florida courts have determined that divorce decrees attempting to divide future monthly state pension benefits are unenforceable due to this legal protection.
For officers and firefighters working for municipal governments, local laws may further influence the division process.
Because state, county and local government pensions cannot be divided using qualified domestic relations orders (QDROs) or similar court orders, parties and judges must explore alternative methods to equitably divide pension rights. These methods might include:
- Increasing alimony payments to include the value of future pension benefits
- Adjusting the division of other marital assets to offset the pension value received by the officer or firefighter spouse
- Establishing a trust account where future pension payments are deposited, with proportional distributions made to the non-service spouse
Additionally, state pensions offer Deferred Retirement Option Plans (DROPS), where pension payments are directed into accounts while the officer or firefighter continues to receive their regular salary upon reaching retirement age. The non-service spouse may have a marital property interest in a DROP account, which must be considered during divorce negotiations or court-ordered property divisions.
The value of professional guidance
As you can see, the division of military, police and firefighter pensions in divorce requires careful attention to detail and a thorough understanding of applicable laws. Both spouses should consult with attorneys who are experienced in addressing these assets. Financial experts may also be needed to provide accurate valuations of future pension benefits.