Divorce can be an interpersonally challenging life-change, and complex legal matter. With two Department of Defense (“DoD”) appropriations bills currently before the House and Senate, the rules to pension fund distribution to U.S. federal Air Force, Army, Navy or Military Reserve ex-spouses at time of divorce will be revised in favor of fixed allocations. If enacted, the new rules would revoke state legislative rules for dividing military retirement contribution funds; effectively reducing apportionment to former spouses. Exception to the proposed federal military pension fund apportionment rule, would be any statutory provision for intestate succession within the jurisdiction of the decedent’s residence at time of death.
Federal Rule Reform of Spousal Entitlements
Military pension apportionment and divorce under the proposed law will effectively entitle spouses apportionment according to a military spouse’s rank and duration of enlistment. For example, a spouse of an Army sergeant first class (E-7) with thirty years of service would be accorded 50 percent of 20/30 or two-thirds of actual pension fund pay at time of retirement. No cost of living adjustments will be accorded spouses under the DoD’s new rules.
The proposed law would also not permit exceptions. No voluntary settlement of military pensions will be allowed if the new bills are passed. This would include pension fund assets transferred to an estate or trust held by a living spouse. The rule change would eliminate this option. Volitional distribution of retirement assets between spouses at time of divorce is seen in more than 90 percent of divorce cases involving military pension funds at present.
The DoD’s “fixed benefit” division is a legal interpretation opposed by the American Academy of Matrimonial Lawyers and American Bar Association memberships. Considered an obstruction to judicial opinion, the new rules if enacted will impact court procedure, as well as attorney representation of participating active and retiring service members, and their former spouses.
N.Y. Estate Laws of Distribution
New York Law EPTL 5-1.4 rules of revocation do not automatically remove nomination of an ex-spouse as trust fiduciary, executor, agent, guardian, representative, trustee, or attorney-in-fact at time of a decedent’s death. Under the state’s divorce and annulment revocation rule, legal termination of a marriage does not automatically revoke an ex-spouse’s power of attorney, or revocable dispositions (“testamentary substitutes”) such as joint tenancies (i.e. joint banking accounts) or any existing lifetime revocable trusts, or insurance policies (IN RE: The Estate of Joseph SUGG, Deceased. No. 2013–5055/B, Decided: June 29, 2015).
Estate laws concerning military pension transfers and ex-spousal apportionment of estate assets at the time of a decedent’s death are consistent with the state’s legislative provisions guiding rules of intestacy. Ask a licensed New York estate law attorney about any forthcoming rule changes to estate or trust held military retirement contribution assets in New York.
Contact an Estate Law Firm
Ettinger Law Firm is a licensed New York attorney practice specializing in estate planning and probate litigation. Contact Ettinger Law Firm to schedule a consultation about an estate law related matter.
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