New Military QDRO Pitfall Under Missouri Law

On behalf of The Marks Law Firm, L.L.C. posted in Divorce on Wednesday, June 25, 2013

Thousands of military families reside in Missouri and, like other families, will one day face the end of their marriage. Military divorces involve a variety of complicated issues separate from non-military families because of a variety of federal laws and regulations. One such difference involves retirement benefits.

For a long time, military pensions could not be considered a marital asset subject to division like your IRA or 401(k). However, Congress changed that with the passage of the Uniformed Services Former Spouses Protection Act (USFSPA). As a result of this Act, spouses of military servicemen have a marital stake in all years of service during the marriage, a stake that becomes a percentage share of the service member’s retirement benefits.

Military pensions do not normally survive the death of the service member without the purchase of an annuity known as a Survivors Benefit Plan (SBP). If a service member wants to assure that a former spouse will receive the full benefit of his or her marital share of the military pension in the event the service member dies before the former spouse, the service member must purchase an SBP and designate the former spouse as the beneficiary.

The military automatically enrolls the service member in an SBP, but does so to protect a current spouse. Without an SBP for a former spouse, in the event of the death of the service member, only the surviving spouse will have the full share of the retirement benefit protected. To cover the former spouse, the service member must make an additional designation by purchasing a separate annuity.

So far, while a bit complicated, it seems that the USFSPA assures the protection of a former spouse in the share of retirement benefits he or she may receive from a court as part of a divorce. But a decision of the Western District last week, Kuba v. Kuba, has created a very unfortunate gap in protection for former spouses of military service members.

In Kuba, the court ordered wife to receive a percentage share of husband’s military pension, and executed a Qualified Domestic Relations Order (QDRO) to execute the division of the pension. The QDRO as written and the original Judgment made no mention of purchasing an SBP for the wife. Husband subsequently remarried, which meant that wife was no longer the named surviving beneficiary for the pension and so if husband died before she did, she would not continue to receive the benefits the court intended her to receive. To fix this, wife asked the court to amend the QDRO. Normally, in Missouri a property division is final and may not be modified; we have an exception for a QDRO that fails to give full effect to the property distribution as intended by the court. Moving under that statute, wife asked the court to make husband purchase an SBP for her to protect her pension. The Western District held that under these circumstances, the trial court had no authority to do so because it would modify the final judgment of property distribution by imposing on husband a new obligation – buying the SBP – that alters the balance crafted by the trial court in its original Judgment. The appellate court noted that courts in several other states reached a different result, putting Missouri at odds with the legal trend on this issue. The Western District noted nothing prohibited a trial court from protecting a former spouse by ordering the purchase of a separate SBP for the former spouse at the time of the original Judgment and as part of the original Judgment.

So, the upshot after Kuba for a spouse of a service member contemplating divorce is to assure that you ask the trial court to order in its Judgment and QDRO the service member purchase an SBP for you to assure you receive the full benefit of your share of the retirement pension in the event the service member predeceases you.

If you have questions about military pensions or QDROs, contact us – we can help.

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