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Trial Outline: Active Duty Service and Military Pension Division (Part 2)

 

by Mark E. Sullivan* 

 

*Mr. Sullivan is a retired Army Reserve JAG colonel.  He practices family law in Raleigh, North Carolina and is the author of The Military Divorce Handbook (Am. Bar Assn., 2nd Ed. 2011) and many internet resources on military family law issues.  A Fellow of the American Academy of Matrimonial Lawyers, Mr. Sullivan has been a Board-Certified Specialist in Family Law in North Carolina since 1989.  He works with attorneys and judges nationwide as a consultant on military divorce issues, and particularly in drafting military pension division orders.  He can be reached at 919-832-8507 and at mark.sullivan@ncfamilylaw.com

 

[Part 1 of this article covered how to educate the judge on military pension division issues, how to question the military member upon direct examination, the important facts and data needed by the trial court, and the introduction of documents such as the LES (leave and earnings statement) and the Thrift Savings Plan account statement.] 

Cross-Examination of Servicemember 

This is an example of the cross-examination of MSG Ellen Baker which might be employed by the lawyer for Jake Baker, the husband.  As can be seen in the rapidly deteriorating line of cross-examination illustrated below, the non-military spouse’s attorney might want to take a pass on adverse examination of the servicemember regarding SBP.  It would be wiser to wait until direct examination of Jake Baker, letting him tell the story and explain why he needs the protection of SBP for his stream of income after the retirement of his wife. 

Q. [Questions by the attorney for the husband] MSG Baker, what is the SBP? 

A. It’s the Survivor Benefit Plan. 

A. Didn’t you conveniently forget to mention that? 

A. I wasn’t asked about the Survivor Benefit Plan. 

Q. Whatever.  You didn’t mention the SBP available to my client, Jake Baker, did you?  If he outlived you, shouldn’t he get some form of income protection? 

A. Well, of course I would.  He’s got a job, he earns good money, so he has income and he has protection. 

Q. No – I’m not talking about his present earnings as a department store cashier.  I’m talking about payments from the Survivor Benefit Plan after you die.  Do you object to his being the beneficiary for your SBP? 

A. Oh, that!  No, of course not.  I’m not planning on remarrying so someone else can get my SBP.  I haven’t even thought of that.  And I don’t care about Jake’s getting my SBP, so long as he pays for what he is going to get; that’s only fair.   

Q. Why should he have to pay for it? 

A. It’s worth nothing to me – I would have to be dead for it to start paying money to him.  So I’m okay with his receiving it if he pays for it!1 

Questions and Goals for the Nonmilitary Spouse 

The facts have been established previously for the court to enter an order for pension division.2  The primary goal of the petitioner at this stage is to stake his claim for coverage as a former spouse regarding the Survivor Benefit Plan.3  Like his wife, Jake Baker will want to gain credibility on direct examination and retain that credibility with the judge in regard to any testimony on cross-examination which he might give. 

Direct Examination of the Nonmilitary Spouse 

At this point, Jake’s attorney could easily forego the examination and simply wait for closing argument to show to the court what the benefit and costs are, using statutes, federal rules found in the Department of Defense Financial Management Regulation, and information found at the DFAS website.  Each of the issues illustrated in this testimony should be briefed to the court, along with the relevant citations to authority and any state cases which apply.   

But oral testimony – based on the law and the rules – usually has a better impact and a greater chance of convincing the judge.  Thus the text below shows the explanation of SBP through the testimony on Jake Baker, the nonmilitary party (and also the party in most cases who is less familiar with SBP).   

Since most of the points about SBP are not common knowledge, the witness will need to be thoroughly prepared for direct examination.  The best approach is for Jake to have a folder which he takes to the witness stand.  The folder should contain, in large font, the appropriate sections of the federal statutes which govern the issues that he will be addressing, such as the monthly premium, the age-55 suspension of coverage when the beneficiary remarries, and the benefit multiplier, which is 55%.  How this is used will be shown below. 

Q. [Questions by the husband’s attorney] Mr. Baker, have you been married to the Respondent for more than ten years during her military service? 

A. Yes, sir.  We have about 13 years of marriage during her service.4 

Q. Do you want the court to order that you receive a share of Ellen Baker’s military pension? 

A. Yes, I do – half of the part acquired during our marriage. 

Q. What else, if anything, are you requesting the judge to do? 

A. I would like the judge to order Survivor Benefit Plan coverage for me. 

Q. What does the Survivor Benefit Plan provide in terms of benefits for a surviving spouse? 

A. Well, he would receive monthly payments of 55% of the amount chosen as the base if the other party dies first. 

At this point, opposing counsel will likely make a loud and vigorous objection.  The objection may be phrased in terms of hearsay (e.g., Jake only knows this information because his lawyer told him or he learned about it from the Internet).  In reality, it is not hearsay at all; it’s the law.  Jake is simply stating what the law says about these benefits.  He will be referring to federal statutes, the Department of Defense Financial Management Regulation, and the information found at the DFAS website.   

When the uproar dies down, the court may rule that opposing counsel may examine the witness as in the voir dire of an expert witness, interrupting the direct examination to allow the other side to determine the basis for the answers that are being given.  The court may also reserve the questions of opposing counsel until cross-examination, ruling that the source of the information goes to the weight being given the evidence and testimony, and not to admissibility. 

Assume that the court allows the voir dire approach. Here is what should come out in Jake’s testimony. 

Q. [from Ellen Baker’s attorney] That testimony you just gave about the SBP and benefits – you don’t really know that, do you? 

A. Yes, I do. 

Q. What I mean to say is, you don’t have any personal knowledge of that stuff, isn’t that right? 

A. Yes, I do have personal knowledge. 

Q. What do you mean, you have personal knowledge? 

A. In preparation for this trial, counsellor, I made sure that I knew the important issues and the questions I might be asked.  I thought that SBP might come up, so I did my homework.  I spent hours making sure that I knew what it is, what it pays, what it costs – the rules, in other words.  What I just testified to – the 55% benefit – comes directly from federal law.  It’s found at Title 10, U.S. Code, Section 1451 (a)(1)(A)-(B).  I have a print-out right here if you’d like to take a look at it. [Here the witness should pull out the printed section and show it to opposing counsel and to the court; it is not, however, introduced into evidence, since this is the voir dire examination by opposing counsel which is proceeding.] 

Q. [attempting to interrupt] But you got that… 

A. I’m not finished.  May I please finish?  I also checked the rules to back up what I know about SBP paying 55% of the base amount to the beneficiary.  I found that this is correct, based on the Department of Defense Financial Management Regulation.  I verified that Volume 7B, Chapter 46, states at Paragraph 460101 the following: “The Survivor Benefit Plan (SBP) provides a monthly annuity of 55 percent of the annuity base amount, cost-of-living adjusted, to the eligible spouse or children.”  I have a copy here for you if you’d like to see it. 

Q. [still trying to interrupt] But that came from… 

A. Counsellor, I’m still trying to answer the question.  Could I please finish my answer?  I then backed up what I’d learned by checking on the website of the Defense Finance and Accounting Service.  Under the heading, “Retired Military and Annuitants,” I found a tab for “Provide for Loved Ones.”  And I found there… 

Q. Enough already!  I withdraw my objection, your honor. 

Here the direct examination resumes.  Jake’s attorney will probably ask the questions below. 

Q. [from Jake Baker’s lawyer] In an active-duty case such as this, what is the cost of SBP coverage? 

A. It’s 6.5% of the base amount chosen. 

A. From where is that money paid? 

A. It comes out of the individual’s military retired pay. 

Q. So, for example, if an airman were to receive $3,000 a month in retired pay, and if her full retired pay were chosen as the base amount, what would be the cost? 

A. It would be about $195 a month. 

Q. And, using the same retired pay figure, what benefit would the survivor receive if the military retiree died first? 

A. That would be 55% of the base amount, or $1,650 per month. 

Q. If the judge awards you SBP coverage and Ellen Baker dies before you, who pays the taxes on SBP payments made to you? 

A. I do. 

Q. What happens if you remarry before age 55? 

A. It is suspended.  I cannot receive SBP payments if I decide to remarry before age 55.5 

Q. Thank you – no further questions, your honor. 

Issues for the Husband’s Attorney – Testimony, Evidence and Closing Argument 

If the Respondent hasn’t testified about her accrued leave or the TSP account, then those subjects should be covered in further testimony by the Petitioner.  Ordinarily this will require knowledge and use of the state’s rules of evidence in producing and explaining the documents which the petitioner’s lawyer has obtained. As noted above, counsel will need to check the rules of evidence to find out the requirements for admission of business records and public records, since every state’s rules are different.  Some have adopted the Federal Rules of Evidence (FRE), and some have their own evidence codes.  The business records authentication rule is contained at FRE 902 (11), but the rules in our hypothetical state of East Carolina might be slightly or entirely different. 

At this point, there are no further facts to be drawn out in Jake’s testimony.  There are, however, three remaining items for his attorney to consider.  The first deals with the new rules about military pension division and would be the subject of closing argument.  When the servicemember spouse, as with Ellen Baker, entered military service on or after September 8, 1980, then her retired pay is calculated according to the highest three years of compensation, her “High-3” pay.  Due to an amendment made December 23, 2016 in the Uniformed Services Former Spouses’ Protection Act, which is at 10 U.S.C. §1408(a)(4)(B), the definition of “disposable retired pay” has been revised to mean the hypothetical retired pay that the member would have received if he or she had retired on the date of divorce.  Thus Ellen’s attorney will want to argue that the court order must fix the retired pay according to “the Frozen Benefit Rule,” as it is sometimes called, rather than determining what will be divided as the final retired pay that Ellen actually receives (as is the law in 90% of the states).  Details are found at “Serving the Servicemember” in the Silent Partner info-letter, All Clauses Considered: Writing the Frozen Benefit Award.6 

There are two other items that remain uncovered, and these are important issues from Jake’s standpoint.  The first is interim pension-share payments pending the start of payments made by the retired pay center.  The second is indemnification.  Both are important, but neither is subject to testimony since they are both “legal issues,” not facts and data to be adduced through examination of a witness.  Thus these should also be reserved for closing argument, and they should be further explained to the judge with a written memorandum. 

Since the Baker case involves a “10/10 overlap” (that is, 10 years of marriage overlapping 10 years of military service creditable toward retirement7), service of the pension division order on the retired pay center (DFAS in this case) will result in direct payments to Jake Baker upon Ellen’s retirement.8  However, there will be a delay of up to 90 days for processing.9  During this interim period, Ellen Baker will need to send payments directly to her former spouse, initiate an allotment from retired pay, or arrange for an electronic fund transfer.  Without one of these payment arrangements, Jake will miss out on two or three monthly payments.  This should be addressed in the military pension division order. 

Indemnification is also an important issue for a non-military spouse.  If Ellen Baker applies for and receives disability payments, the amount of her disposable retired pay10 may be reduced by the disability pay which she receives from the VA (Department of Veterans Affairs).11 This results in a reduction in Jake Baker’s share of the pension.12  For example, if Ellen has a disability which is rated at 40% by the VA, then she can receive about $600 a month in tax-free disability compensation if she waives an equal amount of her retired pay.  This means that there is a $600 drop in the retired pay which Jake was supposed to share, and thus he receives a smaller amount of retired pay as marital or community property.   

Jake Baker’s lawyer will want to ask the court for a clause that requires the ex-wife to make reimbursement payments to her former husband for any reduction in his share of retired pay, due to her election of any form of disability pay.  Without an indemnification clause, Ellen Baker is free to increase her own monthly payments with tax-free disability pay, without regard to the reduced amount of retired pay that her former husband receives.  But can he get the court to order indemnification? 

The judge will probably deny the indemnification request.  Ever since the U.S. Supreme Court’s 2017 decision in Howell v. Howell,13 state courts have been aware that the judge may not impose an indemnification condition on the payment of a share of the pension.  Details are found in the Silent Partner, The Death of Indemnification? 

Conclusion 

Using this testimony and trial outline, the attorney for the servicemember or for the non-military spouse can be familiar with the basic rules and requirements for direct and cross examination in a military pension division trial involving an active duty servicemember.  Different rules, of course, will come into play if the case involves a member of the National Guard or the Reserves, or when the member has already retired.  In the case of a serving member of the armed forces, however, counsel will be aware of the issues which need to be put in front of the court, how to explain the issues clearly and convincingly, and how to state the relief which counsel is requesting.  If trial is necessary, the ends of justice will be served when the husband, the wife and the judge are presented with the facts and the issues on military retired pay, the Survivor Benefit Plan, accrued leave and indemnification.  With all present and potential military benefits known, the court will be able to prepare (or order the preparation of) a military pension division order which addresses these issues is a just and fair manner. 

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