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Military benefits can complicate a divorce settlement

Military couples based in and around Fort Campbell here in Tennessee know very well the strains that service and active deployment can put on a relationship. Sometimes one or both partners may decide to go their separate ways, but when they do, there are issues they will need to resolve that do not arise in civilian marriages.

In a recent case from a neighboring state, a couple divorced, with the ex-wife receiving half of her servicemember husband's military retirement pay. Eventually, however, the ex-husband's retirement pay was reduced when he began to receive VA benefits, which are not considered property that can be divided. When his ex-wife's share of the military retirement pay was also reduced proportionally, she sought to garnish his bank account to make up for the difference.

A court agreed with her that the amount stipulated in their property settlement could not be altered, and ordered the ex-husband to pay her the difference. He did so, claiming the payments as alimony on his tax returns. The state, however, disagreed with the veteran ex-husband about this categorization for tax purposes. Eventually an administrative board resolved the issue in the interest of the veteran, agreeing that the payments could be deducted as alimony despite some apparent evidence to the contrary.

Some underlying lessons should be clear to anyone considering or perhaps going through a divorce in which the military is involved. Military benefits like retirement pay and medical benefits often have special rules governing how they can and cannot be divided in the event of a divorce. Divorce agreements that treat these benefits as they would any other assets during property division have the potential to serve both parties with unpleasant surprises down the line, even years after a settlement is finalized.

Of course, any divorce in which children are involved is likely to be even more complicated, with unique military laws to factor into the final agreement. Fortunately, legal professionals experienced in military divorce issues can help Tennessee couples to minimize the risk of unforeseen changes necessitating a return to the negotiating table or even the courtroom.

Source: Forbes, "Military Retirement Pay Veterans Benefits And Divorce Make For Tax Confusion," Peter J. Reilly, Aug. 12, 2013

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