Survivors Benefit Plan: Is the SBP the Best Way to Insure Your Interest in Your Former Spouse's Military Retirement?

The Survivor Benefit Plan ("SBP"), Reserve Component Survivor Benefit Plan ("RC-SBP"), and Retired Serviceman's Family Protection Plan ("RSFPP") provide military servicemembers with the opportunity to purchase an annuity that pays a defined benefit to certain eligible beneficiaries upon the death of the servicemember.  The annuity pays a percentage of the servicemember's retirement pay on a monthly basis for the lifetime of the beneficiary.   

Upon death, the servicemember's right to receive military retirement pay terminates.  The annuity is a form of insurance that provides coverage in the event that the servicemember predeceases the beneficiary.  This coverage can provide an eligible beneficiary with up to 55% of the servicemember's monthly military retirement pay.

Although there is no cost associated with SBP during active duty service, SBP coverage comes at a premium after retirement.  SBP coverage for a retirement pay annuity can cost as much as 6.5% of the servicember's gross retired pay.  Fortunately, the SBP premium is deducted from retirement pay on a pre-tax basis.  In other words, the servicemember is not taxed on the portion of his or her income used to pay the SBP premium.  

Once a beneficiary starts receiving SBP annuity payments, the payments are adjusted each year based on the Consumer Price Index. This is known as a Cost of Living Adjustment or "COLA."  According to the Defense Finance and Accounting Service, to "earn an even return on your investment, your beneficiary typically must receive payment for seven months for every five years you pay SBP premiums."

Subject to certain exceptions, the servicemember must elect SBP coverage at the time of retirement.   This is done using DD Form 2656, Data for Payment of Retired Personnel, which includes the SBP election. Although the servicemember's SBP election is frequently irrevocable, there are circumstances where a servicemember can change his or her SBP election.  

If you are a military servicemember going through a divorce, chances are that your former spouse will demand a share of your military retirement.  And, chances are the former spouse will also demand that you make an SBP election with the former spouse as the exclusive beneficiary.  

During the divorce, the spouse should consult a military divorce attorney to understand whether the Survivor Benefit Plan is the best means to insure the spouse's interest in the service member's military retirement.  For example, many attorneys that practice military divorce will automatically demand that the servicemember elect to use the Survivor Benefit Plan ("SBP") to secure the spouse's interest in the military retirement.  

In some cases, the attorney will demand SBP coverage even when it makes absolutely no sense.  Absent a reimbursement mechanism, the cost of SBP coverage is necessarily shared on a pro-rata basis between the servicemember and former spouse.  This is because the former spouse only has a right to receive a share of the servicemember's disposable retired pay.  See 10 U.S.C. § 1408.  And, many supposed military divorce attorneys do not even know that a former spouse who remarries before she reaches age of 55 is not an eligible beneficiary under the Survivor Benefit Plan.  See 10 U.S.C. § 1450(b)(2).  In other words, a former spouse with plans to remarry may end up financing an insurance policy that will never pay her a dime.  

Inexperienced attorneys will pound the table demanding this expensive insurance, the benefit of which may ironically go to the servicemember's new spouse if the former spouse remarries.  How many clients would be excited to buy insurance only to find that they will receive no benefit if they remarry?  A competent military divorce attorney should ask the spouse whether he or she is likely to remarry or has plans to remarry (some spouse's have already selected their new partner before the divorce is even finalized).  If the spouse has plans to remarry, then a life insurance policy is probably a much better option than SBP coverage.

If you are a former spouse and the court orders that the servicemember insure your interest in the retirement using SBP, make sure that you file the appropriate forms with DFAS to make a deemed SBP election.  An experienced military divorce attorney representing a servicemember's spouse will always advise the spouse to file the SBP Request for Deemed Election with DFAS.  Do not trust the servicemember to do this.  If the former spouse does not make this election within one year of the date of the court order dividing the military retirement, the right to SBP coverage may be forever waived.

Honorable Discharge: Can I Get Out of the Military and Get More Time with My Children?

As a military divorce attorney, several servicemembers have asked me whether getting out of the military will allow them to spend more time with their children.  This is often a complicated question because it implicates a variety of support and child custody issues.

Under Florida law, if there is a final judgment in place that establishes a time-sharing or visitation schedule, that schedule cannot be modified unless the other parent consents or the party seeking a modification is able to demonstrate a "substantial change in circumstances."

A party seeking modification of a final judgment actually carries the "extraordinary burden" of proving both (a) that there has been a substantial and material change in circumstances, and (b) that the best interests of the child will be promoted by the requested modification.  See Wade v. Hirschman, 903 So. 2d 928, 933 (Fla. 2005).

The parent seeking the change must also establish that the alleged change in circumstances was unanticipated at the time of the Final Judgment.  See Ogilvie v. Ogilvie, 954 So. 2d 698, 702 (Fla. 1st DCA 2007); see also Mesibov v. Mesibov, 16 So. 3d 890, 892 (Fla. 5th DCA 2009) (holding that “the substantial and material change must be one that was not reasonably contemplated at the time of the original judgment”).

The “substantial change” test applies to all requests for modification of all custody decrees, regardless of whether the parents agreed to the initial schedule or it was the result of an adversarial hearing.  See Bazan v. Gambone, 924 So. 2d 952, 955-56 (Fla. 3d DCA 2006).

Florida courts have recognized that changes to a parent’s employment may constitute a substantial change in circumstances for purposes of modifying the parenting schedule.  See, e.g., Shaw v. Nelson, 4 So. 3d 740 (Fla. 1st DCA 2009) (former husband’s new employment as a boat captain constituted a substantial change in circumstances for purposes of modifying time-sharing).

For those considering getting out of the military, Florida courts have specifically recognized that termination of active duty military service may support a modification of a custody determination.  See Purdon v. Purdon, 529 So. 2d 334, 334 (Fla. 1st DCA 1988) (court permitted modification where former husband completed his military service commitment as a flight surgeon and started practicing medicine as a civilian).

For purposes of modifying child custody, visitation, or time-sharing, there is no requirement that the change in circumstances be “involuntary.”  See Fazzini v. Davis, 98 So. 3d 98 (Fla. 2d DCA 2012) (adding voluntariness as a “fourth factor to modification of a time-sharing judgment” is not supported by the statute or case law).

Conversely, if the discharge from the military is voluntary, the servicemember may not be able to achieve a downward modification of alimony.  See Pimm v. Pimm, 601 So. 2d 534 (Fla. 1992) (holding that alimony modification must be support by an unanticipated and substantial change in circumstances that is involuntary and permanent in nature).  If the discharge is due to retirement from the military, an alimony modification may or may not be available, depending on whether the retirement was reasonable under the circumstances.  See Pimm, 601 So. 2d at 537 ("In determining whether a voluntary retirement is reasonable, the court must consider the payor's age, health, and motivation for retirement, as well as the type of work the payor performs and the age at which others engaged in that line of work normally retire.").

As for the servicemember's child support obligation, the obligation to pay support to a former spouse is different from the obligation to pay child support.  See Pimm, 601 So. 2d at 537.  Voluntary retirement or relinquishment of employment can never be considered a change of circumstance that would warrant a modification of child support.  See Pimm, 601 So. 2d at 537; see also Overbey v. Overbey,  698 So. 2d 811 (Fla. 1997).

Interestingly, notwithstanding the case law strictly denying a child support modification where a servicemember voluntarily leaves the military, if the the servicemember applies for a modification and obtains additional time with the children, the servicemember could request a child support modification based on the change in time-sharing.

If you have a question about your legal rights under any of the foregoing circumstances, you should contact an experienced Florida military divorce attorney for a consultation.

When Duty Calls: Modification of Custody and Time-Sharing Due to Military Orders

Divorce is often particularly difficult for military families.  And, in most cases, the challenges do not end when the final judgment is entered.  Due to the demands of serving our country, military divorce cases often generate post-judgment modification cases.

When a divorced servicemember has minor children, military orders to a new duty station raise significant questions concerning how the move will impact each parent's relationship and time-sharing with the children.

Section 61.13(2)(c), Florida Statutes, grants the courts jurisdiction to modify the time-sharing and custody aspects of a final judgment.  The statute, however, does not expressly state the conditions necessary for modification.  Florida courts must therefore look to case law for guidance on how to make this determination.

A trial court’s authority and discretion in a modification proceeding is more restricted than at the time of the original custody determination.  See Clark v. Clark, 35 So. 3d 989, 991 (Fla. 1st DCA 2010).

A party seeking modification of a final judgment carries the extraordinary burden of proving (i) a substantial and material change in circumstances, and (ii) that the best interests of the child will be promoted by the requested modification.  See Wade v. Hirschman, 903 So. 2d 928, 933 (Fla. 2005).

Any alleged change in circumstances must also be unanticipated at the time of the Final Judgment.  See Ogilvie v. Ogilvie, 954 So. 2d 698, 702 (Fla. 1st DCA 2007); see also Mesibov v. Mesibov, 16 So. 3d 890, 892 (Fla. 5th DCA 2009) (holding that “the substantial and material change must be one that was not reasonably contemplated at the time of the original judgment”).

The “substantial change” test applies to all requests for modification of custody decrees, “including those adopted by a trial court pursuant to an agreement of the parties as well as those established after an adversarial hearing on the issue of custody.”  See Bazan v. Gambone, 924 So. 2d 952, 955-56 (Fla. 3d DCA 2006).

Under these authorities, when a servicemember is ordered to a new duty station, the servicemember will typically be able to demonstrate a substantial change in circumstances.  A possible exception would be the case where the final judgment was entered at a time when the servicemember knew about the prospective orders or change of duty station.

When an experienced military divorce attorney prepares a parenting plan for a servicemember, the attorney should discuss with the servicemember whether to include a long-distance time-sharing schedule to serve as a default if the servicemember moves out of the jurisdiction.  This time-sharing schedule may apply until such time that the court has an opportunity to establish a new time-sharing schedule.  One reasons this default schedule might be important is because Florida law does not favor temporary relief in post-judgment modification cases, except where there is an actual demonstrated emergency.  See Braswell v. Braswell,935 So. 2d 604, 606 (Fla. 3d DCA 2006); see also Smith v. Crider, 932 So. 2d 393, 398 (Fla. 2nd DCA 2006). This law means that a servicemember may have to wait until trial for modification.

The Final Judgment may also provide that a change of duty station will constitute a substantial change in circumstances notwithstanding the existence of the default long-distance time-sharing schedule.  Without this language, the local parent could argue that the move was "anticipated" by the final judgment.  But, the default long-distance time-sharing schedule may not appropriate due to the location of the new duty station.  For example, a servicemember stationed on a different continent would not need the same time-sharing schedule as a servicemember stationed only a few hours away.

Providing a default long-distance time-sharing schedule will allow the servicemember to keep the schedule if it works.  Including language regarding the modification will allow the servicemember (or the other parent) to still seek modification in the event that the default time-sharing schedule does not service the best interest of the children.

If you have questions concerning military relocation or military divorce in Florida, please contact a military divorce lawyer.