Milham v. Milham (mem.)

  • If there is a delay between a participant spouse commencing pension benefits and the entry of a domestic relations order dividing those benefits, does the alternate payee spouse have a claim to the missed payments during the interim period?

Facts and Procedural History

The parties divorced in 1998, and Wife was awarded 32.43% of Husband’s military retirement benefits upon his retirement from active service. The decree did not order Husband to pay the benefits directly to Wife, and the parties did not enter a domestic relations order at the time of divorce.

As Husband was approaching retirement, Wife contacted DFAS, the entity responsible for administering military retirement benefits. DFAS initially denied Wife’s application, instructing her to obtain a clarifying order from the trial court. After months of litigation, Husband eventually agreed to the entry of a stipulated domestic relations order dividing Husband’s military retirement.

During the interim period, Husband received 100% of his retirement benefits. The trial court entered a judgment in Wife’s favor for the payments she should have received during the interim period. Husband appealed that judgment, arguing that nothing in the decree required him to make payments to Wife directly during that period.

Ruling

Unsurprisingly, the court of appeals rejected Husband’s argument and affirmed the judgment to Wife for the interim payments. The payments were Wife’s separate property under the decree, and it was no fault of Wife’s that the payments were delayed. Wife acted promptly to secure her share of the benefits prior to Husband’s retirement. Any other result would have been clearly inequitable under the circumstances.

Milham v. Milham, 1 CA-CV 21-0581 FC, 2022 WL 1801049 (App. June 2, 2022) (mem.).

Chaidez v. Grant

Chaidez v. Grant, No. 1 CA-CV 21-0037 FC, 2022 WL 456557 (Ariz. App. Feb. 15, 2022).

Facts and Procedural History

Kentrez Grant (Husband) and Judith Chaidez (Wife) were divorced in 2010 in Yuma County. The divorce decree awarded Wife a percentage of Husband’s future military retirement benefits, and the court retained jurisdiction over the matter to calculate the amount of future payments and resolve related disputes.

In 2019, Wife filed a petition to enforce the division of Husband’s retirement pay. At the time, Husband was receiving gross monthly payments of $2,336 per month. A portion of the payments was based on Husband’s disability.

In the 2019 enforcement action, the court calculated Wife’s percentage based on Husband’s gross monthly payment amount. The court also ordered Husband to continue making payments to Wife’s estate if she predeceased him. Husband appealed the ruling.

Ruling

Federal law imposes precise limitations on the division of military retirement benefits earned during the marriage. Here, the court erred in the following ways:

  1. The court improperly calculated Wife’s benefit percentage based on Husband’s gross monthly payment. It should have been based on Husband’s “disposable retired pay,” which is a term of art defined by federal law. It excludes disability benefits and certain other amounts calculated based on the servicemember’s disability rating.
  2. The court should not have ordered Husband to continue making payments after Wife’s death. Under federal law, a former spouse’s portion of military retired pay is not transferrable, “including by inheritance.” Therefore, all benefits terminate if Wife predeceases Husband.

The court of appeals vacated the order dividing Husband’s retired pay and remanded the case to the trial court for further hearings.

This case highlights the complexity of military retirement benefits and the need for parties to consult an expert before dividing the benefits—preferably before the decree is entered.