Military retirement is often the financial bedrock upon which long term military families build their future plans. Years of service, deployments, and relocations culminate in the promise of a steady monthly income stream. When a military marriage ends, Florida law recognizes the contributions of both spouses by allowing for the equitable distribution of the military retired pay earned during the marriage. Receiving a court order awarding a percentage of this pension can provide essential financial security for the former spouse.
However, there is a critical, often devastating catch: military retired pay typically stops entirely upon the death of the retiree. That court ordered monthly payment, which a former spouse may rely on for decades, simply vanishes. For a former spouse, particularly one who sacrificed career opportunities to support the military mission, this potential loss of income can be catastrophic.
Fortunately, the military offers a vital protection: the Survivor Benefit Plan (SBP). SBP acts like an insurance policy on the retired pay stream, providing a continuing monthly income (an annuity) to a designated beneficiary after the retiree’s death. Securing Former Spouse SBP coverage is often non negotiable for ensuring the long term financial stability of the non military spouse.
But SBP is not free. It comes with a monthly premium, deducted directly from the retiree’s pay. This raises a crucial and frequently contested question in Florida military divorces: Who pays for this essential protection? The allocation of SBP premium costs is a significant financial issue that demands careful consideration, strategic negotiation, and precise legal drafting. Leaving this detail ambiguous is a recipe for future conflict and potential financial hardship. Understanding how SBP costs work and how they can be fairly allocated requires specialized knowledge, making guidance from an experienced Tampa military divorce lawyer absolutely essential.
What is the Survivor Benefit Plan (SBP)? A Quick Refresher
Before discussing costs, let’s briefly recap what SBP is. It is a U.S. government program managed by the Department of Defense that allows military retirees to provide a continuing portion of their retired pay to eligible survivors after the retiree’s death. It functions much like a life insurance annuity specifically tied to the pension.
Key points about SBP for divorcing couples:
- Election Required: Coverage for a former spouse is not automatic. The service member must make an affirmative election for “Former Spouse SBP Coverage” after the divorce, or the court order must mandate it.
- “Deemed Election”: Critically, if the court orders SBP coverage, the former spouse (or their Tampa military divorce lawyer) must submit specific paperwork (DD Form 2656 10 and the court order) to the Defense Finance and Accounting Service (DFAS) within one year of the divorce. If the retiree fails to make the election, this timely submission by the former spouse triggers a “deemed election,” locking in the coverage. Missing this deadline can permanently forfeit SBP rights.
- Annuity Amount: The annuity paid to the former spouse is typically 55% of the designated “base amount.”
- Base Amount: This is the portion of the retired pay upon which the SBP premium and future annuity are calculated. It can be the retiree’s full gross retired pay, a lesser specific dollar amount, or sometimes an amount equal to the share of retired pay awarded to the former spouse. The court order must specify the base amount.
- Irrevocability: Once former spouse coverage is properly elected or deemed, it is generally difficult to cancel without mutual consent or a modifying court order.
SBP is the primary mechanism to ensure a former spouse continues receiving income related to the military pension after the retiree’s death.
Why SBP is Non Negotiable: Protecting a Marital Asset
Why is securing SBP so critical that it often becomes a major sticking point in negotiations? Because without it, the former spouse’s court awarded share of the military retirement – a significant marital asset earned through joint sacrifice – effectively evaporates upon the retiree’s death.
Consider this scenario: A couple divorces after 25 years of marriage, overlapping 25 years of military service. The Florida court awards the wife 50% of the husband’s disposable retired pay. The husband retires, and the wife begins receiving her monthly share, perhaps $1,500, directly from DFAS. Five years later, the husband unexpectedly passes away.
- Without SBP: The wife’s $1,500 monthly payment stops immediately and permanently. She receives nothing further from the military pension. If she is in her 60s or 70s with limited work history, this loss can be financially devastating.
- With SBP (assuming full base amount): Upon the husband’s death, the wife begins receiving the SBP annuity, typically 55% of the husband’s full retired pay amount. While less than her previous 50% share, this provides a continuing, lifetime income stream (provided she doesn’t remarry before age 55).
SBP transforms the former spouse’s portion of the retirement from a temporary benefit contingent on the retiree’s lifespan into a more secure, potentially lifelong asset. It insures the value of the marital property awarded in the divorce. For this reason, any competent Tampa military divorce lawyer representing the non military spouse will insist on addressing and securing SBP coverage.
Understanding SBP Costs: How Premiums Are Calculated
This vital protection comes at a price. SBP premiums are automatically deducted from the service member’s gross retired pay each month.
Standard Premium Calculation (Former Spouse Coverage):
- The premium is generally 6.5% of the chosen base amount.
- Example: If the retiree’s full gross retired pay is $4,000 per month, and the court orders SBP coverage based on the full amount:
- Base Amount = $4,000
- Monthly Premium = 6.5% of $4,000 = $260
Impact on Disposable Retired Pay (The “Double Hit”): This is a crucial point often missed. SBP premiums are one of the specific deductions subtracted from gross retired pay to arrive at the disposable retired pay that is actually divisible by the state court under the USFSPA.
- Continuing the Example:
- Gross Retired Pay: $4,000
- SBP Premium Deduction: -$260
- Disposable Retired Pay (Divisible Amount): $3,740
So, the SBP premium cost does two things:
- It creates a direct monthly expense ($260 in this example).
- It reduces the total “pot” of money available for division between the parties ($3,740 instead of $4,000).
This “double impact” makes the question of who ultimately bears the SBP premium cost a significant financial negotiation point. The retiree often argues that since the benefit protects the former spouse, the former spouse should bear the cost. The former spouse argues the premium is a necessary cost to preserve a marital asset. A knowledgeable Tampa military divorce lawyer understands how to articulate these arguments effectively.
Premium Duration: SBP premiums are typically paid for 30 years (360 months) and until the retiree reaches age 70. Once both conditions are met, the premiums usually stop, but the SBP coverage continues for the beneficiary’s lifetime (subject to eligibility rules like remarriage). Premiums also stop upon the death of the retiree or the beneficiary.
The Legal Framework: Florida Courts Can Order SBP and Allocate Costs
Federal law (USFSPA) explicitly allows state courts to order a service member to elect former spouse SBP coverage as part of a divorce decree. Florida courts routinely exercise this authority, recognizing SBP as integral to the equitable distribution of the military pension asset.
Furthermore, Florida courts have the discretion to determine who is financially responsible for the SBP premium costs. There is no automatic rule. The allocation of this cost is treated like any other financial issue in the divorce – it can be negotiated by the parties in a Marital Settlement Agreement or decided by the judge based on fairness and the overall financial circumstances. Factors a judge might consider include:
- The percentage share of the retired pay each party is receiving.
- The overall distribution of other marital assets and debts.
- Each party’s income, earning capacity, and financial need.
- The length of the marriage.
- Any alimony awarded.
This judicial discretion makes the negotiation and presentation of arguments regarding SBP cost allocation a critical task for your Tampa military divorce lawyer.
Allocation Options: Who Pays the SBP Premium?
There are several ways the financial responsibility for SBP premiums can be structured in a Florida divorce:
Option 1: Retiree Pays 100% of the Premium
- How it Works: The court order mandates former spouse SBP election and is silent on cost allocation, or explicitly states the retiree is solely responsible. The premium is deducted from the retiree’s gross pay, reducing their disposable pay, and the division percentage is applied to that reduced amount.
- Argument For (Former Spouse): This is often argued as the fairest approach. The SBP protects the former spouse’s court awarded share of a marital asset. The premium is a cost associated with the pension itself, similar to taxes. Making the retiree solely responsible ensures the former spouse receives the full value of their awarded percentage of the net disposable pay. A Tampa military divorce lawyer representing the former spouse will typically advocate strongly for this.
- Argument Against (Retiree): The retiree argues they receive no direct benefit from former spouse SBP, only the former spouse does upon their death. They contend the premium cost should therefore be borne entirely by the beneficiary.
Option 2: Former Spouse Pays 100% (Indirectly)
- How it Works: The order requires SBP election. The premium is deducted from the retiree’s pay. The court then calculates the former spouse’s percentage share based on the disposable retired pay after the SBP deduction. In effect, the former spouse’s share is reduced because the divisible pot is smaller due to the premium.
- Argument For (Retiree): The beneficiary pays for their own insurance benefit.
- Argument Against (Former Spouse): This feels like paying twice. The premium already reduced the total disposable pay available for division, so applying the percentage to the net amount means the former spouse is implicitly bearing the cost and receiving a smaller base payment. This requires careful calculation to ensure fairness.
Option 3: Shared Proportionality
- How it Works: The parties agree or the court orders them to share the SBP premium cost in proportion to the share of the disposable retired pay each receives.
- Example: Retiree’s disposable retired pay (after SBP deduction) is $3,740. Former Spouse is awarded 40% ($1,496). Retiree retains 60% ($2,244). The SBP premium is $260.
- Former Spouse’s share of cost = 40% of $260 = $104.
- Retiree’s share of cost = 60% of $260 = $156.
- The order might require the retiree to pay the full premium via deduction, and then the former spouse reimburses the retiree $104 monthly, or the former spouse’s percentage award might be slightly adjusted downward to account for their share of the premium.
- Argument For: Seen as a fair “middle ground” where each party contributes to insuring their respective income streams derived from the pension.
- Argument Against: Can be administratively complex if requiring reimbursement. Adjusting the percentage slightly requires precise calculation.
Option 4: Fixed Allocation (e.g., 50/50 Split)
- How it Works: The parties agree or the court orders a specific split of the premium cost (e.g., 50% each) regardless of the pension division percentage. Similar implementation challenges as Option 3 (reimbursement or percentage adjustment).
- Argument For: Simplicity in concept.
- Argument Against: May not be equitable if the pension division itself is significantly unequal.
Option 5: Offset with Other Assets
- How it Works: The retiree agrees (or is ordered) to pay 100% of the SBP premium. In exchange, the former spouse receives less of another marital asset – perhaps a smaller share of the marital home equity, less from the TSP account, or reduced alimony.
- Argument For: Provides a “clean break” without ongoing premium sharing disputes. Allows the retiree to retain more liquid assets upfront.
- Argument Against: Requires accurately calculating the present value of the future stream of SBP premium payments, which can be complex and often requires input from a financial expert. Getting this valuation wrong can significantly disadvantage one party. This strategy requires careful financial analysis by the Tampa military divorce lawyer and potentially a CPA or CDFA.
The “best” option depends entirely on the specific financial circumstances of the parties, the other assets involved, and negotiation leverage. There is no one size fits all answer.
Strategic Considerations in Negotiation and Litigation
Because the allocation of SBP costs is discretionary, it becomes a significant bargaining chip in settlement negotiations.
- Quantify the Cost: Do not negotiate in the dark. Obtain the retiree’s pay information and calculate the actualmonthly SBP premium based on the desired base amount. Knowing the dollar figure is essential.
- Leverage: The party seeking SBP coverage (usually the former spouse) should frame it as non negotiable protection for a key marital asset. The retiree might use agreeing to pay the premium as leverage to gain concessions elsewhere (e.g., slightly lower alimony, keeping a different asset).
- Tax Impact: Remember that SBP premiums are paid with pre tax dollars from the retiree’s gross pay. This reduces the retiree’s taxable income, providing a slight tax benefit that should be considered. (The SBP annuity received by the former spouse later is taxable income to them).
- Consider the Base Amount: Is SBP coverage needed on the full retired pay, or just an amount sufficient to cover the former spouse’s awarded share? Electing a lower base amount reduces the premium cost but also reduces the potential survivor annuity. This is a strategic decision based on need and cost. Your Tampa military divorce lawyer can model different scenarios.
- Alimony Interaction: If alimony is also being awarded, the SBP cost impacts the retiree’s ability to pay, and the potential future SBP annuity impacts the former spouse’s long term need. These elements should be considered together.
If negotiation fails, your Tampa military divorce lawyer must be prepared to present a clear, compelling argument to the judge based on fairness, financial need, ability to pay, and the overall equitable distribution scheme.
Drafting the Order: Precision Prevents Future Pain
As with all aspects of military benefit division, the language in your Florida Final Judgment or Marital Settlement Agreement regarding SBP must be precise, unambiguous, and compliant with DFAS regulations. Vague language like “Husband shall maintain SBP for Wife” is insufficient and invites future litigation.
Essential SBP Clauses:
- Mandatory Election: “The Husband shall irrevocably elect Former Spouse Survivor Benefit Plan (SBP) coverage for the Wife, [Full Name, DOB, SSN].”
- Specific Base Amount: “The base amount for said SBP coverage shall be $ [Specify Dollar Amount, e.g., the full gross retired pay amount as of date of retirement, OR an amount equal to the Wife’s share, OR a fixed dollar amount].” (Be extremely specific).
- Cost Allocation: “The monthly premium cost associated with said Former Spouse SBP coverage shall be the sole responsibility of the Husband [OR shall be shared proportionally, OR Wife shall reimburse Husband 50%, etc. – State the chosen method clearly].”
- Proof of Election: “Husband shall provide Wife with a copy of the SBP Election Form (DD Form 2656) confirming said election within fourteen (14) days of his retirement or the entry of this Judgment, whichever is later. Husband shall also provide annual proof of continued SBP coverage upon Wife’s written request.”
- Cooperation Clause: “Both parties shall execute any and all documents necessary to effectuate this SBP election, including any forms required by DFAS. Husband shall not take any action to defeat Wife’s SBP entitlement.”
- (CRITICAL) Deemed Election Language: “Pursuant to 10 U.S.C. § 1450(f)(3), Wife is hereby authorized to submit a ‘deemed election’ request (DD Form 2656 10) to DFAS within one year of the date of this Final Judgment to ensure Former Spouse SBP coverage is implemented as ordered herein.”
This level of detail, especially the deemed election language and the one year deadline reminder, is crucial protection that an experienced Tampa military divorce lawyer will always include.
Conclusion: Investing in Clarity Pays Dividends
The Survivor Benefit Plan is often the only way to ensure that a former spouse’s court ordered share of military retired pay continues after the retiree’s death. Securing this vital protection is paramount, but it comes with a monthly cost. Determining who bears that cost – the retiree, the former spouse, or both – is a critical financial negotiation in any Florida military divorce.
There is no single “right” answer for allocating SBP premiums. The fairest solution depends on the specific circumstances of your case. However, what is certain is that leaving this issue unaddressed or using vague language in your final court order is a guarantee of future conflict and potential financial devastation.
Work closely with your Tampa military divorce lawyer to understand the SBP premium calculation, explore the different allocation options, and negotiate strategically. Most importantly, ensure your Final Judgment contains precise, unambiguous language that clearly mandates the SBP election, specifies the base amount, allocates the cost responsibility, and includes mechanisms for verification and enforcement. Investing in this level of detail now provides crucial peace of mind and financial security for the future, preventing costly battles down the road. Protect your share by ensuring the cost allocation is clear – consult a Tampa military divorce lawyer today. Choose your Tampa military divorce lawyer with care. An expert Tampa military divorce lawyer is essential.
Frequently Asked Questions (FAQ)
How much does SBP cost? The premium for former spouse coverage is generally 6.5% of the chosen “base amount” (the amount of retired pay being insured). This is deducted from the retiree’s gross pay before taxes and before division.
Who usually pays the SBP premium in a Florida divorce? There is no automatic rule. It is negotiable or decided by the judge. Common outcomes include the retiree paying 100%, sharing the cost proportionally, or offsetting the cost against other assets. Your Tampa military divorce lawyer will advocate for the fairest allocation.
What happens if the court orders my ex to pay the SBP premium, but they stop? Because the premium is deducted automatically by DFAS from the retiree’s pay, this is unlikely unless the retiree takes action to improperly cancel the coverage. If that happens, it is a violation of the court order, and you would file a Motion for Contempt/Enforcement.
Are there alternatives to SBP for protecting my share of the pension? Sometimes, parties agree to secure the former spouse’s interest with a private life insurance policy on the retiree’s life, with the former spouse named as beneficiary. This can be complex, requires the retiree’s cooperation for underwriting, and premiums may be higher than SBP. Discuss options with your Tampa military divorce lawyer.
If I remarry, do I lose SBP? If you (the former spouse receiving SBP) remarry before age 55, your SBP eligibility and payments generally stop permanently. If you remarry at or after age 55, your SBP eligibility continues.
Guiding Tampa’s Military Families Through Divorce
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