Division of Military Retirement in Colorado

In 1988, the Colorado Supreme Court ruled that military retirements, like other pension plans, are “property” and therefore subject to division upon divorce. In re: Marriage of Gallo, 752 P.2d 47 (Colo. 1988). Military pensions from divorces prior to that decision are not subject to division in Colorado, as the Gallo decision may not be applied retroactively. In re: Marriage of Booker, 833 P.2d 734 (Colo. 1992).

Dividing Retirement while Member Still in Military

As a result of the enactment of the 2017 National Defense Authorization Act, Colorado, like all states, must follow the Frozen Benefit Rule. So if the military member is still on active duty or in the reserves at the time of dissolution, the calculation will be as explained in the Calculation of Military Retirement Shares article.

Note that a Colorado court can also calculate the Net Present Value of the marital share of the military retirement, and award the spouse his share based upon that NPV. Such a division is authorized by the Colorado Supreme Court in In re: Marriage of Hunt, 909 P.2d 525 (Colo. 1995), and is still valid despite the Frozen Benefit Rule.

Calculating an NPV necessitates looking at actuarial tables to speculate as to how long each spouse will live, and make some educated guesses as to the future rates of inflation and discount rate. Such calculations are not for the faint of heart, and Graham.Law utilizes a CPA to perform them.

The net present value method is not commonly used, but when it is, it tends to be with either briefer marriages, or or those involving larger marital estates, where the couple has sufficient other marital assets to offset against the military retirement.

While the undersigned has never seen it happen, a Colorado court could utilize NPV to divide a military retirement when one of the spouses objects - even when the member has under 20 years of service so the retirement has not yet vested! In re: Marriage of Riley-Cunningham, 7 P.3d 992 (Colo. App. 1999).

Dividing Retirement When Member Already Retired at Divorce

Colorado’s formula for dividing defined benefit pension plans is known as the Hunt/Gallo formula. It is a time-rule, or “coverture” formula first promulgated by the Colorado Supreme Court in In re: Marriage of Hunt, 909 P.2d 525 (Colo. 1995). This formula applies to:

1. All defined benefit plans other than military retirement (e.g. FERS, PERA, or private company plans), and
2. Military retirements when the member is already retired at the time of dissolution.

The Hunt formula does not apply to defined contribution retirement plans, such as IRAs, TSPs, 401(k)s, etc, nor does it apply when the member is not yet retired at the time of divorce.

The marital portion is calculated as follows:

Months of marriage overlapping service
-----------------------------------------------------
Total months of military service at retirement

Example: Assume a couple was married for exactly 12 years (144 months) overlapping the 20-year career of a military member who was retired at the time of divorce.

The marital portion would be 144 / 240, or 60% of the member's disposable retired pay, and the former spouse’s share is one-half of that, or 30%. The service member receives the remaining 70%, which consists of the other half of the marital share (30%), plus his premarital separate property interest (40%).

Reserve component retired pay is treated in a similar fashion, except that the formula is based upon points, rather than months.

Can a Colorado Court Award a Spouse Under 50% of the Marital Share?

No. In a companion case decided with Hunt, a service member argued that his wife should receive less than half of the marital share of the military retirement on the grounds that she did not support his military career. The trial court agreed, and awarded the wife less than 50%. The Colorado Supreme Court reversed, directing that the former spouse receive a full half of the marital share. The Court reasoned that awarding less than half was effectively a finding of fault, and Colorado is a no-fault state. In re: Marriage of Hunt, 909 P.2d 525 (Colo. 1995).

So how can a military member prevent the court from allocating the former spouse one-half of the marital portion in Colorado? Only through negotiation. Period. Unless the former spouse voluntarily agrees to waive a claim to military retirement, a court in Colorado is required to divide it and award the former spouse 50% of the marital portion.

Dual Military Spouses & Division of Military Retirement

If both spouses are in the military, is retirement divided the same way, or does each spouse keep his/her own retirement? Strictly speaking, each retirement is divided the same way, with each spouse receiving a share of the other's retirement as set out above. And that is the likely outcome if a judge were to rule on it, assuming the retirements have different values.

However, if both spouses are the same rank and their retirements are worth about the same, they may well agree that each keep their own w/o further dividing them.

More Information:

Military Compensation Web Site, from the Office of the Secretary of Defense. Describes the types of military retirement, and has a retirement calculator for each type.