Matter of: Colonel William F. Magill, USA (Retired) File: B-247508 Date: September 2, 1992
B-247508: Sep 2, 1992
MILITARY PERSONNEL Pay Survivor benefits Annuities Designated beneficiaries Court orders Where state court issues order modifying terms of prior final divorce decree (which was silent regarding Survivor Benefit Plan) and orders retired member to elect former spouse as beneficiary of Plan. Action taken by service to make such designation following proper "deemed election" request by former spouse is not objectionable as 10 U.S.C. MILITARY PERSONNEL Pay Survivor benefits Cost reimbursement While order of court ordering former spouse to be designated beneficiary of Survivor Benefit Plan and stating that former spouse is to pay the cost of such coverage. " before division of retired pay is made.
Matter of: Colonel William F. Magill, USA (Retired) File: B-247508 Date: September 2, 1992
MILITARY PERSONNEL Pay Survivor benefits Annuities Designated beneficiaries Court orders Where state court issues order modifying terms of prior final divorce decree (which was silent regarding Survivor Benefit Plan) and orders retired member to elect former spouse as beneficiary of Plan, action taken by service to make such designation following proper "deemed election" request by former spouse is not objectionable as 10 U.S.C. Sec. 1450(f)(4) permits such action by court. MILITARY PERSONNEL Pay Survivor benefits Cost reimbursement While order of court ordering former spouse to be designated beneficiary of Survivor Benefit Plan and stating that former spouse is to pay the cost of such coverage, such premium cost may not be deducted from former spouse's share of retired pay since 10 U.S.C. Sec. 1408(a)(4)(D) requires such deduction to be made in computation of "disposable retired pay," before division of retired pay is made.
The Defense Finance and Accounting Service (DFAS) has forwarded to our Office Colonel William F. Magill's appeal of a determination by the DFAS regarding his retired pay account and the designation of a beneficiary under his Survivor Benefit Plan (SBP).
Colonel Magill was divorced from his wife, Betty S. Magill, following the issuance by the Superior Court of California, County of San Diego of an Interlocutory Judgment of Dissolution of Marriage on July 17, 1980, and a Final Judgment of Dissolution of Marriage on January 9, 1981. Neither of these documents mentioned Colonel Magill's SBP.
On August 16, 1989, the Superior Court issued a Modification to Interlocutory Judgment and Order After Hearing which, among other things changed the spousal support payments and gave the former spouse a share of Colonel Magill's retired pay. In addition, the order reads in part, as follows:
". . . Petitioner shall have the option to elect the Survivor Benefit Plan. If she chooses to have it, respondent must take all reasonable steps to continue her as beneficiary and she must pay for it. If she chooses not to have it she need not pay for it and respondent may designate another beneficiary."
On September 13, 1989, an Order After Ex-Parte Hearing Re: Spousal Support was issued which stated:
"2. The respondent having previously elected to participate in his military retirement Survivor Benefit Plan and having voluntarily designated petitioner as the beneficiary spouse thereunder, shall make appropriate application to military retirement pay authorities to designate petitioner as his former spouse beneficiary under the Survivor Benefit Plan. Both parties have stipulated to this order. The Court shall reserve jurisdiction to administer all aspects of the Survivor Benefit Plan. Petitioner shall pay for her SBP entitlement."
Following Betty Magill's submission of a written request within a year of the court's action to be named the SBP beneficiary, DFAS changed Colonel Magill's beneficiary from his current spouse to his former spouse. However, DFAS did not arrange for Betty Magill to pay for the SBP entitlement as directed by the court. Instead, SBP premium payments were deducted from Colonel Magill's retired pay.
The SBP program, 10 U.S.C. Secs. 1447-1455, was established in 1972 as an income maintenance plan for the dependents of deceased members of the uniformed services. The SBP law has been amended a number of times in order to provide SBP coverage for former spouses in appropriate circumstances. At the time of Colonel Magill's 1981 divorce, a former spouse had no entitlement to SBP coverage. By the time of the 1989 court order, however, the SBP law provided that a court could order a member to elect coverage for a former spouse and that a "deemed election" request for coverage by a former spouse would by honored by the government in the event the member failed to comply with a court order that coverage be elected. However, as had been the case prior to the law's amendment, member elections or former spouse requests for deemed elections had to be filed within a year of the court order establishing the divorce or of an order modifying the terms of the divorce.
The term "court order", as used in the SBP law, means
"a court's final decree of divorce, dissolution, or annulment or a court ordered, ratified, or approved property settlement incident to such a decree (including a final decree modifying the terms of a previously issued decree of divorce, dissolution, or annulment or of a court ordered, ratified or approved property settlement agreement incident to such previously issued decree)."
10 U.S.C. Sec. 1447(8).
Colonel Magill contends that DFAS had no authority to elect SBP coverage on behalf of his former spouse and that the court orders violate the terms of the SBP. He argues that the final divorce decree issued on January 9, 1981, which did not mention SBP coverage, is the "court order" contemplated by 10 U.S.C. Sec. 1447(8) and the subsequent orders could not affect that decree. Colonel Magill also argues that DFAS should deduct SBP premiums from the share of his retired pay awarded by the court to his former spouse if it is determined that she, in fact, is entitled to SBP coverage.
We note that California law provides that the provisions of any agreement or order for the support of either party shall be subject to subsequent modification or revocation by court order. Cal. Civ. Code Sec. 4811(b) (Deering 1984). Further, 10 U.S.C. Sec. 1447(8), quoted above, includes within its definition of the term "court order" a modification of a previously issued final divorce decree or court approved property settlement.
In Nawanna Driggers, B-244101, dated today, we concluded that an order that merely reiterated an earlier order that SBP be elected for a former spouse did not qualify as a modifying court order under the statute for purposes of beginning a new 1-year period for electing SBP coverage. In that case, we stated as follows:
"In our view, the definition of a `court order' includes modification of a previous order to make clear that the substantive obligation to elect former spouse coverage may be imposed as a change to an existing order. What matters is the substantive obligation to elect coverage, and the 1-year period for a request to the Secretary begins when a court order initially imposes that obligation on a member."
In this case former spouse coverage under SBP was not authorized at the time the original divorce decree was issued. The modifying order for the first time addressed the issue of SBP and ordered that it be provided for Betty Magill. It was the modifying order therefore that created the substantive obligation to elect coverage. Accordingly, Betty Magill's timely request for a deemed election was correctly used by DFAS to support the establishment of SBP coverage for her.
Colonel Magill also objects to the fact that DFAS is not deducting the SBP premium cost from Betty Magill's portion of Colonel Magill's retired pay. Section 1408 of title 10 of the United States Code grants state courts the authority under certain specified conditions to treat military "disposable retired or retainer pay" either as property solely of the retired service member or as property of the member and his spouse, in accordance with the law of the jurisdiction concerned. The term "disposable retired or retainer pay" is defined in 10 U.S.C. Sec. 1408(a)(4) as the total monthly retired or retainer pay to which a member is entitled (other than disability retired pay), less certain deductions including those which:
"(D) are deducted because of an election under chapter 73 [SBP] of this title to provide an annuity to a spouse or former spouse to whom payment of a portion of such member's retired pay is being made pursuant to a court order under this section."
Therefore, DFAS is required to make such a deduction along with any others required by law before determining the disposable retired pay which is subject to the percentage division of such pay ordered by the court. Accordingly, there is no way for DFAS to collect the cost of Betty Magill's SBP coverage from her.
Since the law does not provide a mechanism for DFAS to accommodate the court's order that Betty Magill should bear the cost of her SBP coverage, Colonel Magill may want to bring section 1408(a)(4) to the court's attention so that it can be taken into account by the court in determining how much of Colonel Magill's disposable retired pay should be paid to his former spouse.