Military Service Credits and Divorce in California: Are They Community or Separate Property?
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Here is what happened: Husband served in the United States Air Force for four years before marriage. Thereafter, he began working as a firefighter for a city that participated in the California Public Employees’ Retirement System (CalPERS), which allowed husband to buy up to four years of service credit towards his retirement benefits for his military service. He then married. During the marriage, the husband exercised his right to buy four years of service credit for his military service. Before the parties separated, $11,000 of community funds had been used toward the purchase of the military service credit. Thus, the question at the time of dissolution was whether or not the military service credit was community or separate.
The trial court found the service credit to be the husband’s separate property, and the wife was to pay half of the community funds used to purchase the benefit. Wife appealed, arguing basic community property law and that the service credit should be found to be community property because the property was acquired during the marriage.
The Court of Appeal reversed the trial court and agreed with the wife, stating that because the military service credit was purchased with community funds during the parties’ marriage, it was community property.
Of course, the husband appealed. The California Supreme Court reversed the Appellate Court and agreed with the trial court. The Supreme Court stated that what matters in determining whether retirement benefits are community or separate property is the person’s marital status when the services on which the benefits are based were rendered. Since the husband rendered military service before the marriage, the service credit is the husband’s separate property.
What is a Military Service Credit in Retirement Plans?
A military service credit is a benefit offered to veterans who later work in civilian government roles, such as firefighters, teachers, or public safety workers, enabling them to buy back up to four years of service time toward their pension benefits. Under CalPERS (California Public Employees’ Retirement System), this option can significantly increase retirement income.
These service credits, sometimes referred to as military time buybacks or retirement service credits, are valuable, but when purchased during marriage, ownership can become a legal gray area in divorce proceedings.
Legal Framework: Community vs. Separate Property in California
Understanding the Basics
Community Property (Family Code S760): Assets acquired during marriage are presumed to be jointly owned.
Separate Property (Family Code S770): Assets acquired before marriage, by gift, or inheritance belong solely to the individual.
How This Applies to Military Service Credits
| Legal Concept | Application to Service Credit |
|---|---|
| Underlying Service Date | Military service performed before marriage → Separate Property |
| Community Funds Used to Buy Credit | The community can seek reimbursement under Family Code S2640 |
| Increased Pension Value | Benefits from premarital service remain separate property |
Related Legal Doctrines and Case Law
This case is one piece of a broader legal puzzle. Here are key doctrines and precedents you should know:
- Marriage of Lehman (1998): Retirement benefits are divisible if earned during the marriage.
- Marriage of Brown (1976): Pension rights earned during marriage are community property.
- In re Marriage of Sonne (2010): Community has the right to reimbursement for separate property contributions.
- USFSPA (Uniformed Services Former Spouses’ Protection Act): Federal law governing division of military pensions in divorce, distinct from California’s community property laws.
How to Protect Your Rights: Practical Steps
Dividing military service credits and pensions in divorce can be complex. Here’s a practical guide for spouses and veterans:
For Veterans
- Document the date of military service, which determines separate property status.
- Trace separate funds used for buyback to avoid commingling disputes.
- Consider Survivor Benefit Plan (SBP) and VA Disability Payments implications.
For Spouses
- Request reimbursement for community funds used to purchase service credits.
- File a claim under Family Code S2640, and seek legal advice for proper documentation.
- Understand Time Rule calculations for pension division based on service during marriage.
How California Differs from Federal and Other State Laws
In California, community property law governs divorce asset division, whereas federal law (USFSPA) controls military pension division. For example:
- USFSPA allows states to treat military pensions as divisible property.
- Other states (e.g., Texas) have different rules for classifying service credits.
- California’s approach focuses on when the service was rendered, not just when it was purchased.
Understanding these nuances is critical for military families navigating divorce.
Frequently Asked Questions (FAQs)
Is a military service credit purchased during marriage community property?
Not necessarily. If the underlying military service was before marriage, the service credit is separate property, but the community may be entitled to reimbursement.
What is a “Time Rule” in pension division?
The Time Rule divides pensions based on the proportion of service during the marriage compared to total service time.
How do I file for reimbursement of community funds?
File a claim under Family Code S2640. Keep records of payments, purchase documents, and marital dates.
Can military pensions be divided under federal law?
Yes, under USFSPA, military pensions can be divided by state courts. California treats them as community property only to the extent they were earned during the marriage.
What happens to Survivor Benefit Plan (SBP) coverage in divorce?
SBP coverage may continue after divorce, but the spouse must be named as a former spouse beneficiary in the divorce judgment.
Protect Your Rights During Divorce
Divorce involving military benefits and service credits is complex. Don’t navigate it alone.
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