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Dividing post-retirement military health insurance in divorce

Divorce is never easy and what can often make matters more complicated is the division of property. How marital property is divided typically depends on where a couple lives.

Equitable property states, such as Maryland, divide assets according to a distribution scheme known as equitable distribution. Rather than simply splitting the marital estate in half, courts consider additional factors such as the duration of the marriage and the financial situation of each spouse.

Further complicating matters are assets that can be difficult to divide or value. The Alaska Supreme Court recently addressed whether post-retirement military health benefits can be valued and divided.

The case involved a retired military service member who received a post-retirement military health insurance policy. During the former service member's divorce, the trial judge decided that the military health benefits were considered marital assets and were subject to division. The former service member argued that the policy was not an asset the court could divide because it was a federal benefit; he appealed the trial court's decision.

The Alaska Supreme Court agreed with the trial court's determination that the benefits should be treated as marital property. Under the Former Spouses' Protection Act, a federal law, states can decide whether "disposable retired pay to a service member" is marital property when deciding which assets should be divided.

Although the Maryland court has not addressed this particular issue, this decision is likely to have certain implications throughout the country. Distinguishing marital assets from non-marital assets is important when filing for divorce and, unfortunately, it is not always a simple process.

Source: Insurance News, "Alaska Supreme Court rules military health insurance counts as marital asset," Pat Murphy, Dec. 19 2011

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