In a recent Tennessee Court of Appeals case titled Gonzales v. Gonzales, 2011 WL 221888, (Tenn.Ct.App. Jan. 24, 2011), the Court addressed an issue of first impression regarding military retirement and divorce. The question was whether the Uniformed Services Former Spouse Protection Act ("USFSPA") capped a Tennessee divorce court's ability to award retirement benefits, and the Court decided it did not.
The Court described how the USFSPA was passed by Congress as a response to the Supreme Court's decision in McCarty v. McCarty, 453 U.S 210 (1981). The McCarty case held that the relevant statutes in force at the time contained an implied pre-emption that disallowed state courts from applying state divorce laws to military retirement pay. Basically the USFSPA was an attempt to directly negate the McCarty decision and even went so far as to create a mechanism for direct payment of up to 50% of disposable military retirement earnings from the federal government to the receiving spouse.
However, since the USFSPA became effective, state courts have rendered decisions that are all across the board on this issue. For example, courts in Missouri and Idaho have held that only 50% of a spouse's military retirement is subject to distribution in the divorce. Other courts in Georgia and Minnesota allow for distribution that is over 50%, but those additional amounts cannot be paid directly from the government and must come from the actual spouse.
In finding that Tennessee divorce courts may allocate more than 50% of a spouse's military retirement, the Court relied heavily upon the military's own interpretation. The Court cited articles disseminated by the Defense Finance and Accounting Service, such as "Dividing Military Retried Pay 6 (2006)" and "Uniformed Services Former Spouse's Protection Act 2-3 (2010)." Both documents seem to assume that collection over 50% is allowed, just not through the direct payment system of the USFSPA.
Therefore, the underlying Martial Dissolution Agreement in Gonzalez that gave 100% of Husband's military retirement to his Wife was upheld, with 50% being paid through the USFSPA garnishment and the remainder having to be paid by the Husband directly to the Ex-Wife.