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Are unvested military retirement benefits subject to division? (2 of 2)

Welcome back. We are currently discussing a divorce case that was recently decided by the Ohio Supreme Court and asks whether unvested military retirement assets, like vested military retirement benefits, are considered property that can be divided during divorce.

The reason this is a difficult question, and one that is cut out for the state Supreme Court, is that Ohio law doesn’t distinguish between vested and unvested retirement assets in its section on property division. Two decades ago, the state Supreme Court held that vested military pension benefits can be considered marital property, but the Court had not yet considered unvested benefits… until now.

The wife in the case argued that she was entitled to a portion of her husband’s military retirement benefit that would not vest until he had served another four years with the National Guard, which he had already committed to do.

The trial court sided with the husband, concluding that there were “no retirement benefits for the court to divide” as the unvested benefits were merely an expectation not an actual asset. The court of appeals agreed with this holding.

However, the Ohio Supreme Court disagreed with the lower courts. It found that even though it is presumably difficult to attach a value to assets that have not yet vested (and may never vest), unvested retirement benefits are still considered property and are subject to division during divorce.

Instead of deciding that the unvested military retirement benefit could not be divided, the Supreme Court held that the lower court should have come up with a percentage that the wife will be entitled to once the benefit does vest. This percentage could be determined by looking at how much of the retirement benefit was earned during the couple’s marriage, the Court ruled.

In sum, if you take anything from this Ohio Supreme Court decision remember that: Military retirement benefits that have not yet vested are still subject to division during divorce.

Source: The Clermont Sun, “Ohio Supreme Court hears case dealing with military retirement benefits,” Paul Pfeifer, Nov. 13, 2014

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