The dissolution of marriage through divorce delivers an agonizing emotional blow under even the most amicable conditions. However, when that marriage involves active or prior military service, the financial complexities heighten further given the unique circumstances military families face. Navigating post-divorce life requires military families to completely re-evaluate budgets, assets, debts, benefits, insurance, and long-term plans through a new lens. Meticulous financial awareness, planning, and decisive action secure financial health when starting fresh after divorce. Below are key considerations, strategies, and resources to empower military members and spouses to take control of finances during marital transition to build a sound financial future.
Unique Challenges for Military Families
Certain complex dynamics intrinsic to military family structures can complicate financial standing during and after divorce. Understanding these unique challenges is the first step toward overcoming them.
Frequent Relocations
Frequent relocations are a hallmark of military family life, whether due to changing duty stations every few years or deployments. This mobility introduces complexities during divorce. For the non-military spouse, maintaining steady employment across moves poses difficulties, creating income instability and professional setbacks that limit financial standing after divorce. Costly moving expenses also strain budgets. If relocations cross state lines, the laws governing divorce and finances may also shift each move. Managing finances smoothly despite constant mobility requires flexibility and preparation.
Military Benefits
Military members earn a valuable compensation package including pensions, heavily subsidized healthcare, housing allowances, and other benefits that must be thoroughly understood, valued, and divided during divorce. Complex rules govern how divorcing spouses divide or retain these benefits post-divorce. Meticulous record-keeping and guidance from experts versed in military divorce ensures neither spouse forfeits entitled benefits nor experiences costly surprises that undermine financial foundations.
Jurisdictional Issues
Frequent moves between military bases in different states and even different countries over a military career create jurisdictional uncertainties when divorce arises. Determining which state or country laws apply depends on factors like current residence, length of residency, location of marital assets, and more. Complex legal navigation is required to ensure fair, lawful division of assets across state lines or international borders. Jurisdiction also determines statutes of limitations on various divorce-related legal matters. Understanding these key jurisdictional issues from the outset streamlines proceedings and avoids negative rulings.
Financial Assets and Liabilities
Certain key categories of assets and debts common in military families require careful attention when dissolving a marriage.
Retirement Benefits
A military pension represents one of the most valuable assets earned during marriage through years of service. Yet, military divorce complexity obscures this. The former spouse must proactively secure their rightful share of retirement benefits through post-divorce actions like obtaining a constituted pension order (CPO) from the court. Overlooking this forfeits entitled benefits. Knowing state laws on dividing pensions also optimizes outcomes.
Debt and Credit
During a military member’s frequent absences and relocations, managing family finances largely falls upon the non-military spouse. The accumulated debts and damaged credit scores that may result from years of “solo” financial duties must be untangled. Similarly, debts related to maintaining two households and high moving costs need to be addressed. Disputes over responsibility for certain debts should be resolved through mediation before stationary financial footing is possible.
Real Estate and Investments
Property like the family home near a current or former base plus any real estate investments must undergo valuation, tax analysis, and careful division. Other investments like brokerage accounts, businesses, and securities also require thorough documentation and strategic allocation between spouses during settlement. Scrutinizing assets from tax, profitability, and growth standpoints allows optimal division. Valuable assets should not be forfeited unknowingly.
Financial Planning Strategies
The clean financial slate created post-divorce provides an opportunity to rebuild financial foundations using proactive strategies.
Create a Budget
Whether maintaining or transitioning households, create a post-divorce budget reflective of new income sources and living expenses based on your family’s unique situation. Account for loss of access to formerly shared income and military benefits. Plan for new single household costs. Build in child and/or spousal support payments. Adjust savings rates accordingly. Follow the budget diligently to avoid early financial pitfalls.
Emergency Fund
Given uncertainties facing military families and veterans, establishing an emergency fund cushioning 3-6 months of essential living expenses brings security. Unexpected illness, job loss, family emergencies, economic downturns, and other contingencies call for accessible savings that an emergency fund provides. Build it up gradually if needed.
Update Financial Documents
Following the finalization of divorce and associated financial actions, immediately update beneficiary designations on retirement accounts, insurance policies, and bank accounts to reflect the new circumstances. Similarly, update wills, trusts, and powers of attorney documents impacted by the dissolution of marriage to ensure assets flow to the proper recipients in the event of disability or death.
Emotional and Psychological Aspects
The above focuses specifically on the financial planning intricacies of military divorce. However, the extreme emotional trauma and psychological stress that the dissolution of a military marriage creates cannot be understated. Seeking counseling, and professional psychiatric assistance if needed, relying on your support system, practicing self-care, maintaining perspective, and being gentle with yourself facilitates healing. Protecting mental health amidst financial concerns brings true stability.
Military family life involves frequent change and uncertainty even without divorce. Divorcing while in military service or as a veteran ushers in a complex financial transition carrying high risks if mishandled. Through education on military divorce financial nuances, proper documentation, strategic planning, and collaboration with legal and financial professionals, military families can strategically build stable futures.
