Is Involuntary Military Separation Pay Marital Property?

On rare occasions, the US military will terminate a service member involuntarily. It rarely happens, but it is considered an honorable discharge and the service member is given a severance package. The service member does not receive any retirement benefits. The severance package can be quite large. For example, in White v. White, 710 So. 2d 208 (Fla. 1 st DCA), the first district court of appeal held that the Wife's severance package from involuntary separation from the military was not marital property.

The Wife in White was in office for approximately eight of her fourteen years of service in the Navy. Naval officers are subject to an annual fitness review board, the outcome of which affects advancement, salary, and benefits. The Wife was not selected for promotion to the next higher rank and was involuntarily discharged from the Navy. The rules regarding involuntary discharge are governed by the United States Code, section 631-632. The wife received $46,000 in separation pay and did not receive any of her retirement pension benefits.

The trial court held that the separation pay was not marital property and the first district court of appeal upheld the trial court's decision. The first district court of appeal stated that the legislative history of the code awarding separation pay upon involuntary discharge indicates that such payment is not to be a replacement for retirement. On the contrary, the separation pay is designed to help the service member financially during the transition period into a civilian livelihood. It is compensation for being abruptly fired with no retirement or other benefits.

Therefore, the payout is not marital property and not subject to equitable distribution. A situation where a service member is involuntarily terminated is rare and can be complex. Also, a service member can choose to voluntarily separate from the military and also receive a different type of severance package. If the service member voluntarily resigns, then the legal analysis as very different and the severance package received could possibly be considered marital property.

If you or your spouse is facing involuntary separation from the military and expecting a severance package, contact your expert family law attorney to discuss your options today.