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My almost 47 year old daughter is getting divorced from her 49 year old retired military husband. He wants her to drop the Survivor Benefit Plan which costs close to $400 monthly and he will get a 15 or 20 year term insurance policy for $500,000 for her benefit. She has been a stay- at- home mom so her career prospects are unclear. My concern is she could end up at 62 or 67 without the insurance or survivor benefits. Any suggestions?
I went through a military divorce. Unlike pension share distribution, which is pretty clear under the USSPA, the SBP is up to the judge’s discretion and depends on a lot of different variables. Obviously I would not waive it voluntarily but it is also important to properly value it in context of other property distribution in the divorce, i.e. there is a big difference for the judge if they were married only 10 years of active duty and she is eligible for only 25 percent of the pension based on a 20 year career vs if they were married 20 years of active duty and there is a 50 percent share of the pension for example.
This is a complex decision. Some things to consider before making a decision.
-Remarriage ends SBP benefits. Your daughter would lose SBP if she remarried.
-She would also likely lose SBP if the husband remarried and filled a form to redesignate the beneficiary. She would need to research this more.
-While the military advocates for people to take the SBP, most military men live longer than the general public shortening the payout of benefits. Something to consider given their similar ages.
-It’s hard to give advice without knowing the rest of the financial situation. SBP is mainly to get through the working years as the benefit lessens the less time that you can collect (based on SS benefits).
-SBP declination is completely up to the spouse, so it is her choice. However, divorce can cause people to do vindictive things (like marry a female friend just to remove her from SBP since she didn’t agree to his proposal he seems to be pushing), so she should weigh the risks. I doubt you can force him to agree not to remarry, but maybe not to remove her SBP or replace it with a life insurance policy if he chooses to do so.
-As a good faith she can agree to pay the monthly payments also, as part of a compromise, those monthly payments cease after 30 years.
Are you sure this is still true after passage of the Social Security Fairness Act? “SBP is mainly to get through the working years as the benefit lessens the less time that you can collect (based on SS benefits).”
In real estate, they say location, location, location! In divorce disputes, it’s attorney, attorney, attorney! Whoever has the best representation wins. The goal should be equality, but neither party will see the settlement as fair.
My free advice is to hire a lawyer who is also an accountant who can prepare a present value calculation to show that the survivor benefit is the only responsible choice.
Here is ChatGPT’s response, but I 100% agree with Dan Smith’s advice #1 & 4: Hire a good attorney!
Your daughter should refuse to drop the Survivor Benefit Plan (SBP) because replacing it with a 15- or 20-year term life insurance policy exposes her to massive, irreversible financial risk in her senior years.
While a term policy sounds like a fair trade today, it is a ticking time bomb for a former stay-at-home mom. If her ex-husband survives past the 15- or 20-year mark (dying after age 64 or 69), the insurance policy expires completely worthless, leaving her with zero financial protection exactly when she needs it most.
The strategy below outlines why she should keep the SBP, how to handle the monthly cost, and the steps to protect her future.
Analyze the Risks: SBP vs. Term Life Insurance
Evaluating the differences reveals why the husband’s proposal favors him while leaving your daughter vulnerable.
(Chart not transferable)
Step-by-Step Action Plan for the Divorce Negotiations
Your daughter must take immediate control of the financial negotiations through her attorney to secure her long-term safety.
1. Demand Former Spouse SBP Coverage
She must refuse to waive her rights to the SBP. Her attorney must ensure the final divorce decree explicitly mandates that the husband maintains Former Spouse SBP Coverage.
2. Negotiate Who Pays the Premium
The $400 monthly premium is automatically deducted from the husband’s gross military retirement pay. He wants her to drop it to increase his own monthly cash flow. Her lawyer should argue that the husband must bear the cost of this premium as part of her spousal support, or adjust the division of the overall marital asset pool to compensate her for the deduction.
3. Meet the Strict 1-Year Federal Deadline
The military will not automatically transition the coverage. Once the divorce is finalized, your daughter must independently submit DD Form 2656-10 (Survivor Benefit Plan Election Change) directly to the Defense Finance and Accounting Service (DFAS). This is a “deemed election” that must be filed within exactly one year of the divorce date to guarantee her coverage, even if her ex-husband fails to file his paperwork.
4. Secure Her Share of the Current Pension
As a long-term stay-at-home mom, she is likely entitled to a direct share of his monthly military retirement pension under the Uniformed Services Former Spouses’ Protection Act (USFSPA). Ensure this division is legally formalized alongside the SBP.
Hidden Blind Spots to Consider
Is a formal divorce attorney is already representing her?
Thank you for all the responses. Daughter does have a lawyer who seems to be letting her make this decision without much guidance (but which she does get continually from husband to give SBP up).
The lawyer seems VERY PROBLEMATIC. A good lawyer acts as an advocate for his/her client. Your daughter needs better representation.
Dk, when I was going through divorce I hated receiving advice from well meaning friends. Those friends aren’t ‘in the room where it happens’. But since you asked, here are a few thoughts.
I recently wrote in an article that, painful as it was for me, my ex-wife raised my daughters, and they turned out pretty darned good. The settlement was not unfair.
A QDRO should happen but there are many pitfalls how they are structured, especially related to when the spouse can begin to collect her portion and that affects the reduction to the employees portion. Had to deal with many QDROs over the years and saw some nasty stuff.
Right. Another argument for numbers one and four.
I once had a retiree show up at our office claiming to have a gun looking for me because I gave away half his pension to his ex.
In fact, his attorney made the deal and the retiree paid no attention to what he signed agreeing to the QDRO.
OMG, it’s can’t have been easy being HR.
Interesting. I’ve been retired 16 years, but last year I had a now retired former union committee member e-mail asking me to verify something I had promised the union back in 2000 or so.
Under no circumstance give up the survivor benefit. She needs to think long term security, especially if term insurance is involved. A life annuity is a life annuity.
Advise her against it. The survivor benefit plan is for life, and as you indicate, a term life insurance policy is not, so she could end up with nothing. What’s more, there would be the concern of the ex husband not making the payments for the term policy (a concern that would exist even if he promised a whole life policy).