Financial Planning for Military Families Post-Divorce

Financial Planning for Military Divorcees: Strategies for Success

Introduction

Divorce is a difficult process for anyone, but it can be particularly challenging for military families. Not only do service members and their spouses have to navigate the emotional aspects of ending a marriage, but they also have to address unique financial considerations. Military divorcees may face challenges such as dividing assets and benefits, managing debt and credit, and planning for child support and alimony payments. In this guide, we will explore some key strategies for post-divorce financial planning specifically tailored to military families.

Understanding the Unique Financial Challenges Faced by Military Divorcees

In order to effectively plan for their financial future, military divorcees must first understand the unique challenges they may face. One major factor is that military families often have to move frequently, which can make it difficult to maintain stable employment and establish credit. Additionally, military benefits such as housing allowances and healthcare can complicate the division of assets and support payments during divorce proceedings.

Another challenge is that military pensions and benefits are subject to specific regulations and laws, such as the Uniformed Services Former Spouses’ Protection Act (USFSPA). This can impact how they are divided during divorce and may require additional legal considerations.

Creating a Post-Divorce Budget

The first step in post-divorce financial planning is to create a budget. This is especially important for military divorcees who may have to adjust to a change in income or assets. Start by listing all sources of income, including military pay, retirement benefits, and any other sources such as employment or investments. Then, list all necessary expenses such as housing, utilities, food, and transportation.

It’s important to be realistic and conservative when estimating expenses. Military families may also need to factor in additional expenses such as childcare during deployments or PCS (Permanent Change of Station) moves. Once all income and expenses are accounted for, the budget can be adjusted as needed to ensure financial stability.

Navigating the Division of Military Pensions and Benefits

One of the most complicated aspects of a military divorce is dividing military pensions and benefits. The USFSPA allows state courts to divide military retirement pay as property during divorce proceedings. This means that the non-military spouse may be entitled to a portion of the service member’s retirement pay, depending on the length of the marriage and other factors.

In addition to retirement pay, military benefits such as housing allowances, healthcare, and commissary privileges may also be affected by divorce. It’s important to work with an attorney who has experience in military divorce and understands the laws and regulations surrounding these issues.

Managing Debt and Credit After a Military Divorce

Divorce can often result in financial strain, and military divorcees may face additional challenges when it comes to managing debt and credit. It’s important to review any joint accounts and make a plan for paying off shared debt. This may involve transferring balances to individual accounts or seeking out financial assistance programs for military families.

It’s also important to monitor credit reports and take steps to establish individual credit if necessary. This may be especially important for military spouses who have relied on their service member’s credit during their marriage.

Exploring Insurance Options for Military Families After Divorce

Health insurance is a major concern for many military families after a divorce. Under the USFSPA, a former spouse may be eligible to continue receiving military healthcare benefits if certain requirements are met. However, this may not be an option for all divorced military spouses, so it’s important to explore other insurance options.

Additionally, life insurance may need to be addressed during a military divorce. In some cases, a service member may be required to maintain a policy to ensure continued support for their former spouse and children.

Planning for Child Support and Alimony Payments

Child support and alimony are key financial considerations for military families going through a divorce. In general, child support is calculated based on the income of both parents and the amount of time the child spends with each parent. Alimony, on the other hand, may be awarded to the non-military spouse based on the length of the marriage and other factors.

Military divorcees should work with their attorneys to ensure that these support payments are properly calculated and accounted for in their post-divorce budget.

Updating Estate Plans and Beneficiary Designations

During a divorce, it’s important to update estate plans and beneficiary designations to reflect any changes in marital status or beneficiaries. This includes updating wills, trusts, and any other legal documents that outline how assets should be distributed in the event of death.

It’s also important to review and update beneficiary designations on life insurance policies, retirement accounts, and other assets. In some cases, the USFSPA may require a former spouse to be listed as the beneficiary of a service member’s retirement pay, so it’s important to understand and comply with these regulations.

Seeking Financial Guidance from Military-Specific Resources

Military divorcees may benefit from seeking out resources specifically tailored to the unique financial challenges faced by military families. This can include financial counseling services offered through military installations, as well as organizations such as the Military Officers Association of America (MOAA) or the National Military Family Association (NMFA).

Working with a financial advisor who has experience in military divorce can also be helpful in developing a post-divorce financial plan and navigating any legal concerns.

Moving Forward: Rebuilding Financial Stability and Security

While a divorce can be financially challenging, it’s important for military families to focus on rebuilding their financial stability and security. By understanding the unique challenges they may face and creating a comprehensive post-divorce financial plan, military divorcees can take steps towards a strong and stable financial future.