Assets and debts are divided either equally or equitably in North Carolina divorces. Tangible property like vehicles, houses, furniture, and jewelry can be included in this distribution, as can intangible assets like bank accounts and retirement accounts. Military pensions are also subject to distribution in a divorce, but they are handled slightly differently from other accounts like 401(k)s and IRAs.
One distribution rule that is unique to military retirement involves the amount of time spouses must be married. According to the US Code, spouses must have been married for at least ten years in order for the non-veteran spouse to receive payments directly from the Defense Finance and Accounting Service (DFAS). This doesn’t mean that spouses married for shorter periods are precluded from receiving a portion of their wife or husband’s military pension. It only means that DFAS will likely deny an application for direct payments.
Diener v. Brown
In the Court of Appeals case of Diener v. Brown, Husband appealed an order that stated he breached the terms of the parties’ separation agreement and that required him to pay Wife 15% of his monthly military retirement pay for the rest of his life plus an additional $8,550 in arrearages. He argued that since the separation agreement specifically stated Wife would receive her portion of his pension from DFAS, she is not entitled to receive a portion of his pension.
The parties were married in 2011. Husband’s service in the US Marine Corps lasted 15 years and he retired in 2016. The parties were divorced in 2019. Prior to the divorce, they entered into a separation agreement that stated Wife would receive 15% of Husband’s military retirement payments for the rest of his life. It also stated that once her payments were being deducted directly from Husband’s retirement, Wife would be responsible for contacting DFAS to coordinate her payments.
Later in 2019, Wife notified Husband that she could not receive her portion of the pension directly from DFAS because the parties had not been married for ten years or more. Despite this, Husband refused to directly provide any payments from his military pension.
Breach of Contract Filing
Wife filed for breach of contract and specific performance based on Husband’s failure to comply with the separation agreement. The trial court entered an order stating that Wife qualified for direct payments from the military finance center, but DFAS denied her application. The trial court then ruled that Husband had breached the separation agreement and ordered him to specifically perform by:
- Paying Wife’s portion of his pension directly to her
- Paying arrearages of $8,550
Husband appealed, arguing that he did not violate the terms of the separation agreement. The Court of Appeals disagreed with Husband’s argument. The separation agreement awarded Wife with 15% of Husband’s pension because she waived her interest in other intangible property. Husband did not pay Wife any of the pension money she was entitled to, so the appellate court ruled that he had breached the separation agreement.
What is Specific Performance?
When no other remedy at law is able to address an issue adequately, specific performance may be the most appropriate option. In Diener v. Brown, the Court of Appeals determined that Wife’s remedy at law would require her to repeatedly sue Husband to receive her percentage of his pension, which would be an expensive, time-consuming, and inadequate remedy. Thus, the trial court’s decision to order Husband to specifically perform by paying Wife directly each month was affirmed by the Court of Appeals.