The Uniformed Services Former Spouses' Protection Act (or USFSPA) is a U.S. federal law enacted on September 8, 1982 to address issues that arise when a member of the military divorces, and primarily concerns jointly-earned marital property consisting of benefits earned during marriage and while one of the spouses (or both) is a military service member.
[3] The divisibility of U.S. military retirement payments in divorce proceedings has had a turbulent legislative and legal history, and the USFSPA has not closely tracked its civilian cousin enacted in 1975, the Employee Retirement Income Security Act (ERISA), although they are similar in some respects with regard to public policy aims.
[7] Some service members may be entitled to a different benefit called combat-related special compensation (CRSC) because of disability caused either by direct engagement in an armed conflict or through an instrumentality of war, such as exposure to Agent Orange.
[4][15] Before the enactment of the USFSPA, former spouses had no statutory right to receive a portion of a member's military retired pay such as they would under later revisions of ERISA;[16] for example, in the 1981 McCarty case, the U.S. Supreme Court determined there was total preemption of any such right concerning federal military retirement benefits.
[2] In other words, a State court is prohibited from distributing in a divorce action disposable retired pay which constitutes that portion of retired pay that has been waived by the retiree under 38 USC § 5305 in favor of receiving VA disability benefits.
[30] The federal Tax Court has noted that there is no law which excludes military retired pay from income, and ruled in 2012 that the purpose of the USFSPA is not to address the tax treatment of military benefits, but rather to permit Federal, State, and certain other courts to consider military retired pay when fixing property rights between parties to a divorce, dissolution, annulment, or legal separation.