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San Antonio, TX Family Law and Military Divorce Blog

Monday, June 20, 2016

Survivor Benefit Plan (SBP) "Base Amount" at Retirement or Divorce

A servicemember's military retired pay stops when the servicemember dies.  Likewise, in military divorce, a former spouse's share of military retired pay also stops when the servicemember dies.  How can the former spouse replace some or all of the income stream from retired pay that terminates on the servicemember's death?  The answer is to have Former Spouse Survivor Benefit Plan (FS SBP) coverage in place. 

FS SBP is a purchased annuity that begins payment when retired pay stops upon the servicemember's death.  The amount of the income FS SBP provides depends on the amount of the servicemember's retired pay insured.  The amount insured is known as the "base amount."  By default, the base amount is the servicemember's full retired pay -- UNLESS a lesser amount had been elected at time of retirement (with the spouse's signature agreement) or at time of divorce (by court order). 

This decision on setting the "base amount" is very important.  Consider the following examples:

  1. If the servicemember's retired pay had been $4,000 per month at time of death, and the full retired pay is the base amount insured, the spouse or former spouse with SBP or FS SBP coverage would receive $2,200 per month (i.e. 55% of the base amount of $4,000).
  2. If the same servicemember had selected at retirement (with the spouse's signature agreement) or at time of divorce (by court order) a lesser base amount that at time of death equaled $2,000 per month (i.e. one-half of full retired pay at time of death), the spouse or former spouse with SBP or FS SBP coverage would receive only $1,100 per month (i.e. 55% of the base amount of $2,200).

Caution!  If a spouse agreed to a lesser base amount at time of the servicemember's retirement, that same spouse (i.e soon to be ex-spouse) cannot get the court to order a higher base amount at divorce.  Otherwise, It is important to note that the base amount, SBP or FS SBP premium (which is 6.5% of the base amount), and monthly SBP or FS SBP payment at death of the servicemember all are adjusted annually according to military retiree cost of living adjustments (COLAs).  To learn more about SBP and FS SBP, speak with a qualified military divorce attorney.

Author Jim Cramp is a retired active duty colonel and the founder and principal attorney at the Cramp Law Firm, PLLC.  The firm provides a spectrum of family law-related services to clients in the greater San Antonio region, across the United States and throughout the world.  The firms also provides Wills and Estates and Probate services. 


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