Case of Military Man Highlights Worst Divorce Settlement Mistakes

There are many mistakes people can make when going through the divorce process. If you are ending your marriage, it is important to avoid these errors, as they can end up costing you for years. It may even continue costing you for decades if your settlement is unfair.

One of the worst divorce settlement examples is Thomas, a man from South Dakota who made a very serious error that could have cost him. After calling in to The Ramsey Show in November 2025, Thomas obtained advice that could offer him more protection. Below, one of our Charlotte property division attorneys outlines how to ensure you are protected, too.

A real-life divorce settlement that shocked financial experts

When Thomas from South Dakota called into The Ramsey Show, he left hosts Dave Ramsey and John Delony shocked. An active military member, Thomas phoned the show to talk about the debt he had incurred post-divorce. After purchasing a truck and racking up credit card debt, Thomas needed advice about how to manage his $57,000 in debt.

Thomas explained that while earning approximately $78,000 a year, he invests 40 percent in his Thrift Savings Plan (TSP) and 20 percent in his children’s education savings. He believed he could repay his debts very quickly if he stopped investing in the TSP. However, his divorce settlement stipulated that he must give his former wife half of the military pension when he turns 67 years old.

Thomas’ dilemma was that while terminating payments to his TSP would help him repay the debt, he did not want to stop contributing just out of spite for his former wife. After being asked when his former wife would receive the benefits, Thomas confirmed that it would be when he turned 67. Essentially, under the agreed settlement terms, his former wife may receive a portion of contributions made after the marriage ended, even though North Carolina law typically limits division to the marital portion.

Ramsey was shocked and stated that he had never heard anything like the story before. Typically, retirement accounts such as a TSP are considered marital property, but only to the extent of the contributions made during the marriage. Under North Carolina’s property division law, marital property is divided fairly, although not necessarily equally, during divorce. Marital property generally includes assets and debts acquired by either spouse during the marriage and before the date of separation. As such, only the contributions Thomas made during the marriage (and associated growth on those contributions) should have been subject to property division.

Why dividing future retirement benefits in a divorce is so risky

In Thomas’ case, his former wife was generally not entitled under North Carolina equitable distribution law to post-divorce contributions, unless agreed to in a valid settlement. She would have been entitled only to a portion of the contributions made during the marriage. Due to the fact that Thomas’ divorce was final, it seems he voluntarily signed away his right to the full contributions he would make for decades to come.

Thomas also told the show hosts that his attorney had outlined his options and recommended doing it this way. The hosts, in turn, told him it was bad advice. They also suggested he stop making contributions to the TSP and use another investment tool.

Common divorce settlement mistakes that can cost you for decades

There are many common divorce settlement mistakes people make. This is particularly true when they are not working with legal counsel. Some of the most common mistakes made include the following:

• Failing to include and divide all marital property fairly: Failing to include all marital property, including all assets and debts, in a settlement agreement is a mistake made more commonly than people realize. In particular, it is important to include all retirement and pension accounts. If a settlement agreement contains language indicating all issues have been resolved, it can make it very difficult to obtain any portion of omitted assets in the future.
• Failing to submit the necessary documents: There are specialized documents that must be completed and submitted when dividing retirement accounts, in particular. Military pensions require a court order that complies with federal USFSPA and DFAS requirements to allow direct payment to a former spouse.
• Failing to consider all consequences: When transferring and distributing certain types of property, such as retirement accounts, it is critical to consider all penalties and income taxes that may apply. Failing to consider these consequences can greatly diminish an asset that seemed very valuable at the outset.
• Failing to properly value marital assets: Valuing marital property can become very complex. This is particularly true when valuing retirement accounts. For example, in non-military divorces, failing to obtain a court order may leave a retirement account subject to certain taxes. It is important to consider the value of marital property after these are applied so that the division remains fair.

Military divorce and retirement benefits: what makes these cases different?

Dividing retirement accounts in divorce is always complex. However, this is especially true when one spouse is a member of the military. This is largely due to the difference in QDROs vs. military pensions in divorce. The key differences are as follows:

• Qualified domestic relations orders (QDROs): QDROs are used for employer-sponsored, private, non-military retirement plans, such as 401(k)s. The military does not recognize QDROs. Instead, a specific, separate court order is required for the Defense Finance and Accounting Service (DFAS) to pay a former spouse directly.
• Military pension orders: Military pension orders are specifically used for military retirement pay, and they are governed by the Uniformed Services Former Spouses’ Protection Act (USFSPA).

Plan administrators often approve QDROs, but the DFAS pays former spouses directly.

Can you modify a divorce settlement?

It is possible to modify a divorce settlement, but it depends on the terms you want to change and your circumstances. If you can show a substantial change in your circumstances, you may be able to modify child custody, child support, and alimony orders. However, modifying property division settlement agreements is much more challenging. North Carolina law only allows this in limited circumstances.

Why speaking with a divorce attorney can protect your financial future

Clearly, the common mistakes made during divorce can be very costly. At Epperson Law Group, PLLC, our Charlotte property division attorneys can provide the legal advice you need to avoid these mistakes and protect your financial interests. Call us today or contact us online to schedule a consultation with one of our experienced attorneys and to get the legal protection you need.