Federal Preemption

Federal preemption means that federal law takes precedence over state laws regarding certain assets in a community property context. Specifically, Social Security benefits are considered separate property, military retirement benefits are divided only according to the Uniformed Services Former Spouses' Protection Act (USFSPA), and Employee Retirement Income Security Act (ERISA) plans require a Qualified Domestic Relations Order (QDRO) for division.

Alice and Bob are getting divorced after 10 years of marriage. During their marriage, Bob earned Social Security benefits, military retirement, and contributed to an ERISA plan. In the divorce proceedings, Alice learns that she cannot claim any of Bob's Social Security benefits, that the military retirement must be divided per USFSPA guidelines, and that she needs a QDRO to access the ERISA plan. Ultimately, Alice receives her fair share of the military retirement and ERISA benefits, but not the Social Security.

Federal law trumps state rules on certain assets: Social Security is separate, military retirement divides by USFSPA, and ERISA needs a QDRO.

Exams may confuse students by presenting scenarios where they mistakenly believe all assets are subject to community property rules without recognizing federal preemption. Watch for assets like Social Security and military benefits that have specific federal guidelines.

Questions often present a divorce scenario with various types of assets, requiring candidates to identify which assets are affected by federal preemption and how they should be divided.