Members of the armed forces (whether in the regular or Reserve components) and members of the Public Health Service and NOAA commissioned corps are, generally, authorized to transfer benefits to their spouses or dependent children.
If you transfer all or some of your benefit to your spouse, he or she is only entitled to the same benefits you'd be entitled to. That means that as long as you're on active duty, your spouse will not be eligible for either the housing allowance or the book stipend. However, after you leave active duty (whether to the Reserve or out of the Coast Guard entirely) your spouse will be entitled to all three of the main benefits.
If you transfer all or some of your benefit to dependent children, they will be entitled to tuition payments and the housing allowance and the book stipend regardless of your status.
NOTE: You must transfer your benefits before you leave the Coast Guard.
The general rule is that you (as a regular and Reserve servicemember) are authorized to transfer your benefit to either your spouse or a dependent child after
completing six years of active duty service, drilling Reserve service, or a combination of the two and
obligating yourself to serve at least four more years of service.
If you've transferred your benefit to your spouse, he or she may begin using the benefit immediately.
If you've transferred your benefit to a dependent child, he or she must wait until you've served at least ten years on active duty to begin using the benefit and must have
completed the requirements for a secondary school diploma or equivalency certificate or
reached his/her 18th birthday.
For those who became or will become eligible for retirement between 01 August 2009 and 01 August 2012, there are special rules concerning the additional obligated service. These rules are listed below:
if you became eligible for retirement on 01 August 2009, no additional service was required after transferring all or some of your benefits to a dependent;
if you became eligible for retirement after 01 August 2009 and before 01 August 2010 you have to serve at least one year after transferring all or some of your benefits to a dependent;
if you became eligible for retirement on or after 01 August 2010 and before 01 August 2011 you have to serve at least two years after transferring all or some of your benefits to a dependent;
if you became eligible for retirement on or after 01 August 2011 and before 01 August 2012 you have to serve at least three years after transferring all or some of your benefits to a dependent.
Currently, the policy is that if you became (or become) eligible for retirement on or any time after 01 August 2012 you must serve at least four years after transferring all or some of your benefits to a dependent or, if that's not possible because of Coast Guard policy or a statutory prohibition, you must agree to serve for the maximum amount of time allowed by that policy or statute.
If you don't want to stay in the Coast Guard longer than 20 years, be sure to transfer at least one month of benefits to each dependent before you reach the 16-year point in your career.
If you're to be involuntarily separated with an honorable discharge (e.g., CRSP, medical board, disability, etc.), you may transfer your benefit while still on active duty without incurring any additional service obligation.
If you fail to complete your service obligation (assuming you’re not involuntarily separated), you could be placed in an overpaid status and the Department of Veterans' Affairs may come after you for any money paid out.
ALCOAST 377/09 is the current authority for new GI Bill transferability policy. You can read the complete DoD memo that the ALCOAST was drawn from. The DoD memo will remain Coast Guard policy related to transferability until 01 August 2013. On that day, authority over transferability policies will revert to the service chiefs.
The Commandant has not yet published any decision as to whether the current transferability policies will continue in force or if new ones will take their place on and after 01 August 2013.