Complex matters concerning military retirement and disability pay are at issue.
In May 2017, the U.S. Supreme Court issued an opinion that will impact many military divorces involving division of military retirement pay when the military spouse also becomes eligible for veterans’ disability benefits. The ruling concerns legal issues that arise at a complex intersection of federal military law and state divorce law.
Federal military law
As background, the federal Uniformed Services Former Spouses’ Protection Act gives state courts power to divide military retirement pay as community property in divorce. Another kind of benefit that some veterans receive is disability pay, but some of those veterans must waive the same amount of retirement pay to get disability. This is a logical choice because disability pay is not taxable gain, while retirement is.
The Act’s definition of retirement pay excludes any part that is waived to get disability. The case of Howell v. Howell out of Arizona decides a legal issue arising from this definition.
The Howell divorce
John Howell was in the Air Force and approaching retirement age when he and his wife Sandra divorced in 1972. Their divorce order provided that they would split his future retirement pay in half every month, which they did when it began about a year after the divorce. Several years later, John was found to be partially disabled and eligible for a small amount of monthly military disability pay, so he waived the same amount of retirement to get it.
This waiver reduced his and Sandra’s monthly retirement pay by about $125 each and Sandra went back to Arizona state court to ask for reimbursement from John, which the court ordered. It said that the original amount of retirement pay had “vested” in her. The Arizona Supreme Court agreed and John’s request for review was granted by the U.S. Supreme Court, which reversed the Arizona ruling.
The May opinion held that the federal law pre-empts the state court action and that no state court may order reimbursement of the amount of retirement reduced by disability waiver because the federal law excludes the amount waived from the definition of retirement pay that is divisible as community property in divorce. While it had held this to be true in a previous case in which the waiver happened before the divorce was final, Howell held that the same rule applies when the waiver happens after the divorce as in these parties’ situation, even though it can mean a loss to the nonmilitary spouse.
This ruling will impact other cases like the Howells’ because other spouses like Sandra may unexpectedly receive less retirement pay because of waivers. The U.S. Supreme Court notes that potential remedies could include asking a state court for an increase in alimony (if it is also being received) based on changed circumstances.
The court also notes that in future military divorces, the contingency that waivers could eventually reduce nonmilitary spouses’ portions of divided retirement pay should be taken into account in placing value on the future retirement or in setting alimony pay.
These complicated issues illustrate the importance of anyone involved a military divorce or facing a waiver of retirement because of disability seeking legal counsel with specific military divorce experience and knowledge.
The attorneys at Stange Law Firm, PC, with offices throughout Missouri, Illinois, Kansas and Oklahoma represent military service members or employees and military spouses in divorce, including people associated with Scott Air Force Base and Fort Leonard Wood.