United States Supreme Court holds a state court may not order a veteran to indemnify a divorced spouse for the loss in the divorced spouse’s portion of the veteran’s retirement pay caused by the veteran’s waiver of retirement pay to receive service-related disability benefits

The United States Supreme Court rarely issues opinions addressing family law, making the May 15, 2017 opinion in Howell v. Howell blogworthy. Howell addresses an issue that arises in divorces involving military members and that I had previously assumed had been addressed by the Supreme Court in Mansell v. Mansell, 490 U. S. 581 (1989): whether a state court may order a veteran to indemnify a divorced spouse for the loss in the divorced spouse’s portion of the veteran’s retirement pay caused by the veteran’s waiver of retirement pay to receive service-related disability benefits.

The Uniformed Services Former Spouses’ Protection Act, 10 U. S. C. §1408 specifically allows family courts to treatment a military member’s “disposable retired pay” as community or marital property. However that statute excludes from the definition of “disposable retired pay” amounts deducted from that pay “as a result of a waiver . . . required by law in order to receive” disability benefits. Military veterans who are or become disabled are entitled to disability benefits. Unlike retirement pay, these benefits are not subject to taxation. However, to receive disability benefits, veterans must waive an equal portion of their retirement pay. Military retirees often shift retirement pay to disability benefits to avoid taxes. These retirees can seek increased disability ratings over time, which increases their disability benefits (and their tax obligation) but reduces their retirement pay.

Another consequence of retired veterans receiving disability benefits is that it shifts these benefits from money that, under the federal statute above, is subject to equitable distribution by the family court, to money that is not. Mansell addressed whether a family court could divide disability benefits as part of a marital dissolution proceeding and held that this federal law preempted any state law that allowed such a division.

In Howell, long after the parties’ divorce, veteran husband shifted some of his retirement to disability benefits. This reduced the amount his ex-wife received in retirement pay by about $125.00 per month. She sought an order requiring Husband to indemnify her for the loss in the her portion of his retirement pay caused by the his waiver of retirement pay to receive service-related disability benefits. The Arizona state family court granted this request and the Arizona Supreme Court affirmed. I have long thought that Mansell foreclosed such an order, but evidently there was a split in state court authority on the issue. Hence the United States Supreme Court accepted certiorari in Howell and unanimously reversed the Arizona Supreme Court, finding that the rationale of Mansell–that the Federal statute explicitly prevents state courts from dividing retirement pay–foreclosed the relief sought by Wife.

Given this federal statute, it is simply impossible to force a military veteran to share disability pay as part of equitable distribution. Aware of this, the past decade I have developed a moderately useful work-a-round when representing spouses of military members: we ask the court for an order, or enter an agreement with the military spouse, that reserves alimony if the military spouse shifts retirement pay to disability benefits. Assuming my client is not otherwise foreclosed from alimony–typically due to adultery–the court has granted this request. Obviously if a military spouse remarries or would otherwise not be entitled to alimony, there is no remedy if a veteran shifts retirement to disability. However, prior to Howell, I would not have considered the remedy used by the Arizona courts as being allowed; after Howell it certainly isn’t.

I have yet to litigate a request for alimony based on such a reservation after the veteran shifted retirement to disability. However without such a reservation there is no chance for relief. Family law attorneys who were previously unaware of the issues raised in Howell should understand that reserving alimony is the only method–and an imperfect method at that–of keeping a military ex-spouse’s income from dropping when a military veteran elects to receive disability.

Put Mr. Forman’s experience, knowledge, and dedication to your service for any of your South Carolina family law needs.

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  • Michael Jones

    My question is does this include regular disability benefits that is not retired pay or connected to retire pay in any way.

    I am 100% and served 12 years but I did not medically retire. I got my rating a few months after I got out. Now I am facing a divorce

    And I would like to know if this new supreme court ruling applies to me also. I want to know if my wife will get a portion of my disability

    For either child support, alimony, and what ever else. My intent is to pay her a amount that we can mutually agree on. But as of right now she wants half of my VA, and some of my SSDI benefits. Any help or advice would be so appreciated .

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