Important development in division of military retirement in divorce

The U.S. Supreme Court has decided a case with implications for existing and future divisions of military retirement in divorce that could be impacted if a military spouse waives part of retirement in lieu of disability benefits.

A new U.S. Supreme Court case clarifies federal law governing the division of military retirement benefits between spouses in a state divorce court. Federal statute provides that military retirement may be divided as part of the overall property division in divorce, except for any portion of retirement pay that is waived by the military spouse in exchange for receiving the same amount of disability pay. What Howell v. Howell clarifies is that it does not matter when the waiver occurs: before or after the divorce. The waived amount is not part of retirement pay subject to division with the nonmilitary spouse.

The Howell circumstances

The facts of the Howell case illustrate the difficulty of this holding for some ex-spouses. Sandra and John Howell were divorced in the 1990s, shortly after which he began receiving military retirement pay, which was divided equally between them pursuant to their divorce decree. After around 13 years, John became eligible for military disability pay because of a shoulder problem.

It is better for a veteran to get disability over retirement because the former is not taxable, while the latter is. To get disability, the beneficiary must waive the right to receive an equal amount of retirement, which John logically did. This caused the monthly retirement amount to be reduced by around $125 each to Sandra and John.

It may have been difficult for Sandra to suddenly get less money each month and she accordingly went back to Arizona state court to ask for reimbursement from John, which the court ordered, saying that the money had by then become "vested" in her. The appeals progressed all the way to the U.S. Supreme Court.

Federal pre-emption

The Supreme Court disagreed with the Arizona courts because the Uniformed Services Former Spouses' Protection Act, the federal law that grants the power to state courts to divide military retirement between divorcing spouses, omits from the definition of retirement pay the amount waived to get disability benefits. The Supreme Court had previously applied this law to disallow division of the waived amount when the waiver had happened before the divorce, but in Howell the court clarified that the same logic applies when the waiver occurs even years after the divorce.

Potential impact

This ruling could impact any nonmilitary spouse receiving military retirement pursuant to a divorce decree. If an ex-spouse service member develops a service-related disability that creates veterans' disability benefit eligibility, should the military spouse waive the amount of retirement needed to get the disability, the nonmilitary ex-spouse's portion could be reduced like Sandra Howell's was.

Anyone in this situation should seek immediate legal advice from an attorney with military divorce experience. The Howell court in recognizing this potential hardship states that such a person could investigate whether this would be considered a change of circumstances that might qualify the nonmilitary ex-spouse for an increase in alimony or spousal support under state law.

In addition, the Supreme Court notes that when divorcing couples negotiate or advocate before the state court about division of military retirement, it should be kept in mind that the value of those retirement benefits may be reduced because of the contingency that a future waiver for disability benefits could lower retirement payouts.

The attorneys at Brandon Family Law Center, LLC, in Brandon, Florida, represent active and retired service members as well as nonmilitary spouses of military personnel, often affiliated with MacDill Air Force Base, in divorce and all related issues, including division of military retirement benefits.