The interplay between military retirement and disability pay in divorce

The U.S. Supreme Court handed down an important case resolving an issue on this topic.

In May 2017, the U.S. Supreme Court released its opinion in Howell v. Howell - a case that resolved a legal question that had long been at issue among the courts of various states across the country. The court held that while military retirement pay may be divided between divorcing spouses in state court, any part of retirement waived by a military retiree as a condition of receiving veterans' disability pay is not subject to division in divorce pursuant to federal law.

Challenging circumstances

The Howell case illustrates how this legal issue can impact the parties in a military divorce, especially the nonmilitary spouse who may be receiving part of the military spouse's retirement pay pursuant to the divorce decree from a state court.

Sandra and John Howell divorced in 1991. John was in the Air Force and the divorce decree provided that Sandra would get half of his monthly military retirement pay when he retired. Shortly after divorcing, John retired and began receiving that pay, with Sandra getting her 50 percent. This continued for about 13 years, at which time John was found to have a 20 percent service-related disability from a shoulder injury, making him eligible for a proportionate amount of disability pay.

Retirement pay waiver

To get disability pay in John's circumstance, he had to waive the same amount of retirement pay. Veterans often make this choice because retirement pay is taxable, while disability is not and accordingly, John waived about $250 of a monthly retirement payment of about $1,500. This reduced both John and Sandra's portion by about $125.

Sandra asked the state court in Arizona, where they had divorced, to order John to reimburse her for the monthly loss. The state court agreed, saying that the full amount had vested in her. She won appeals up to and including one before the Arizona Supreme Court.

Federal law controls

The U.S. Supreme Court reversed, holding that the state court had no power to order John to reimburse Sandra for the waived amount of retirement pay. The Supreme Court looked at the language of the federal Uniformed Services Former Spouses' Protection Act, which says that retirement pay is divisible in divorce, but not that amount deducted as a waiver to get disability.

The Supreme Court had previously held this, but in a case where the retirement waiver had occurred before the divorce. Sandra Howell's situation seems more sympathetic, since she had probably relied on the full amount of monthly retirement pay for a long time and the reduction may have come as an unexpected surprise.

Nevertheless, the Supreme Court said that the federal law is clear no matter what the timing of the waiver is. Recognizing the financial problems that could arise in a situation like Sandra's, the court noted that going forward, this will be an issue in military divorce that can be resolved at the time of divorce. For example, the value of the military retirement could be discounted to account for the future possibility of reduction. If the nonmilitary spouse receives alimony, the parties could go back to court to ask for an adjustment, arguing that the reduction in retirement is a material change in circumstances.

Anyone with military divorce questions should seek experienced legal counsel.

Family lawyer Rebecca Anne Gonzalez of the Law Office of Rebecca Anne Gonzalez in San Antonio represents spouses involved in military divorces across the state of Texas, including those affiliated with Camp Bullis, Fort Sam Houston, USO San Antonio, Lackland Air Force Base, Randolph Air Force Base and others.