There are special rules that apply when a member of the military goes through divorce.
For example, the Uniformed Services Former Spouses’ Protection Act is a federal law that allows state courts to divide military retirement pay as part of the property settlement portion of a divorce. It was adopted in the 1982 to provide some financial protection to former spouses of servicemembers.
In addition to other benefits, the USFSPA allows former spouses who meet certain requirements to seek a court order that awards them a share of military retired pay, or more specifically “disposable retired pay.” The law defines “disposable retired pay” as the service member’s retired pay minus pay waived in favor of disability benefits.
In many cases, former military spouses are awarded a share (often half) of the disposable retired pay as part of the divorce settlement. However, what happens if, down the road, the servicemember decides to waive part of his or her retirement pay to receive disability benefits, say, because of the tax benefits? Would the former spouse just be out the difference? Or would the military spouse have to make it up?
These are the question that is currently before the U.S. Supreme Court.
The Supreme Court case Howell v. Howell
The Supreme Court case Howell v. Howell involves former spouses who were divorced in 1991. As part of the divorce settlement, Sandra was awarded half of John’s military retirement pay, which began the following year.
In 2005, 14 years after the divorce, John decided to forgo a portion of his retirement pay to receive disability benefits instead. This resulted in Sandra receiving $125 less per month, while John received more money, on top of tax savings.
Sandra asked the state court to order John to reinstate her larger payments, which it did. John appealed the decision all the way to the nation’s highest court, which held oral arguments in the case a few weeks ago.
John’s attorney argued that the USFSPA prohibits state courts from ordering John to make up the retirement pay that Sandra lost and he now receives as disability pay, as the USFSPA specifically states that pay waived in favor of disability benefits cannot be considered “disposable retired pay.”
Sandra’s attorney argued that Congress, when creating the USFSPA, did not intend for servicemembers to be able to agree in a divorce to divide up retirement pay and then, later on, apply for disability benefits and waive part of that pay that was supposed to go to the spouse.
As you can see, both sides have a valid argument. This is especially true because there were two main purposes of the USFSPA: to protect former spouses of military members, but also to protect disability benefits for veterans -- and the two purposes appear to be at odds in this situation.
We will be watching closely for a decision to be announced in the case later this year because it will undoubtedly affect divorcing military couples throughout the country.