The nation’s highest court has spoken. On May 15, the Supreme Court issued a decision in a case that questioned whether courts can require veterans to pay their ex-spouses to make up for retirement benefits that are traded in for disability benefits.
The Court held that lower courts cannot order veterans to do this. As Military.com reported, this could result in disabled veterans sharing much less of their retirement benefits with their former spouses.
When retirement benefits become disability benefits
In Howell v. Howell, as we discussed in a previous post, a veteran, John, and his wife, Sandra, divorced in 1991. She was awarded half of his military retirement pay, which is standard under the Uniformed Services Former Spouses’ Protection Act.
In 2005, John received a 20 percent disability rating from the Department of Veterans Affairs and decided to begin waiving a portion of his monthly retirement payment in order to receive his full monthly disability payment from the VA.
As a result, Sandra lost about $125 per month in retirement benefits because disability benefits are not subject to division during divorce. Sandra asked the court to order John to make up the amount, and the court agre. John appealed the decision, and the case made its way to the Supreme Court.
What the decision means for veterans and spouses
It is common for retired members of the military choose to forgo a portion of their retirement pay in order to receive their full disability pay because disability benefits are not subject to federal income tax. Therefore, many veterans and former spouses of veterans could be affected by this ruling.
- Veterans: The ruling provides a way for veterans, who are disabled or could eventually become disabled, to protect their income in a divorce settlement.
- Ex-spouses of veterans: The ruling could result in ex-spouses of veterans losing a portion of the retirement assets they were awarded in the divorce.
This ruling is just another reason why it is so important for current and former members of the military, and their spouses, to consult an experienced attorney when going through divorce. The issue in this case could potentially result in one spouse ending up with much more or much less in retirement assets.