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U.S. Supreme Court clarifies military retirement pay issue in divorce

The case looked at what happens when military retirement pay is divided in divorce and later reduced as a contingency of receiving service-related disability pay.

State courts around the country have been divided on an issue related to the division of federal military retirement pay in divorces that are otherwise mostly governed by state laws. To clarify, the U.S. Supreme Court handed down a unanimous opinion on May 15, 2017, in Howell v. Howell, a case out of Arizona between two ex-spouses, one of which is an Air Force veteran.

The federal law

The issue concerns the federal 1982 Uniformed Services Former Spouses' Protection Act. The Act says that military retirement pay may be considered community property to be divided in divorces in state courts.

The law defines military retirement pay without including any part waived in lieu of disability benefits, when the service member is eligible for both kinds of benefits. To accept disability in this dual-eligibility scenario, an equal amount of retirement pay must be given up by the veteran. This choice is preferable because retirement pay is taxable and disability is not.

In an earlier case, the Supreme Court said that a state court may not divide in divorce that part of retirement pay waived to accept disability. In that case, the waiver had already happened at the time of divorce.

The Howell scenario

In Howell, the facts were slightly different. When the Howells divorced, John, the veteran, had not yet retired. The divorce decree ordered by an Arizona court provided that when John received retirement in the future it would be equally divided between the parties. About a year later, those payments began and they were split in half.

About 13 years later, John became eligible for a 20 percent service-related disability for a shoulder injury. He chose the waiver of an equal amount of retirement in order to receive the disability. Accordingly, John and his ex-wife Sandra each lost about $125 each out of John's reduced retirement pay. Sandra, understandably, went back to state court to ask that John reimburse her.

Arizona courts all the way up to and including the Arizona Supreme Court said that John had to reimburse her because the money had already vested in her. The U.S. Supreme Court disagreed, holding that state courts had no power to order John to pay Sandra.

The court reasoned that the federal law, which grants state courts the power to divide federal military retirement, less amounts waived for disability, means that not only could the waived amount not be divided at the time of divorce, but also may not be divided years later in cases like the Howell's.

Future remedies

Finally, the Supreme Court suggested that state courts can find other ways to make it fairer for the service member's spouse in this situation. For example, alimony could be adjusted to account for the contingency that retirement pay could be reduced in case of a disability waiver. Alternatively, the value of the retirement pay could be adjusted because of this contingency.

This is a complex issue at the intersection of federal and state law. Anyone facing a military divorce or who faces an issue of retirement reduction because of a disability pay waiver after divorce should seek immediate legal advice from an experienced family lawyer.

Attorney Roland R. Esparza of The Law Office of Roland R. Esparza, P.C., in San Antonio represents clients in military divorce and other family law matters across South Texas, including people affiliated with Randolph Air Force Base, Camp Bullis Military Reservation and Lackland Air Force Base.

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