Unfortunately, here in Virginia we see many military couples seeking divorce. One issue that is unique to military divorce is dividing the service member’s retirement. The Uniformed Services Former Spouses’ Protection Act allows State Courts to divide the military service member’s pension as an asset acquired during the marriage. Typically, a dependent military spouse can receive up to a maximum of half the service member’s retirement pay for a marriage lasting twenty years – so long as the marriage and service time ran concurrently. For marriage’s lasting less than twenty years, the former spouse would receive a lesser portion of the retirement. For marriages that lasted over ten years, running concurrently with the military service, DFAS will direct pay the former military spouse. In marriages lasting less than ten years, the retiree will have to make his own arrangements to see that payments are made.
One problem that arises in cases such as these is when the servicemember has a portion of his retirement classified as disability. When this happens, the servicemember or retiree will waive his right to a portion of his retirement to have it classified as disability. The servicemember benefits by taking less retirement and more disability because the disability is tax free. When the retiree waives the retirement, then the former spouse, who is receiving a percentage of the retirement see a cut in pay. Lawyers and Courts have been trying to address the former spouse’s reduction in benefits due to this waiver of retirement pay for many years.
The US Supreme Court addressed this issue in the case of Howell v. Howell, decided on May 15, 2017. In the Howell case, the Arizona Supreme Court ruled that Mr. Howell, the retiree should have to pay his former spouse the difference that she lost when he waived his retirement pay in favor of disability. The Arizona high court said that her interest vested in his pre-waiver retirement and he would have to make up the difference in direct payments to her. The US Supreme Court struck down the Arizona court holding that “A state court may not order a veteran to indemnify a divorced spouse for the loss . . . caused by the veteran’s waiver of retirement pay to receive service-related disability benefits.”
This sounds fair to most people. If a veteran is receiving disability for service related injuries, why should the wife, who was not injured, get a portion of the disability income? Most of the time, the former spouse receiving less due to a waiver will not have a dramatic effect. However, in cases where the former spouse is truly relying on the entire retirement to make ends meet, there could be an injustice. The Supreme Court addresses this type of situation by saying, “Family courts remain free to take account of the contingency that some military retirement pay might be waived or take account of reductions in value when calculating or recalculating the need for spousal support.”
This means that a former spouse may, if spousal support is reserved in the Final Decree, go back and ask for an increase in spousal support based on the need arising from a decrease in overall income. If the former spouse has not reserved spousal support, then they would not have the opportunity to ask for more spousal support. Strategically, going forward, when negotiating the separation agreement prior to divorce, the former spouse’s lawyer will have to determine if the risk of reserving spousal support outweighs the risk of the service member seeking a waiver of military retirement.
