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Supreme Court decides key issue about military retirement in divorce

On behalf of Jerome Bowen

The court clarified an issue of military law in divorce that has divided state courts.

In any divorce when one or both of the parties are current or former U.S. service members, the legal issues can be unique and complex because of the interaction of federal military law and state divorce law. The state court grants the divorce, but the proceedings can be impacted by federal laws about military retirement and pension, veterans’ benefits, child custody, overseas deployment, military health care, housing, relocation with children and more.

The Howell holding

In May 2017, the U.S. Supreme Court decided Howell v. Howell, which resolved a longstanding issue that had divided state courts about the division of military retirement pay in divorce. The court held that when a veteran becomes eligible for veterans’ disability benefits and chooses to waive a proportional amount of retirement benefits as a condition of receiving disability, the amount of retirement waived cannot be divided between him or her and his or her spouse in divorce.

Military retirement waiver

Federal law requires the waiver of retirement pay to get disability in some situations. The choice is financially sound for such a veteran because retirement benefits are taxable and disability pay is not. Significantly, it does not matter whether the waiver happens before or after the divorce for purposes of a reduction in pay to a military spouse. When the waiver reduces part of the retirement pay that the other spouse was granted in divorce, even years later, the military spouse cannot be ordered to reimburse the amount of reduction.

Howell illustrates the real-life impact of this holding. John Howell, a member of the Air Force, and his wife Sandra divorced in 1991 in Arizona. The state court ordered that half of John’s eventual military retirement pay would be paid to Sandra. About a year later, he retired and this payment arrangement began. Years later, John was found 20 percent disabled from a service-related injury. He elected to collect disability and waive a proportionate amount of retirement pay, reducing the monthly payout to Sandra and him each by $125.

Sandra sued in state court to have John reimburse her for this unplanned-for reduction. The state trial court and the state appeals courts agreed with her, holding that the full amount had “vested” in Sandra and ordering John to reimburse her for the reduction.

The U.S. Supreme Court disagreed. It held that the language of the federal law is clear in that the amount waived may not be divided and that it does not matter whether the waiver happened before or after the divorce, despite the kind of impact this has on people like Sandra.

Impact of decision

The Supreme Court acknowledged the negative impact on people like Sandra, noting that the parties in future military divorces should consider the impact on the value of the retirement pension of the possible future contingency that a military spouse could be found eligible for disability.

The court also noted that in this situation, the nonmilitary spouse could try to ask the court for an alimony adjustment based on changed circumstances to make up for the reduction in retirement pay.

This is a complicated area of military divorce law. Anyone who is serving or has served in any branch of the military or the spouse or former spouse of such a person who has issues related to military pension or disability pay should speak with an experienced attorney for advice and counsel.

In Las Vegas, the attorneys at Bowen Law Offices represent military divorce clients in the Las Vegas area and in Clark County as well as across the state of Nevada.