The U.S. Supreme Court recently heard argument on a military divorce appeal concerning the division of retirement pay which can have major financial consequences for divorcing military couples. The Court will rule on whether retired service personnel must pay a portion of retirement pay that they now receive as disability pay.

The Uniformed Services Former Spouse’s Act empowers state courts to divide military pay in divorce. State courts may treat disposable retired pay as the service member’s property or the property of both formers spouses under state law. Disposable retired pay is the retired member’s retired pay less any part of that pay that was waived in favor of disability benefits.

In this case, the couple’s dispute arose 14 years after their divorce. They originally agreed that the wife would receive half of the ex-spouse’s military retirement pay, which is taxed. The service member later chose to waive part of his retirement pay in favor of receiving disability benefits which are not taxed. Following this decision, his wife now received $125.00 per month less while her husband received more money from not paying his wife and his new tax savings.

His ex-wife sought relief in state court. The Arizona State Supreme Court ultimately approved her request and the U.S. Supreme Court agreed to accept this appeal last fall.

The husband’s attorney argued that the USFSPA prohibits a state court from ordering him to pay his ex-wife half of his retirement pay he now receives as disability pay. He claimed that Congress, in passing this law, wanted veterans to keep their disability pay because of their disability and to take the place of money that cannot be earned through employment. His right to disability pay is unrelated to whether he received this entitlement before or after divorce.

The wife’s lawyer argued that allowing her ex-husband to all the disability would be against the purpose of the USFSPA. Congress, in enacting the law, did not intend to allow service members to agree to divide retirement pay but apply for disability pay, waive that pay and exclude their ex-spouse from any of that entitlement.

Dividing military benefits is only one of the important and sometimes difficult issues that arise in these divorces. An attorney can assist a spouse and help protect their rights as Courts address these issues.


Source: SCOTUS Blog, “Argument analysis: Quiet bench means few signals on military divorce case,” By Amy Howe, March 20, 2017