The Supreme Court Monday released a decision in Howell v. Howell ruling veterans do not need to pay a divorced spouse for retirement benefits that have been waived in favor of service-related disability benefits.
In its finding, the Supreme Court held and earlier decision (Mansell v. Mansell) that found a state court may not order a veteran to underwrite a divorced spouse for the loss in the divorced spouse’s portion of the veteran’s retirement pay caused by the veteran’s waiver of retirement pay to receive service-related disability benefits.
When John and Sandra Howell divorced in 1991, the Arizona Superior Court in anticipation of John’s retirement granted Sandra half of his Military Retirement Plan funds, treating the payouts like community property.
Subsequently, in 2005 the Department of Veteran’s Affairs found that John was roughly 20 percent disabled due to a service-related injury to his shoulder. In order to receive disability benefits, he was required to waive some of his retirement funds in order to prevent ‘double dipping.’ In doing so, Sandra’s portion of retirement pay was reduced.
The Arizona family court enforced the original decree holding that it had given Sandra a “vested interest in the pre-waiver amount of that pay.”
The Supreme Court held that although the waiver in Mansell v. Mansell divorce took place before divorce proceedings … unlike the waiver in Howell v. Howell, which came many years after the divorce, the state court still did not have to power to extinguish the future contingency that Sandra’s share of military retirement pay would worth less due to John’s waiver.
“We’re pleased with the Supreme Court’s ruling in this case,” said VFW National Commander Brian Duffy in a statement to Task & Purpose. “This will, hopefully, provide some much-needed consistency across the country and ensure some certainty for veterans.”
Thirteen years after Howell’s payouts began; the Department of Veterans Affairs diagnosed the veteran with a service-connected degenerative joint disease in his shoulder. The condition rendered him 20 percent disabled, and therefore entitled him to disability benefits. This money is untaxed, but also must be substituted out as a proportion out of his military retirement plan, Task & Purpose reports.
Essentially, John gave up $250 of his $1,500 a month in retirement pay so that he could receive the same amount in disability benefits. His decision cost Sandra $125 a month, so she sued him in 2013.
Task & Purpose reports in court, Sandra argued that even if John’s retirement pay had been reduced, she still deserves half of what his retirement pay would have been without the disability benefits. The state courts agreed.
But John brought the case to the Supreme Court and the High Court ruled in John’s favor. The court held that its previous decision in Mansell v. Mansell prevents state courts from considering the waived portion of military retirement pay as a community asset in divorce proceedings.
According to Matthew Randle, a divorce lawyer in Arizona, this ruling could have serious implications for ex-spouses, most affecting those who were married to veterans with 50 percent disability ratings or less. Through concurrent retirement and disability pay, retirees with a 50 percent or higher disability rating receive both 100 percent military retirement pay and VA disability pay.
Ex-spouses in those cases will still be compensated at the same rate, while those with veteran ex-spouses with less could see up to half of their alimony taken away under the Supreme Court ruling.
“This is a double-edged sword,” Randle tells Task & Purpose. “Family courts can and should consider that this could happen and find ways to do offsets in community property division in other places.”
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