Divorces are full of tripfalls and traps and pensions are the quicksand of divorces. Dividing military pensions adds another level of difficulty altogether.
Howell v. Howell
When John and Sandra Howell got divorced in Arizona the state court awarded Sandra 50% of John’s military retirement pay. She began receiving payments a year later when John retired. About 13 years later, the Department of Veterans Affairs found John to be partially disabled due to a service connected injury.
The Uniformed Services Former Spouses’ Protection Act authorizes states to treat veterans’ “disposable retired pay” as community property. 10 U.S.C. 1408. However, if a veteran receives disability pay, her or she is required by law to waive the same amount from pension benefits and the definition of “disposable retired pay” specifically excludes amounts waived for disability payments. 10 U.S.C. 5305. In the Howell case this reduced Sandra’s payments, and increased John’s payments, by about $250 a month.
Sandra petitioned the state court to enforce the divorce order and restore the original payments. The court agreed and so did the Arizona Supreme Court when John appealed. But that’s not the end of the case and John was determined to take it all the way to the U.S. Supreme Court. That court, in 2017, held that the federal law pre-empted states from dividing waived military retirement pay as community property State courts could not require the veteran to reimburse or indemnify a spouse for a loss of benefit due to the disability waiver.
- The U.S. Supreme Court said a state court could adjust alimony to take into account the possibility of a future reduction in disposable retired pay, or
- A state court could value the pension less because of the contingency that it might be reduced and divide or set off other community property to take that reduction in value into account. (Equitable distribution states like MD, VA and DC could adjust the marital award to account for this contingency.
Weiser v. Weiser
What if the parties have an agreement on how they will divide military pension? The parties can do lots of things that judges cannot do. The courts will enforce agreements by the parties even if they provide for something the court does not have the power to order. Andrew and Michelle Weiser married in 1992 and divorced in 2011. Their marriage settlement agreement said:
“In the event the husband’s military retirement benefit shall be reduced or offset by disability pay, such a reduction shall not reduce the amount the wife is entitled to receive each month under the terms of this order.”
Andrew retired in 2010 after 20 years in the US Army. In 2012, Andrew received a 30% disability rating and started receiving disability pay which reduced his retirement pay. He began paying Michelle one half of the remaining military retirement pay, rather than one half of the original military retirement pay.
Michelle sued to enforce the agreement and collect the reduction in payments. Her lawyers argued that since there was no agreement in Howell it did not apply to the Weiser case. They also argued res judicata which means the dispute has already been decided in the case.
Even if it was decided wrongly, the court will not reopen the case to let the parties relitigate it. The Washington Court of Appeals agreed with Michelle and awarded her attorney fees.
The Law Governing Military Pensions in a Divorce
Is this the last word on the subject? Another judge on another day could find the contractual provision void as against public policy and decline to enforce it.
It doesn’t seem right to let a veteran wiggle out of his agreement not to reduce pension payments to a former spouse just because the payments change from retirement pay to disability pay. But Congress passed the law to protect veteran’s disability pay from all creditors including former spouses.
We’ll have to wait and see if Congress or the U.S. Supreme Court clarifies the law. In the meantime, watch out for the quicksand!