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 Loopholes

  1. 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
  2. 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!

Life insurance in divorce

Divorcing spouses and parents have varied life insurance needs. Whenever one or more persons are financially dependent on another’s earnings, there is what the life insurance industry refers to as an insurable interest.

In families of two married parents with young children, the primary wage earner often has life insurance coverage equal to several years earnings. The benefit to the financially dependent spouse and the children is obvious. The benefit to the insured party is the peace of mind that comes from knowing your loved ones are provided for in all events.

Often, both spouses carry life insurance coverage because both are employed or, if one is not employed, the stay at home spouse is providing services that would have to be purchased in the event of her, or his, untimely death.

Upon divorce in families with children there is still the same basic economic need for life insurance coverage to protect the child support payments. The children generally would be the beneficiaries of the policy – directly or through a trust. The insured still benefits from knowing his loved ones will be provided for.

Life insurance proceeds paid during the insured’s children’s minority would be needed and would benefit the insured’s children just as they would if he or she died while the children were minors and the insured was married to the other parent at death.

But the dynamic is different in divorce. The insured views the insurance coverage as benefiting the ex-spouse. Often there is hard bargaining around how much insurance coverage there will be, how long it will be in place or how quickly it decreases, and whether the spouse can be the trustee of the trust to which the insurance proceeds are paid.

I’ll explore this further in future posts.

Ask the divorce lawyer

In this post, divorce lawyers from Thyden Gross and Callahan answer your family law questions.

The Dispute

Q: The children didn’t have school today (Friday).  My ex says I have to pick them up at her house.  I say that she has to drop them off to me. Who’s right?

Divorce Lawyer Answer:  First let’s look at the divorce order or separation agreement if you have one.

What the Agreement Says

Q:  Our separation agreement says:  “The father shall have the children on Wednesdays and Fridays from pickup at daycare/school/camp (hereinafter referred to as “school”) or from 8:30 am for any child not attending school that day.”

Divorce Lawyer Answer:  The agreement is not clear. The drafter tried to cram too many thoughts into that one run-on sentence.  It would have been better if the sentence ended with the parenthetical.

The next sentence would read:  “The father will pick up the children from mother’s home at 8:30 am on days when they are not in school.”  Or the mother will drop them off at the father’s house.  What have you been doing so far?

Past Conduct

Q:  On the mornings that I have the kids, but it is my ex’s day, if the kids are sick, I will drop them off at my ex’s.  So on her mornings, when it is my day, she should do the same.

The issue with Fridays is that every two weeks, there is no school on Friday. Teacher development day or something. So I have it worked out with my boss, that I work from home every other Friday so I can watch the kids.  This way, it is good for both of us, I don’t lose wages, and my ex also gets to go to work and not lose wages either.

I will also not pay her lost wages claims. I told her that I will not pick them up today and she’s causing her own wage loss.  I want her to pay for my legal fees as well.

The Solution

Divorce Lawyer Answer:  I agree that you should not have to pay her for lost wages.  And I agree that both of you win and it is therefore best for the children if she drops them off on Fridays.

However, the agreement doesn’t say that, so in the event of a dispute, you either have to reach a mutual agreement or go to mediation or court.  The American Rule applies to legal fees – each pays their own.

A Robot Mediator for Family Law Cases?

“I’ve only got two tools my toolbox,”  divorce attorney Andy Pratt tells his clients.  “Either we negotiate an agreement with your spouse or we go to court and let the judge decide.”

Maybe now he will be able to add a third tool to his toolbox.

A robot mediator using artificial intelligence and an algorithm has settled a court case in Canada.  A client disputed a fee charged by a personal trainer.

The parties had tried mediation with a human but failed to resolve their case.

Then the parties tried Smartsettle ONE, an online program which allows parties to make offers and counter-offers by moving flags along sliders.  Another program, Smartsettle Infinity, allows participants to include conditions in their settlements.

They settled the case in less than two hours.

What’s next – a robot mediator for family law cases?