U.S. Supreme Court: military retirement division in divorce

In a new case, the court issued a unanimous opinion about an important legal issue.

In any divorce, an important issue is the division of retirement benefits between spouses. When one is a military service member, the division of military retirement benefits has extra complexity from a legal standpoint.

The U.S. Supreme Court on May 15, 2017, decided a case that clarifies a complicated aspect of this issue. Howell v. Howell considered an issue of the pre-emption of federal military law - specifically the Uniformed Services Former Spouses' Protection Act - over state family law as it concerns the division of military retirements in divorce.

The Howells' story

Sandra and John Howell divorced in 1992. The divorce decree ordered that any military retirement benefits be divided equally. A year later, John began receiving retirement benefits, with half going to Sandra. Several years later, he was found partially disabled by a service-related injury and therefore eligible for disability benefits.

Receipt of disability when a veteran already gets retirement is contingent on the person waiving an amount of retirement equal to the disability payout. This is attractive because disability is not taxable, while retirement is. John made this election and his and Sandra's monthly retirement payment was reduced by $125 each.

Sandra went back to Arizona state court to try to get reimbursed for the reduction in retirement pay. The court found the pay had "vested" in her and ordered John to reimburse. After a couple of appeals, the case ended up at the U.S. Supreme Court.

The timing of the waiver makes no difference

The Supreme Court looked closely at the Act, which says that states may divide military retirement as part of community property in divorce, with the caveat that any amounts waived as a condition of receiving disability are excluded and may not be divided. The court had decided in an earlier opinion that this meant that the excluded amount could not be divided in divorce when the waiver occurred before the divorce.

In Howell, the waiver happened years after the divorce, but the court decided that this makes no difference in the interpretation of the Act. Waived retirement is still excluded from property that state courts can divide in divorce, a characterization that reaches the Howells' situation. Despite the hardship she may have faced from the reduction, the Arizona court could not find she had vested ownership rights. The federal statute preempts the state power to divide the property in divorce as it concerns this kind of waived retirement.

This is an extremely complicated area of law and anyone facing a divorce involving military retirement or disability benefits, whether already being paid or potentially payable at some time in the future, should seek an experienced lawyer to protect his or her rights. The same is true for anyone who was divorced in the past and is currently receiving military retirement or whose ex-spouse is receiving it based on the decree, where the possibility of disability eligibility and subsequent waiver of retirement exists.

Attorney Paula Lock Smyth of Paula Lock Smyth Law Offices in Dallas, Texas, represents active and retired service members and nonmilitary spouses throughout the Metroplex in all military divorce matters, including retirement benefit division.