Love is a Battlefield-VA Disability Payments in Divorce

Mobile, Alabama has its fair share of military service members, veterans, and retirees. Sometimes, those folks get divorced. When they do, the military spouse’s military retirement is subject to equitable division by the Court.

Either the parties agree on the division of military retirement or the Court divides it. In any event, the non-military spouse would then be entitled to receive a portion of the military spouse’s disposable retirement pay.

Most of the time, if the military spouse is eligible for retirement, you can bet that he or she will be granted some degree of a Veterans Administration disability rating. For example, the tinnitus from which I suffer and attribute to weapons ranges and the like is worth 10%. A monthly check from the VA on a 10% rating is less than $150, but it is tax-free.

Once I retire from the Army, so long as my rating is less than 50%, I must elect whether to accept the tax-free disability payments and have that deducted from my retired pay, or whether to receive only the retired pay, which is all taxable. Why would I not take that tax break, right? It’s a no-brainer.

Here’s a primer on the way the pay breaks down from the VA’s website: https://themilitarywallet.com/va-disability-compensation-affects-military-retirement-pay/.

However, when that occurs, the disposable retirement pay of the military spouse decreases. So, going back to the terms of the divorce order, in cases where the military spouse’s rating is less than 50%, the non-military spouse’s monthly payments decrease accordingly. As you can imagine, that could cause some consternation. So, what to do?

In the past, lawyers with experience with military retirement pay and divorce, would include an indemnification clause in the divorce agreement or seek one from the Court which basically required the military spouse to make up the shortfall to the non-military spouse upon the election of accepting VA disability payments. That is until the Supreme Court of the United States stepped in.

In Howell v. Howell, 137 S. Ct. 1400 (2017), the Supreme Court held that states are prohibited from increasing (pro rata) the amount a divorced spouse receives monthly from a veteran’s retirement pay in order to indemnify the divorced spouse for monies lost due to a veteran’s post-divorce decision to waive retirement pay in favor of nontaxable service-related disability benefits.

Here’s a quick read on Howell for the non-lawyer: https://www.military.com/daily-news/2017/05/18/supreme-court-ruling-may-cut-spouses-divorce-pension-payments.html.

The Alabama Civil Court of Appeals followed the ruling of Howell in Brown v. Brown, 2018 WL 1559790 (Ala. Civ. App. Mar. 30, 2018). The Court held that the ex-husband’s Chapter 61 temporary disability retired list (“TDRL”) pay was not “disposable retired pay” that could be considered marital property subject to division upon divorce, regardless of the parties’ settlement agreement to the contrary. Therefore, the Court agreed with the husband that his TDRL pay was disability pay that, under federal law, cannot be considered marital property subject to division. And, by the way, under Alabama Law, once the time to appeal a property division in a divorce passes, it’s a done deal. There’s no way to go back and change it.

If you’re a service member or the spouse of a service member going through a divorce, please, please, please make sure your attorney has military divorce experience before you hire that attorney. It would honor me if you would include me on your list of attorneys to interview. You can call me at (251)445-0891 or email me at ron@mcbaylaw.com. I’ll help you avoid the minefields waiting for you as you travel past your military divorce.