Recent Supreme Court Decision Affects the Distribution of Military Pensions in Divorce

by Laurie A. Saltzgiver, Esquire

U.S. Supreme Court Decision, Howell vs. HowellHowell v. Howell, No. 15-1031, the Court determined that, “A State Court may not order a veteran to indemnify a divorced spouse for the loss in the divorced spouses portion of the veteran’s retirement pay caused by the veteran’s waiver of retirement pay to receive service-related disability benefits.”

A military pension is subject to a federal statute which permits the states to divide a veteran’s military retirement pay in a divorce action. The recipient of a military pension may waive a portion of his retirement pay in order to receive disability benefits, which are not taxable. The statute does not permit the distribution of the disability pay in divorce, nor does it permit the waived portion of the retirement to be considered marital property. The Howell case challenged this portion of the federal statute and requested that the Court determine whether, after the divorce and division of the pension, the non-military recipient spouse’s portion of retirement pay can be reduced when the military recipient waives a portion of his retirement pay in order to receive disability payments.

The Howell case involved parties who were divorced and had entered a QDRO for distribution of the Husband’s military veteran’s retirement pay. Following the parties’ divorce, and after the division of assets and entry of the QDRO, the Husband waived a share of his retirement pay in order to receive federal non-taxable disability benefits. As a result of this, the portion of Husband’s pension which Wife received pursuant to the QDRO was reduced. The Supreme Court found that although Husband’s right to waive a retirement benefit in order to receive a disability benefit resulted in a loss to Wife, in light of the federal statute, Wife is unable to recover the amount of retirement pay she lost due to Husband’s waiver.

The Supreme Court found that the federal statute providing for retirement benefits superceded state laws regarding divorce and property distribution. This case will force domestic practitioners to rethink the distribution of military retirements in divorce, in light of the new uncertainty regarding the distribution of a marital federal pension.

If you have any questions regarding this Opinion or how it may affect your case, please feel free to contact us.