Supreme Court ruling changes aspect of asset division in divorce

In 1982, the Uniformed Services Former Spouse Protection Act (USFSPA) determined how military retirement pay may be divided. However, with the United States Supreme Court ruling earlier this year, there are some military spouse organizations decrying the decision, as it purportedly can reduce a former spouse’s income. The ruling now protects a veteran’s disability income from division during or after a divorce. There are likely many Colorado families who may be directly impacted by this decision.

The 1982 Act stated — in part — that, if a marriage lasted a minimum of 10 years and overlapped with at least 10 years of service, the former spouse would be entitled to up to 50 percent of the veteran’s pension. However, in the event that a veteran seeks a disability rating from the Veteran’s Affairs agency, the service member usually agrees to waive a percentage of his or her retirement benefits. The recent ruling by the Supreme Court concerned a case that had worked its way through the court systems and was filed by an ex-air force spouse whose husband sought disability benefits in exchange for foregoing an estimated 20 percent of his retirement.

Unfortunately, this agreement resulted in his former wife seeing her portion also reduced. She had filed the suit to have her share of the money restored. Her case went to the Arizona Supreme court, which ruled in her favor. Her former husband appealed that decision, and the Supreme Court ruled that disability benefits are not subject to division. There are veterans’ organizations that applaud this ruling, while there are others that are urging that the policy regarding disability and retirement pay be revamped.

Currently, any veteran who receives a disability rating of 50 percent or greater is entitled to receive both full retirement and disability pay at the same time. However, a rating under 50 percent forces a veteran to waive a portion of the pension in favor of the tax-free benefit. There are some who are concerned that spouses will now seek a disabled designation in an attempt to prevent a spouse from receiving a portion of these assets as determined by a divorce settlement. Colorado families who are concerned about this ruling or related matters may seek more information from an experienced attorney well-versed in military divorce.

Source: ameriforce.net, “Recent Supreme Court Decision Affects Military Divorce Settlements“, Andrea Downing Peck, Sept. 1, 2017