Even though you have an interest in a military retirement account as a military dependent, sometimes that interest can be compromised if the military member converts his or her retirement account into a disability based award (actually, when he or she waives the retirement account in favor of a disability account). What happens when this “conversion” occurs? Do you lose this asset if in your marriage you were a military dependent?
The division of military retirement benefits is governed by the Uniformed Services Former Spouses’ Protection Act, 10 U.S.C. § 1408. The law says that a “court may treat disposable retired pay payable to a member…either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court.” Simply stated, the law gives state courts the ability to treat disposable military retirement pay as community property (i.e., property to which both people of an interest). Disposable retired pay is defined as “the total monthly retired pay to which a member is entitled” less some specific deductions. However, the law excludes military benefits waived in order to obtain veteran’s disability compensation from being treated as disposable retired pay.
The Supreme Court of the United States in Mansell v. Mansell further elaborated on treatment of veteran’s disability benefits. In its holding, the Court stated that “the Former Spouses’ Protection Act does not grant state courts the power to treat as property divisible upon divorce military retirement pay that has been waived to receive veterans’ disability benefits.” 490 U.S. 581, 594-595 (1989). Cited by: In re Marriage of Perkins, 107 Wn.App. 313 (2001).
While state courts are barred from treating veteran’s disability benefits as divisible community property, the Supreme Court of Washington has provided an avenue of recovery for former spouses when a military member has waived disposable retirement pay for veteran’s disability benefits.
In a somewhat famous case, the Washington court specifically dealt with a wife who, pursuant to a decree of dissolution, received a portion of her husband’s military retirement benefits, which had been characterized as community property. As ordered by the decree, the wife was awarded a share of the husband’s military benefits. After the decree was issued, the Department of Veterans Affairs determined that the husband’s disability had worsened and the Department increased the husband’s disability benefits, while decreasing his retirement benefits. This reduction in retirement benefits lowered the wife’s award significantly. The wife filed a motion requesting the trial court either vacate the decree, modify the decree by providing the wife with maintenance payments equal to one half of the husband’s disability payments for as long as he received disability pay, or clarify the decree to require the respondent to pay the wife what she was originally to receive. Because the court was not able to distribute the disability pay as community property, the only option for the court was to award additional spousal maintenance as an equitable offset. Upon review of the matter, the Supreme Court supported this because “there were extraordinary circumstances… which justified remedial action by the trial court to overcome a manifest injustice which was not contemplated by the parties at the time of the 1992 decree.” The court further ruled that denying the military dependent a fair share of the retirement was fundamentally unfair as this was a significant marital community asset.
