On this week’s #FamilyFriday article, the attorney’s at ERA Law Group, LLC are discussing the recent change in how Court’s treat a service member’s waiver of retirement pay for disability benefits and the effects it may have on the former spouse. A service member’s retirement pay is considered marital property. Depending on the length of the marriage and the Court’s Order, a percentage of the marital portion of the retirement pay is reserved for the former spouse upon the service member’s retirement. Due to a recent Supreme Court decision, a former spouse may now lose a significant amount of their ex-spouse’s military retirement pay despite what was awarded to them in their Judgment of Absolute Divorce.
In Maryland, upon entering a Judgment of Absolute Divorce, couples negotiate what, if any, percentage of the service member’s retirement pay will be awarded to the former spouse. If a service member applies for and receives disability benefits, the Department of Veterans’ Affairs (DVA) automatically reduces the member’s retirement pension on a dollar-for-dollar basis. This automatic waiver prevents members from double dipping and receiving both retirement pay and disability benefits. In practice, in exchange for the disability benefits, a member’s retirement pay is decreased which also results in a decrease for the former spouse. Put simply, the former spouse will receive a smaller piece of the pie than what was originally contemplated.
Until recently, Maryland and many other states, treated the award of the service member’s retirement pay as a contractual arrangement. This permitted the former spouse to retain their agreed upon portion of the service member’s retirement pay if and when a service member obtained disability benefits or increased benefits after the divorce which resulted in a waiver of their retirement pay. The Court interpreted the waiver as a dilution of the former spouse’s share. Finding this arrangement unfair, Maryland Courts continued to enforce the award in the Judgment of Absolute Divorce. In other words, the service member was still required to pay the difference.
A recent Supreme Court decision, Howell v. Howell, has changed the way Maryland and other states have treated such circumstances. Now – regardless of what the award was – a former spouse is only entitled to receive a portion of the retirement pay even if that retirement pay is now significantly smaller. The Supreme Court suggested that state courts consider the unreliability of the former spouse’s portion of retirement pay when making a marital award and, if applicable, compensate the spouse elsewhere. For example, perhaps this would increase alimony or a lump sum award.
If you are a military spouse, call the attorneys at ERA Law Group, LLC today at (410) 919-1790 to ensure your rights and benefits are protected!