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The Professor Nedley Series
Military Money – Part III 1/2
Elective Military Disability
February 10, 2008
Military Pay-Part I - outlines various allowances provided by the military in an attempt to make military compensation equivalent to that of comparable jobs and locations in the civilian world.
Military Pay – Part II - is an outline of the many separate pays provided by the military while a member is on active duty.
Military Pay - Part III - explains how the courts deal with the division and jurisdiction issues of military retired pay.
Military Pay III 1/2 - delves into the mysteries of what to do with the post judgment election of the military member to take disability payments in lieu of earned retirement.
The Ongoing Mystery of Disability Pay in Lieu of Retirement
A disabled spouse cannot defeat the community interest in the vested pension plan that has been earned by years of service. Where disability is taken in lieu of “earned” retirement benefits, only that portion that is not earned during the marriage may be treated as SP. Justice (1984) 157 CA3d 82, Stenquist (1978) (An Ashworth Lawyer Case) 21 C3d 779, Briltz (1983) 141 CA3d 17.
Same result even if the service member hadn’t reached the decision point in his/her career. Ie. Not far enough along to even decide whether it will be disability or retirement (longevity). Pensions are divisible CP whether or not vested.
See Rutter on Family Law §8:171, §8:141.
Note that the service member gets credit for the disability being tax free. Give them that without a fight. In other words the spouses share is a share of “disposable retired pay” and that excludes the amounts saved on taxes by the waiver in order to receive compensation under Title 38 (10 USC §1408(a)(4)(B)). You simply calculate the division of the retirement as if the full amount is to be taxed, the non-military spouse is entitled to the net amount.
Federal preemption is no longer a barrier (See §8:223) See also §8:176. The major case that the court must look to is the Krempin (1999) 70 CA 4th 1008 case, which provides an equitable remedy to protect the non-members right to a share of the CP military pension payments after a member’s post-judgment waiver of pension rights.
The state court’s jurisdiction when it comes to enforcement only extends to 50% of the disposable retired pay, so if the court had to redo the percentages to account for a waiver of retired pay for disability it could still only exercise this control as to 50% of the total. Without getting lost in the math. If a member waived 30% of the retired pay to get that share as disability, the court would only have jurisdiction over 50% of the 70% remaining or 35% of the total. So if there were a true 20/20 spouse, the court would not be able to make an enforceable order. They can make the order for 50% of the total, but the military would not enforce it with direct payments from dfas. So yes, disability is the service members property, but only to the extent that it wasn't earned during the marriage. If it is earned during the marriage and thereafter the retired pay was waived in lieu of disability, it remains CP and the only problem may become enforcement as opposed to the application of the CP law.
In that case the court should follow Krempin to the extent that it has control over the remaining non-waived amount.
There's a good book in this area that only costs $25, it's called Pensions and Divorce.