Are Disability Benefits Received in Lieu of Retirement Pay Divisible Marital Property?

 By Jessica O’Connell GMUSL ’13, CLASV Spring 2013 Student Advisor

Military divorce cases involve a complex convergence of state and federal laws.  States vary in their interpretation and application of the federal laws governing veterans’ disability benefits and their use in divorce proceedings.  Last October, the U.S. Supreme Court declined to consider this issue, which states are sharply divided over: whether federal law bars state divorce courts from considering a veteran’s disability benefits marital property that can be divided between divorcing parties.[1]  This post outlines what you need to know as a military servicemember, veteran, or spouse before obtaining a divorce.

Under federal law, the Uniformed Former Spouses’ Protection Act (“USFSP”) authorizes state courts to divide a servicemember’s disposable retired pay in a divorce.[2]  “Disposable retirement pay” is defined as “the total monthly retired pay to which a member is entitled,” less any authorized deductions; among those authorized amounts deducted from a servicemember’s retired pay are disability benefits.[3]  The USFSP does not require any particular division of the servicemember’s military retirement, but rather authorizes states to apply their own laws regarding division of military retirement in divorce cases.[4]

Until the implementation of concurrent receipt of disability and retirement pay, when a retired servicemember (20 years or more)[5] elected to receive tax-free disability pay, he or she had to give up a similar amount of retirement pay.[6]  Although disability pay cannot be divided as part of a divorce, when a servicemember gave up retirement pay in exchange for disability pay, this reduced the amount of retirement pay a divorcing spouse could receive.[7]  For those who are receiving retirement pay, but are not eligible for concurrent receipt, disagreement often arises in cases when post-divorce the disability waiver is elected, and the former non-military spouse faces an unanticipated reduction in the amount of military retirement he or she expected to receive.

The dispute regarding whether disability pay may be considered in a divorce raises issues under 38 U.S.C. § 5301(a) which deals with veterans’ disability benefits and makes them immune from “taxation, claims of creditors, attachment, levy and seizure.”  This Section fails to address whether disability benefits are marital or personal property and whether or not they should be included as part of a veteran’s income for support purposes.  However, the Supreme Court in Rose v. Rose made it clear that the anti-attachment clause of Title 38 does not apply to court orders which require a veteran to support his or her family.[8]  The Rose Court further found that the legislative history of veterans’ disability benefits demonstrated an intent to compensate the veteran “and his family.”[9]

Most states, including Virginia, have adopted the approach that disability pay can be used towards alimony,[10] and base this reasoning on Supreme Courts’ decision in Rose v. Rose which held that the legislative history of the veterans’ disability benefit scheme demonstrates an intent to compensate the veteran “and his family.”[11]  On the other hand, a minority of states have held that veterans’ disability benefits are not divisible property and therefore are not entitled to be used in calculating support.[12]  While states are divided on whether disability benefits may be considered in awarding familial support, the USFPA makes it clear that disability payments under Title 38 of the U.S. Code are not subject to property division upon divorce.[13]

The Supreme Court has spoken to this issue in Mansell v. Mansell, a case involving a state court’s decree which divided a military retiree’s disability benefits as part of the property settlement, and not as spousal or child support.[14]  In Mansell, the Court held that federal law prohibits state courts from dividing or partitioning disability benefits as community or marital property upon divorce, and also prohibits treating waiver of military retired pay (in order to obtain VA disability benefits) as marital or community property.[15]

While the Supreme Court and Congress agreed that VA disability benefits are not subject to property division at divorce, there is no federal law, and the Supreme Court has never held, that VA benefits may not be considered as a factor in dividing other assets, namely spousal support,[16] and a number of state courts have held that such consideration is not forbidden under Mansell.[17]  Further, a majority of state courts, including Virginia, have held on similar grounds that federal law does not prevent a state court from enforcing a contractual division (such as a property settlement of disability benefits).[18]


[1] Barclay v. Barclay, 133 S. Ct. 176, 184 L. Ed. 2d 235 (2012), cert. denied.

[2] See 10 U.S.C. § 1408.

[3] 10 U.S.C. § 1408(a)(4).

[4] 10 U.S.C. § 1408.

[5] Those servicemembers retired with less than 20 years are ineligible for concurrent receipt and must waive a portion of their retirement when electing to receive tax-free disability pay.  See http://www.military.com/ContentFiles/NEW%20_Retirement_HR_1588.htm.

[6] Understanding the Division of Military Pensions in Divorce, Divorcenet.com, http://www.divorcenet.com/states/new_york/military_divorce_and_pensions (last visited April 3, 2013) (sometimes, it is dollar-for-dollar).

[7] Id.

[8] 481 U.S. 619, 634 (1987).  The Rose case involved nonpayment of child support, however the Supreme Court views both child support and spousal support together as familial support.

[9] Id.

[10] Tom Philpott, Is Counting VA Disability in Divorce Proceedings Legal?, Military.com, (May 18, 2012) http://www.military.com/features/0,15240,245321,00.html.

[11] Rose, supra note 7 at 634.

[12] See Hagen v. Hagen, 282 S.W.3d 899, 903 (Tex. 2009) (holding veterans’ benefits which are not in lieu of retirement benefits are not subject to alimony payment calculations); Youngbluth v. Youngbluth, 6 A.3d 677, 680 (Vt. 2010) (holding “at least when the original property division order states an exact percentage and contains no indemnity provision – a former spouse cannot use an enforcement proceeding to receive an increased percentage to offset the military servicemember’s subsequent application and receipt of disability benefits); see also Davis v. Davis, 777 S.W.2d 230, 232 (Ky. 1989) (holding that courts in Kentucky are prohibited from treating a retiree’s disability payments as marital property).

[13] 10 U.S.C. § 1408.

[14] 490 U.S. 581 (1989).

[15] Id. at 594-95.

[16] Several jurisdictions have held that federal law does not bar considering veterans’ disability pay as a source of income in awarding spousal maintenance, even where disability benefits may be used to make such payments.  See, e.g., Clausen v. Clausen, 831 P.2d 1257, 1263 n.9 (Alaska 1992); see also, In re Marriage of Kraft, 832 P.2d 871 (Wash. 1992); Womack v. Womack, 818 S.W.2d 958 (Ark. 1991); In re Marriage of Nevil, 809 P.2d 1122 (Colo. Ct. App. 1991); Riley v. Riley, 571 A.2d 1261 (Md. Ct. Spec. App. 1990); Lambert v. Lambert, 395 S.E.2d 207 (Va. Ct. App. 1990); Weberg v. Weberg, 463 N.W.2d 382 (Wis. Ct. App. 1990).

[17] Bottigi v. Wall, 765 N.E.2d 819 (Mass. App. Ct. 2002); In re Strong, 8 P.3d 763 (Mont. 2000); Bishop v. Bishop, 440 S.E.2d 591 (N.C. App. 1994); Vitko v. Vitko, 524 N.W.2d 102 (N.D. 1994); In re Murphy, 862 P.2d 1143 (Mont. 1993).

[18] White v. White, 568 S.E.2d 283, 285 (N.C. App. 2002) (Mansell “does not prohibit military spouses from contracting away their disability benefits”); see also, McLellan v. McLellan, 533 S.E.2d 635 (Va. 2000); Price v. Price, 480 S.E.2d 92 (Ct. App 1996).

The views and opinions expressed in this article are those of the author’s only and do not necessarily reflect the official policy or position of CLASV, George Mason University School of Law, George Mason University or any agency of the Commonwealth of Virginia.