The Supreme Court of the United States [official website] issued an opinion [text, PDF] on Monday for Howell v. Howell [SCOTUSBlog materials] ruling that a veteran does not need to pay a divorced spouse for retirement benefits that have been waived in favor of service-related disability benefits. In Mansell v. Mansell [text] the court held that while the Uniformed Services Former Spouses’ Protection Act (USFSPA) [CRS backgrounder, PDF] allows for a state to treat a veteran’s “disposable retired pay” as divisible property, the act expressly excludes “from its definition of ‘disposable retired pay’ amounts deducted from that pay ‘as a result of a waiver . . . required by law in order to receive’ disability benefits.” The court also stated that “reimbursement or indemnification displace the federal rule” and as a result are also preempted by USFSPA.

When John and Sandra Howell divorced in 1991 the Arizona Superior Court [official website] in anticipation of John’s retirement granted Sandra half of his Military Retirement Plan funds, treating them like community property. In 2005 the Department of Veteran’s Affairs found that John was about 20% disabled due to a service-related injury to his shoulder. In order to receive disability benefits, he was required to waive some of his retirement funds in order to prevent double counting. In doing so, Sandra’s portion of retirement pay was reduced by about $250 per month. The Arizona family court enforced the original decree holding that it had given Sandra a “vested interest in the prewaiver amount of that pay.” The Supreme Court held that although the waiver in Mansell took place before the divorce proceeding, unlike the waiver in Howell that came many years after the divorce, the state court still did not have the power to extinguish the future contingency that Sandra’s share of military retirement pay would be worth less due to John’s waiver.