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Division of Military Retirement and Disability Payments in an Arizona Divorce

Posted on : December 22, 2015, By:  Christopher Hildebrand
Effect of CDRP on Alimony in Arizona

Division of Military Retirement and Disability Payments in an Arizona Divorce

Division of Military Retirement in an Arizona divorce.

Division of Military Retirement in an Arizona divorce.

Under federal law, a veteran who receives military retirement pay cannot collect Veteran’s Affairs (VA) disability benefits without giving up an equivalent amount of his retirement pay. Questions may arise regarding the division of military retirement and disability payments in an Arizona Divorce. Disability benefits are, under federal law, the separate property of the veteran. Therefore, in a divorce proceeding, a spouse cannot be awarded any part of the disability nor of any retirement pay, the veteran waives to receive disability. Arizona family and divorce law prohibit courts from making up for the waived retirement pay by awarding extra money or property to the spouse. In the case of Howell v. Howell No CV 15-0030-PR (Filed December 2, 2015), the Arizona Supreme Court discussed what happens when part of a veteran’s retirement pay is awarded to the spouse in a divorce decree before the veteran waives a part of it for disability benefits.

John Howell and Sandra Howell divorced in 1991. At that time, John was retired from the Air Force and receiving monthly retirement pay, and the court awarded half of the retirement pay to Sandra. John later qualified for VA disability payments, and he waived an equivalent amount of his retirement pay to get them. Because of that waiver, the monthly payments to both John and Sandra were reduced. Sandra asked the court to make John pay her the difference. The divorce court and the Court of Appeals ruled in her favor. John appealed to the Arizona Supreme Court.

Hildebrand Law, PC | Voted Best of Our Valley in Arizona Foothills Magazine.

Hildebrand Law, PC | Voted Best of Our Valley in Arizona Foothills Magazine.

Choice Between Military Retirement Pay and Disability Pay

If a veteran who receives military retirement pay is found to be eligible for monthly VA disability benefits, he is not entitled to claim both. He can accept full retirement pay and decline disability benefits, or he can accept the monthly disability benefits and waive an equal amount of monthly retirement pay. Since disability benefits are not subject to income tax, it is usually better financially to accept the disability benefits.
In the Howell case, John was receiving full military retirement pay of $1,474 per month when he and his wife Sandra divorced in 1991. Each spouse was awarded 50% of the retirement pay.

In 2004, John filed a disability claim with the VA asserting that the degenerative disk in his shoulder was a disability directly related to his military service. The claim was accepted the following year and assigned a 20% disability. John accepted a monthly, tax-free disability payment and waived an equal amount of his pay. That meant that the 50% each spouse received decreased by $255 to $1,219. Sandra’s monthly check was only $609.50. In 2013, Sandra filed a claim against John. She claimed that she was entitled to 50% of the full retirement pay and that she had received less than the acknowledged amount in the divorce agreement because of John’s waiver. She asked for the difference between what she received and what she should have received to date – a total of $3,813 – plus an order requiring John to make up any difference in the future between what she was awarded and what she received. The divorce court agreed.

Jennifer, thank you for being my attorney. I could not have been more pleased with the outcome of my family court hearing. Everything you have done for me throughout this case reflects in the final ruling of the judge. You helped me keep my head together and taught me a lot about myself as a person. I learned so much about my life from observing and listening to you. I will take all the advice you gave me to continue taking responsibility for my choices, continue to put the kids' needs first, and always stay truthful. Your diligence, dedication, and persistence in my case made what seemed impossible, possible. You are a wonderful person and an amazing attorney and I am stronger and more confident because of you.
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After interviewing several law firms, I came across Jennifer Shick, and her firm, who I hired to represent me for my Family Court case. Jennifer has extensive knowledge of the law and is determined to bring the truth to every issue involved within the case. Throughout my case, Jennifer was prepared meticulously as well as went above and beyond all of my expectations. Even when the other party tried to differ from the truth, lie to the Judge, and turn situations around, Jennifer remained attentive and provided substantial evidence to show the judge the facts as well as the proof to support what was the best interests of my children. Additionally, Jennifer helped me endure many difficult experiences, situations and inspired me to remain positive throughout the entirety of my case. Her kindness, compassion, and professionalism helped me through very difficult times and made the process feel a thousand times lighter on my shoulders. She truly has my children and my best interest at heart and I trust her perspective as well as her honesty on each and every aspect of my case. She lessened the burden on my shoulders and even when I felt like the case was not going to go in my favor, Jennifer was open-minded and reassured me that the Judge would, in fact, see the truth, which he did and the case went in my favor. After nine months of court, everything finally came together. I cannot declare how much Jennifer has been an outstanding attorney. She addressed each and every issue with diligence, she cares about her clients and their families. Jennifer genuinely cares about her clients and her dedication to the details of the case was remarkable. Overall, I am extremely pleased with Jennifer’s services and I am truly thankful that I was so blessed to have her represent my children and me. I highly recommend Jennifer as one of the best attorneys in Arizona and if the situation ever arises, I will definitely have her represent my children and me again.
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I feel that Tracey Van Wickler is certainly one of the best family lawyers around. She is logical, intelligent, and truly cares. Tracey always does what is in the clients best interest, does it well, timely and with integrity. She is good at keeping her clients informed as to what is going on and clear in her communication both written and verbally. I have recommended Tracey to other people and will continue to recommend her. I recommended Tracey to someone who was having issues with their ex-wife and his response was, “I know how good she is because I went up against her and she ate me for lunch”. This same person was so impressed with her, he even recommended her to someone else, WOW, that is impressive! I am exceptionally happy with her attention to detail, her ability to explain things in ways that are easy to understand, as well as her ability to keep everyone focused on the most important things. I would recommend Tracey to anyone who may be in need of her services.
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Sam Franchimone
Sam Franchimone
22:09 12 Sep 13

Federal Preemption and Military Disability Payments in a Divorce

Military Retirement Pay and Divorce.

Military Retirement Pay and Divorce.

John argues that Sandra is not entitled to a split of his disability pay because of federal law – though allowing state courts to divide military retirement pay in a divorce — prohibits them from dividing pay that has been waived for disability benefits. However, the Arizona Supreme Court noted that neither the law nor U.S. Supreme Court rulings directly discuss a situation where the pay is allocated between spouses in a divorce decree before the disability waiver. The Court noted that matters of divorce law are largely left to state law. Because of that, the Court ruled that Arizona divorce law was not preempted by federal law unless federal law directly and specifically addressed the subject.
A 2010 Arizona Law Cannot Alter Property Rights that Vested before 2010

The State of Arizona passed a law in 2010 prohibiting a divorce court from modifying a divorce decree to “make up for” a veteran’s waiver of retirement pay to obtain disability benefits. John argued that the court’s ruling, in this case, violated that law by requiring him to make up to Sandra for the waiver of his pay. However, the Arizona Supreme Court determined that Sandra had property rights in 50% of the retirement pay under the divorce decree. Those rights vested in her at the time of the divorce order, well before 2010. It concluded that a 2010 law cannot retroactively alter a person’s vested property rights.

The case above describes one of the many issues that may arise long after a divorce is finalized. From monetary awards, divorce decrees, alimony, and other financial issues, you need a trusted legal team to help you steer through the numerous obstacles. If you are in need of a divorce, family law, or grandparents rights lawyer, call the team at Hildebrand Law. We have provided the Scottsdale, AZ area with legal expertise for over 20 years and we don’t plan on stopping anytime soon.

Call us at (480)305-8300 to schedule your personalized consultation with one of our experienced Phoenix and Scottsdale Arizona divorce attorneys.