Military Retirement Pay Does Not Include Disability Pay

This blog entry might be subtitled, "Ah, but what a difference a few words makes!"

Here's the background: When a service member retires, he or she is entitled to receive military retirement pay, either voluntary retirement benefits or disability retirement benefits.  If the service member becomes divorced, his or her spouse might well be awarded a part of the military spouse's retirement pay (if, as and when received) as part of the division of the community estate.

If a service member is disabled, or becomes disabled, he or she may elect to receive Veteran's Administration disability benefits instead of military disability retirement benefits.  Veteran's Administration disability benefits are considered personal to the service member and cannot be divided upon divorce because they are not part of the community estate.

What sometimes happens is that a retired, disabled service member will opt to waive all or part of his military retirement pay for Veteran's Administration disability benefits.  To the extent that the former service member receives Veteran's Administration disability benefits in lieu of military retirement pay, his or her military retirement pay is reduced.  As a result, the amount of military retirement pay the former spouse then receives decreases because there is less of it to split.

Nearly twenty years ago, in Berry v. Berry, 786 S.W.2d 672 (Tex. 1990) (per curiam), the Texas Supreme Court ruled on a case in which this situation occurred.  In that case, the former spouse was to receive a percentage of her ex-husband's "gross Air Force disability retirement pay" which was to be "computed on the gross amount thereof before any deductions."  The retiree elected to receive Veteran's Administration disability benefits; his military retirement pay was reduced accordingly. The Court upheld the former wife's attempt to require the former husband to continue paying her a portion of the former husband's retirement pay based on the amount of his retirement pay before the reduction caused by accepting Veteran's Administration disability benefits because that reduction amounted to a "deduction" from the retirement pay.  Thus, because of the way the divorce decree had been drafted, the former wife continued to receive her full share of the former husband's military retirement pay.

On May 1, 2009, the Texas Supreme Court ruled on another case of this nature, Hagen v. Hagen, in which the divorce decree granted the non-military spouse a portion of "all Army Retirement Pay or Military Retirement Pay" that the service member might receive.  The decree did not mention Veteran's Administration disability benefits or contemplate that the former husband's military retirement pay would be reduced if the husband became disabled and opted to receive Veteran's Administration disability benefits in lieu of military retirement pay.  Accordingly, the Court upheld the reduction in payments to the ex-wife caused by the ex-husband's decision to accept Veteran's Administration disability benefits.

Had the decree in Hagen read like the one in Berry, the result in Hagen would have been the same as in Berry.  But those crucial few words were missing, so the result was different. 

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Comments (1) Read through and enter the discussion with the form at the end
Barbara A Cocke - October 7, 2011 11:02 AM

I just found out that the portion of military retirement pay I receive from my ex-spouse has dropped because he has received VA Disability now. He is 81 -- and from this point on, I am sure their will be more ailments coming. He had no problems upon his retirement -- receiving no disabilities. He is now receiving 50 percent based on recent applications due to recent ailments. According to DFAS, I will continue receiving reductions as long as he is applying for more and more disabilities. I guess I am just shocked at this -- for I consider "disability" to mean disabled. This man goes to gym daily, plays golf a couple of times a week, belongs to a weekly bowling league, travels on long airplane trips and driving trips. Disabled?

Anyway, would anyone out there know what I might do? As of now, all I can see is that his search for more "tax free money" will continue to erode my living income. Am I perceiving this correctly?

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