In 2017, the Supreme Court set forth a landmark ruling regarding military veterans and their benefits. At issue was the ability for state courts to order some divorced veterans to compensate their ex-spouses for disability benefits received in place of retirement funds.
When a military veteran has a service-related illness or injury that renders them up to 50 percent disabled, a reduction in the veteran’s military retirement benefits enables the veteran to receive disability benefits. Veterans with more than a fifty percent disability receive their full retirement as well as disability benefits.
The Ruling’s Impact
The Supreme Court ruled that a state court could not order a military veteran to pay an ex-spouse the difference between regular and reduced retirement benefits when the reduction is due to the receipt of military disability benefits.
In the case of Howell v. Howell, the court declared the opinion that even though a disability benefit designation means that an ex-spouse will most likely get less retirement benefits compensation, the veteran does not have to pay the ex-spouse to offset the decrease.
A Reduction in Support
It does not matter whether the veteran was diagnosed with a disability while married or after the divorce. A veteran’s disability of up to 50 percent and the reduction in retirement benefits due to acquiring a disability benefit can lead to a reduction in the division of retirement benefits.
This ruling can fundamentally change how some military families divide retirement assets in the event of a divorce. Foresight and proactive planning are necessary to craft an advantageous settlement agreement that takes any future disability scenarios into account.