Retirement Benefits and Divorce

July 6, 2017

Media Divorce Lawyers Discuss Retirement Benefits and DivorceBy, Craig B. Huffman, Esquire

The United States Supreme Court decided a case involving a military pension which highlights the importance of understanding the nature of retirement benefits in divorce cases. While it is very unusual for the United States Supreme Court to address family law matters, the case of Howell v. Howell, 581 U.S. ___ (2017) is one such case.

The facts of the case are simple. Husband was serving in the Air Force at the time that he and Wife got divorced in the State of Arizona. Arizona ordered that Husband’s retirement benefits with the Air Force would be split evenly between Husband and Wife when they started being paid approximately one year after the date of the divorce decree. The benefits commenced shortly after the divorce and Wife received her retirement benefit as contemplated by the Court’s Order for approximately 13 years.

However, Husband developed a service related disability later in life qualifying him for tax exempt military disability benefits. Under Federal Law, when a veteran is receiving disability benefits, he/she receives a prorated reduction in the military pension benefits they are receiving. As such, Husband’s take home income remained the same (or perhaps after taxes actually went up) but Wife’s take home benefits went down because she received a prorated reduction based upon Husband’s receipt of disability benefits.

Wife, understandably upset by this development, petitioned the state court in Arizona to have the Divorce Decree modified for a “make-up payment” to adjust for Husband’s receipt of disability benefits. Husband objected and claimed that Federal Law trumped the ability of the State Court to modify his receipt of his military pension benefits based upon receiving disability payments. The State Court agreed and modified the divorce decree. However, on appeal, the United States Supreme Court reversed and found that Federal Law controls this situation and that Wife’s benefits needed to be reduced on a prorated basis.

While this case is an unusual family law case involving the intersection of State and Federal Law, it highlights the critical importance of understanding the exact nature of the retirement benefits that are being divided in a divorce case. Similar issues can arise in non-military pensions and can be seen frequently in municipal pensions for fire fighters or police officers.

It is critical to have proper legal representation in any divorce case and the Media divorce lawyers at Eckell Sparks can provide you proper legal representation. Call us today at 610-565-3701 or contact us online for a consultation.