An issue of how military pensions are distributed in divorce has gone all the way to the U.S. Supreme Court. Previously, in Wyoming and beyond, it was unclear if a disabled ex-spouse is responsible to make up the reduction in an ex-spouse’s retirement benefits when the military pension is reduced due to receiving disability pay. The policy has varied from state to state, making the specifics of military divorce murky. Recently, the Supreme Court made the issue clearer by ruling that disabled ex-spouses do not have to make up any shortfalls if military pension payments are reduced for disability payments.
When a military person retires, he or she receives a pension. A military person is also entitled to disability pay if qualified. If disability income is paid, the pension is reduced proportionate to the amount of the disability income received.
Disability income is not considered a marital asset subject to division in the event of divorce, although retirement pension benefits are marital assets and are divided between spouses. If a retiree receives disability payments, this may reduce the amount of pension awarded, and therefore reduce payments to the ex-spouse. In some states, the disabled vet would then have had to make up the shortfall in the payments to the ex-spouse.
This issue was taken to the courts and finally reached the Supreme Court. The court found that disabled vets are not responsible to make up any shortfalls in pension amounts awarded to ex-spouses due to subsequent disability awards, although this possibility remains an issue for discussion when the couple first gets divorced. When negotiating a military divorce, couples may choose to address the fact that military pension benefits may be affected by future payments for disability. In Wyoming and elsewhere, sorting out the details of the division of marital assets during military divorce is best handled by a family law attorney with experience in handling these important concerns.
Source: military.com, “Supreme Court Ruling May Cut Spouses’ Divorce Pension Payments“, Amy Bushatz, May 18, 2017