F. Waiving Disposable Retired Pay for Department of Veteran’s Affairs Compensation

• Library: Military Issues in Family Law 2017

F. Waiving Disposable Retired Pay for Department of Veteran’s Affairs Compensation

When a member of the military retires, they may receive a disability rating if they have one or more disabilities that resulted directly from their military service. A servicemember who receives a disability rating has the option to waive a corresponding percentage (dollar-for-dollar) of their retired pay in favor of disability compensation from the VA. The VA compensation is nontaxable, so the servicemember almost always opts to do this. If the servicemember initiates a waiver of retired pay, the former spouse’s share of the disposable retired pay is automatically affected. A motion by the servicemember to modify the amount of retired pay the former spouse receives is not necessary. See Gurtz v. Gurtz, 186 S.W.3d 435 (Mo. App. S.D. 2006).

Members of the Armed Forces who serve for a specified period may receive retired pay upon their retirement. Mansell v. Mansell, 490 U.S. 581, 583 (1989). “Veterans who became disabled as a result of military service are eligible for disability benefits.” Id.; see 38 U.S.C. §§ 1110, 1131. “The amount of disability benefits a veteran is eligible to receive is calculated according to the seriousness of the disability and the degree to which the veteran’s ability to earn a living has been impaired.” Mansell, 490 U.S. at 583; see 38 U.S.C. §§ 1114, 1155. “In order to prevent double dipping, a military retiree may receive disability benefits only to the extent that he [or she] waives a corresponding amount of his [or her] military retirement pay.” Mansell, 490 U.S. at 583. “Because disability benefits are exempt from federal, state, and local taxation, military retirees who waive their retirement pay in favor of disability benefits [can] increase their after-tax income.” Id. at 583–84 (citation omitted).

Regardless of the wording of the dissolution judgment, Mansell allows only disposable retired pay to be considered as martial property. Total retired pay amounts that do not fit into the category of disposable retired pay cannot be divided in a dissolution judgment. This includes both disability benefits and amounts waived to receive disability benefits.

Morgan v. Morgan, 249 S.W.3d 226, 231–32 (Mo. App. W.D. 2008).

The USFSPA (Uniformed Services Former Spouses’ Protection Act), Pub. L. No. 97-252, 96 Stat. 730, authorizes state courts to treat disposable retired pay as marital property. 10 U.S.C. § 1408(c)(1); In re Marriage of Strassner, 895...