Landmark Supreme Court Case Greatly Impacts Servicemembers and Spouses at Divorce


On May 15, 2017, the United States Supreme Court in Howell v. Howell (490 U.S. 581) held that a state court may not order a veteran to indemnify a divorced spouse for the loss in the divorced spouse’s portion of the veteran’s retirement pay caused by the veteran’s waiver of retirement pay to receive service-related disability benefits. The Supreme Court’s decision in Mansell v. Mansell (490 U. S. 581) determines the outcome here. There, the Court held that federal law completely pre-empts the States from treating waived military retirement pay as divisible community property.

This means that the court cannot force a military member to indemnify a former spouse if the military member chose to waive a portion of his/her longevity pay in exchange for VA disability payments. The military member can unilaterally divest the former spouse.

The Howell decision overrules California’s Krempin decision (upholding the trial court’s ability to order a Servicemembers who took disability pay to pay to his former spouse “indemnification” in the form of spousal support to make up for her loss.) In re Marriage of Krempin, 70 Cal. App. 4th 1008. It is clear that the Krempin case, which makes an end-run around the disability limitations by condoning spousal support orders to compensate the former spouse, is no longer good law.

This case may add to the ongoing problems with military pay division in Family Law unless Congress abrogates the decision in Howell. In 1981, the Supreme Court in McCarty v. McCarty (1981) 453 U.S. 210 held that military pay is not subject to division in divorce cases because it is a federal entitlement and there is no legal authority for its division.  The legislature responded with The Uniformed Services Former Spouses’ Protection Act (USFSPA), 10 U.S.C. 1408, which overruled the holding in McCarty by providing that: “Subject to the limitations of this section, a court may treat disposable or retired pay payable to a member for pay periods beginning after June 25, 1981, either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court.” (10 U.S.C. §1408 (c)(1)) (Uniformed Services Former Spouses’ Protection Act [USFSPA].))

The Howell decision comes off the heels of The National Defense Authorization Act of 2017, a federal law passed on December 23, 2016 that provides that the military retired pay of those service members still serving will be that attributable to the rank and years of service of the military member at the time of the parties’ divorce. This is so even though the Servicemembers may rise in rank and years of service afterwards, resulting in a larger pension to be divided, which would then be discounted by using the “marital fraction” to apply pension division to only the benefit which was acquired during the marriage.

Family Code § 2550 requires courts to divide marital estates (i.e. “community property”) equally.  While this code section appears to promote equal division of assets, it has the reverse effect when federal law preempts. In Marriage of Peterson (2016) 243 Cal.App.4th 923, In IRMO Peterson Wife participated in LACERA Plan E and Husband contributed into Social Security through mandatory payroll deductions.  Under the Windfall Elimination Provisions and the Government Pension Offset provisions, Wife was barred from receiving Social Security benefits under federal preemption, both individually and as the spouse of someone who contributed to Social Security.  The court ruled that because the Social Security Benefits were not part of the marital estate under federal law, Husband should receive a one-half interest in Wife’s LACERA benefits and 100% of his Social Security benefits, leaving Wife with only one-half of her LACERA benefits.

As an example of how recent law can play out, let’s take this scenario: Husband is in the military and Wife is in CalPERS.  Husband’s military pension is frozen in time at dissolution for Wife but Husband enjoys the enhancements to Wife’s CalPERS benefits.  Husband is also allowed to divest wife via VA waiver or combat pay waiver, but if Wife receives an industrial disability retirement from CalPERS, Husband loses nothing.

Because of these recent developments in the division of military retirement, could California loosen the trial court’s discretion to allow for some equitable considerations when dividing up marital estates?  If not, it may be a bad day for military Servicemembers’ former spouses who get divorced after 12/23/16.

For more information about military divorce, property division, and other family law issues, contact us today.