Dividing Military Benefits in a Divorce – When State & Federal Law Conflicts

Posted on Tuesday, October 17th, 2017 by Tim Simonson and is filed under Divorce, Marriage, Military.

It’s not often that the United State Supreme Court makes a decision that affects how divorces are handled in Minnesota Family Courts. But, when it comes to a veteran’s retirement and disability benefits, the Supreme Court has not held back in putting the state courts in their place.

The United States Constitution provides that Federal law preempts State law. According to Article VI, Clause 2, the laws of the United States “shall be the supreme Law of the Land; and the Judges in every state shall be bound thereby”.   This is important because it is Congress that determines how our brave men and women in the service (and their retirement and disability benefits) are treated.

Congress has enacted laws to protect veterans’ justly earned benefits in divorces; even in situations where a veteran might choose to divide his/her benefits with a former spouse.   According to the Uniformed Services Former Spouses’ Protection Act, military retirement pay is limited (50%) in what is available for division in a divorce, and, military disability pay is completely excluded from division in a divorce.  10 U.S.C. 1408 (1982).

Because Family Court is a court of equity (meaning courts can grant relief which the parties agree to be fair, not necessarily what is required by law) parties are allowed to enter into agreements, which courts can enforce, to divide marital property in a divorce.  For example, if parties to a divorce agree they don’t want to award child support based on the Minnesota Child Support Guidelines (created by the Minnesota Legislature) the court can enforce that agreement, provided that it agrees the arrangement is in the child’s best interests).

But the court’s ability to enforce a division of marital property has its limits, IF that property division includes military retirement pay or disability pay.  According to the United State Supreme Court decision Howell v. Howell, 137 S.Ct. 1400 (2017), “a state court cannot ‘vest (or secure)’ [rights] which they lack authority to give.”  Meaning, a state court cannot enforce rights which it has no authority to grant in the first place. 

And so it has been determined in Minnesota that in accordance with federal law (Uniformed Services Former Spouses’ Protection Act) and the United States Supreme Court (Howell v. Howell) Family Courts do not have the authority to treat military disability pay or (more than 50% of) military retirement pay as marital property. 

This can be a problem in dividing a marital estate where a significant amount of the parties’ assets include military retirement or disability benefits.

But this shouldn’t stop parties from finding creative solutions to finding a fair solution, since the Minnesota Court of Appeals recently held that the Family Court is still fee to account for any reduction in the value of a marital estate, when determining a spousal maintenance award. Berberich v. Mattson, October 2, 2017.

Since spousal maintenance is determined based on a parties’ income, not property, the restrictions imposed by Congress and the Supreme Court do limit the relief a court can award to a former spouse. 

Because of these limited imposed by federal law over military benefits, it is important to consider how such benefits should be treated in a divorce proceeding.

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If you are facing divorce and any of the divorce-related issues such as spousal maintenance, child support, child custody, property division, or domestic abuse matters, you need our experienced Minneapolis divorce attorneys to help you. Contact Beyer & Simonson in Edina, Minnesota today at (952) 303-6007.