U.S. Supreme Court shakes up the rules for military pensions

On Behalf of | May 31, 2017 | Divorce, Firm News |

In a divorce, Florida residents must divide property that belongs to the marital estate. This can be problematic enough for civilians, but when you are a military veteran, additional issues regarding your benefits and pension arise.

In many military divorces, the non-service member spouse ends up receiving a portion of the service member’s retirement. You may end up relinquishing a portion of your military retirement as part of your divorce. You should know that a recent decision from the U.S. Supreme Court could affect the amount your soon-to-be former, or former, spouse receives now and in the future.

Disability benefits

Like many other veterans, there could come a time when you apply for and receive disability benefits. If you accept the benefits, that same amount is deducted from the retirement you receive. You may decide to accept the disability benefits in lieu of a portion of your retirement since disability benefits are not taxable.

This works well for you, but not necessarily for your ex-spouse. Whatever portion of your retirement he or she was going to receive or does receive will be reduced by half the amount of your retirement that you traded for disability benefits. In the past, many courts would require you to make up the difference to your former spouse out of your own pocket.

The U.S. Supreme Court’s recent decision

A veteran in the southwest decided to challenge the courts when he had to pay his former spouse for the amount of his retirement that she lost when he took disability pay. The state supreme court where he resides sided with his former wife, so he went to the highest court in the land to get its opinion.

Fortunately for him, the U.S. Supreme Court agreed with him that he should not be made to pay the difference. The precedent set in this case will more than likely change things for many veterans and their former spouses across the country. If you are or become eligible for disability benefits, you could trade them for a portion of your retirement — tax-free. Now, after the court’s decision, you won’t have to make up the difference to your ex-spouse. At least that’s how it should go.

Legal assistance

Since this ruling is so new, lower courts throughout the country could struggle to implement it. Different fact scenarios will require testing the new decision, and your case may be one of them. In order to get the most out of your military retirement and your disability benefits, you may benefit from allowing a military divorce lawyer to advocate for you with the court.

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