In Howell v. Howell (U.S. Supreme Court No. 15-1031, 5/15/2017), the high court had to educate the Arizona Supreme Court that federal law pre-empts state law when it comes to matters involving military annuities.
When the Howells divorced, the state court’s decree gave Sandra Howell half of her ex-husband’s future retirement pay. Under the Uniformed Service Former Spouses’ Protection Act (USFSPA), states may divvy up a veteran’s “disposable retired pay” as community property, and that is just what the state court did. However, that law specifically excludes retired pay that has to be deducted as a waiver in order to receive disability benefits.
When John Howell retired a year or so after the divorce, Sandra started collecting her half of his annuity. The hitch occurred when many years later the Department of Veterans Affairs (DVA) ruled that John was partially disabled from a service-related injury. This meant John was required by USFSPA to give up an equal amount of his regular retirement pay in order to receive the disability pay. When John signed the required waiver to reduce his retirement pay, it affected the half share Sandra had been receiving, reducing it by some $125 each month.
Sandra went back to the Arizona court to demand that John make up that difference, notwithstanding his required disability waiver. The family court agreed with Sandra, ruling that her interest in John’s annuity had “vested,” and ordering John to make up the difference, brushing aside John’s argument that the federal law pre-empted the state court’s decree. When the Arizona Supreme Court sided with the family court, John took his case to the U.S. Supreme Court.
In a 6-0 U.S. Supreme Court decision, the matter is settled. The Court scoffs at the “vesting” notion: “State courts cannot “vest” that which they lack the authority to give.” Bottom line of the ruling is succinctly summed up: “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.” Period. Reversed and remanded.
Disputes involving federal and military pay come pretty much once in a blue moon before the highest court in the land, which is what makes this one newsworthy. Given that Arizona courts tried to elevate that state’s handling of a divorce decree above federal law requirements, it is no surprise the Supreme Court decided to step in and straighten things out.
