YET ANOTHER MILITARY DIVORCE POTHOLE
September 10, 2012 § 2 Comments
Representing military parties in a divorce case got a little more difficult a couple of weeks ago, and you need to pay attention or you might unwittingly victimize a client.
The problem lies in the intersection between state divorce law and federal statues governing military benefits.
The latest case is Mallard v. Burkart, decided by the MSSC on August 30, 2012. The parties were divorced in 2001. A significant part of the financial settlement that Burkart received was 40% of Mallard’s “disposable military retirement pay” for ten years. The language of the PSA to effect this division was as follows:
Pursuant to the Uniform Services Former Spouses Protection Act (“USFSPA”), 10 U.S.C. §1408, the Court makes the finding followings of fact:
(A) That the Husband is currently an active duty service member in the United States Air Force.
(B) That Husband’s rights under the Soldiers and Sailors Civil Relief Act have been observed in these proceedings.
(C) That Wife and Husband were married for at least ten (10) years during which Husband performed at least ten (10) years creditable service, making Wife eligible for involuntary military deductions under The USFSPA at such time [a]s Husband becomes entitled to retirement pay.
(D) Wife is awarded 40% of Husband’s disposable military retired pay for ten (10) years unconditional. Wife shall continue to receive 40% of Husband’s disposable military retired pay after ten (10) years if she does not remarry or has not lived with someone for a cumulative of sixty (60) days. Payments shall continue until Wife remarries or lives with someone for a cumulative of sixty (60) days upon which time payments shall cease. It is Wife’s responsibility to notify the Defense Finance and Accounting Service and Husband of any change of eligibility for payment.
(E) The Husband voluntarily consents to the exercise of jurisdiction to the State of Mississippi, County of Forrest for division [of] military retired pay.
That would appear to me to be a competently drafted provision that invokes every element needed for Burkart to cash in on her prpoperty settlement. It would also appear to give Burkart a full 40% of Mallard’s retirement pay. But things are not always as they appear, are they?
At some point after the divorce, Mallard elected to take a 60% disability rating as part of his retirement pay. By doing so, under federal law, he reduced his “disposable military retired pay,” dollar for dollar, by 60%. He reduced his payments to Burkart by a corresponding amount, limiting his payments to his ex-wife to the non-disability portion of his retirement. Due to the election, his payments to Burkart fell from $571 a month to between $80 and $120.
When Mallard sued Burkart for modification on some custody issues that are not part of this appeal, Burkart counterclaimed for contempt, based on Mallard’s payment of reduced retirement benefits. She charged that Mallard had improperly structured his retirment so as to defeat her contractual rights in the PSA. The chancellor found for Burkart, awarding her a judgment for $21,213.57, and Mallard appealed.
The MSSC stated the issue before it: ” … today we must determine whether federal law preempts state law, thus precluding state courts from treating as property divisible upon divorce, military retirement pay waived by the military spouse in order to receive military [veterans’] disability benefits.” Justice Carlson’s opinion noted that this was a case of first impression in Mississippi.
The court held that the issue was disposed of in the US Supreme Court case of Mansell v. Mansell, 490 US 581 (1989), in which the high court held: “In this appeal, we decide whether state courts, consistent with the [USFSPA], may treat as property divisible upon divorce military retirement pay waived by the rtetiree in order to receive veterans’ disability benefits. We hold that they may not.”
Another post highlighting a similar preemption problem with military life insurance beneficiary designation is here.
A few observations:
- The MSSC opinion points out that it is unclear when Mallard was determined to be disabled. In my opinion, if the determination had predated the divorce, there is a fraud question in connection with the PSA.
- Considering the minefield of federal law and regulation dealing with retired service members, you might want to define your client’s settlement in terms of alimony and property settlement in set figures as opposed to percentages. I know that percentages are a good way to make sure your client is not short-changed, and I know that alimony can terminate, but wouldn’t Ms. Burkart have been better off with an agreement that Mallard would pay her $571 a month in alimony, or that same sum as a division of her property rights in his military retirement? Then it would have been Mallard’s problem to figure out how to pay it.
- What business do you have representing military parties — either husband or wife — if you don’t keep up with and fully grasp all the ins and outs of federal law and regulations governing military retirement?
None of this is a knock on the lawyers who participated in the drafting of the PSA in this case. This was, after all, a case of first impression in Mississippi. And, apparently and presumably, no one knew at the time of the divorce that there would be a disability election. If they had known, that Mansell case would have loomed large. Very large.
The Better Chancery Practice Blog 
Mansell case no longer applies to division of retired pay when a military member waives retired pay in order to receive disability from the VA,, since concurrent receipt legislation was passed in 2004 while Bush was in office, and became effective in 2008, retroactive to 2004.This means that military retirees that have waived a portion of their retired pay to receive VA benefits no longer can do that, but can draw both, and therefore my former husband had to give me back pay all the way back to 2004 when my portion of his retired pay went down by several hundred dollars when he elected to waive part of his retired pay to receive VA benefits. The judge and lawyers in this case must not be current on the law. http://www.military.com/benefits/military-pay/concurrent-retirement-and-disability-pay-crdp-overview.html
Thank you for your comment. The judges in this particular case are the justices of the Mississippi Supreme Court, so their decision is the law of the land in Mississippi.