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Military Retirement and Divorce in Texas

This article only concerns military retirement and divorce in Texas.

Recently, the United States Supreme Court issued a ruling that could significantly impact former members of the military and their spouses who are divorced or going through a divorce.

According to some estimates, this could potentially affect tens of millions of people.

In May 2017, in Howell v. Howell, the U.S. Supreme Court ruled in a unanimous decision that veteran’s disability benefits can not be considered in a division of property.

How does that affect military retirement and divorce in Texas? To understand that, you need to understand some of the basics of military divorce and divorce generally.

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Community Property vs. Separate Property – What’s Divisible in a Divorce?

When dealing with military retirement and divorce in Texas, we must first look at community property.

Texas is a community property state, which means everything you acquire during a marriage is community property.

These are the only things that are considered separate property:

1) Things owned by the spouse before the marriage.

2) Gifts or inheritance received during the marriage.

3) Recovery from a personal injury that is attributed to a loss of earning capacity.

Everything else is considered community property and is divisible in a divorce.

Military Retirement and Divorce in Texas — Dividing Benefits

Because all community property is divisible in a divorce, it’s natural for retirement or pensions to be included.

This applies to 401ks, employer pension plans, and military retirement, as well as a host of other retirement and pension plans.

Therefore, if you’ve been married while serving on active duty in the military, your spouse is entitled to a portion of your retirement.

Military retirement is called a “Defined Benefits Plan,” meaning that there is a formula that’s used to determine your earnings in retirement based on years of service, earnings before retirement, etc.

To divide a military retirement (or any other defined benefits plan), you divide the retirement for each year that the couple was married while earning that retirement.

For example:

Military Retirement and Divorce in Texas — Scenario A

W is in the military for 20 years and retires from the military. W and H were married for 10 years, all while W was in the military.

W’s retirement pay is set at $2,000 per month (based on 20 years of service).

H is entitled to 50% of W’s retirement pay, but only for the 10 years that they were married.

Therefore, H is entitled to $500 per month of W’s $2,000 per month retirement pay.

Each month, H receives $500 in retirement pay, and W receives $1,500 in retirement pay.

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Military Retirement and Divorce in Texas — What About Veteran’s Disability?

For years, service members have been able to “waive” a portion of their retirement and collect veteran’s disability instead if they have a service-connected disability.

The amount of the disability payment is determined by the amount of disability. But, to collect the disability, you have to “waive” that portion of your retirement.

For example, if a former service member receives a 25% disability, then they still collect the same amount of money each month from the government in retirement. So, then 75% of the amount comes from retirement and the remaining 25% comes from disability.

The difference is that the money coming from retirement is taxable, and the money coming from the disability is non-taxable. So, there’s an obvious advantage to taking as much as possible through disability.

Now, in Howell vs. Howell, the U.S. Supreme Court just unanimously ruled that disability pay is not divisible in a divorce.

To put this into perspective, let’s use the same scenario as above, but slightly modify it:

Scenario B

W is in the military for 20 years and retires from the military. W and H were married for 10 years, all while W was in the military.

W’s retirement pay is set at $2,000 per month (based on 20 years of service).

W is determined to have a 25% disability, and opts to receive 25% disability and 75% retirement.

H is entitled to 50% of W’s retirement pay for the 10 years that they were married.

Now — H is only entitled to 50% of W’s retirement pay for the 10 years that they were married, but it’s only 75% of the total value that W will collect.

Now — Instead of dividing $2,000 per month, they’re only dividing $1,500 because W collects the other $500 per month in disability, which is not divisible!

Now — Each month, H receives $375 in retirement pay, and W receives $1,125 in retirement pay, plus $500 in disability pay.

So, clearly W has gained an advantage by claiming a portion of their own retirement through VA disability.

Contact Hayes, Berry, White & Vanzant About Military Retirement and Divorce in Texas

Do you have questions about military retirement and divorce in Texas?

Are you a current or former member of the military and going through a divorce?

Contact the attorneys at Hayes, Berry, White, & Vanzant.

If you need to speak with a lawyer concerning retirement in a divorce, we also have family law attorneys at Hayes, Berry, White & Vanzant.

Give us a call to set up a consultation regarding your military retirement and divorce in Texas at (940) 387-3518, or contact us here.

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