In the area of benefits, Congress has occasionally demonstrated the ability to enact a law that exists as an illusion of protection, one of which is the Uniformed Services Former Spouses' Protection Act (FSPA), 10 U.S.C. § 1408. This act was intended to protect a spouse who is married to a member of the military and is forced to move around the country due to numerous deployments in various locations. If you stick with your spouse through a military career, then this Act entitles you to a part of their military retirement. However, that depends on whether the retirement is reclassified as something else.

Military Divorce Entitlements Under FSPA

The life of a military spouse is often fraught with struggles to develop lifelong friends and a support network due to frequent moves, which are often a part of the military life, as the military spouse is deployed wherever needed. The FSPA is supposed to protect the non-serving spouse by permitting the military retirement pay to be treated as community property if there is a divorce. The act refers to such payments as “disposable retired or retainer pay,” § 1408(c)(1).

The Illusion of Protection Under FSPA

However, to prevent a military retiree from “double-dipping”, that is receiving excess amounts in the event of a disabling condition that is service-related, the retiree who receives disability benefits must waive a corresponding part of their retirement benefit. The disability part of the benefit is not considered community property. Unfortunately, for the non-serving spouse, any military retirement pay is waived in order for the retiree to receive veterans' disability benefits, § 1408(a)(4)(B), cannot be considered in a property settlement and is solely the military retiree's benefit. So even if there is an agreed settlement, that part based on retirement pay can disappear.

Representative FSPA Cases

Mansell v. Mansell, 490 U.S. 581 (1989)
There was a property agreement between the divorcing parties. The party who had retired from military service agreed to pay 50% of military retirement pay to his spouse. However, he was found to have suffered a disability in serving and thus had the right to exclude from his retirement pay the amount attributable to disability pay. That of course took away a large part of the property settlement. As noted in the Mansell case, Congress, in its infinite wisdom to prevent double dipping, created an exception to the protection. “A military retiree may receive disability benefits only to the extent that he waives a corresponding amount of his military retirement pay. § 3105. Because disability benefits are exempt from federal, state, and local taxation, § 3101(a), military retirees who waive their retirement pay in favor of disability benefits increase their after-tax income. Not surprisingly, waivers of retirement pay are common.” Id. at 583-84.

Colafrancesco v. Colafrancesco, No. 2200494 (Ala. Civ. App. Feb. 11, 2022)

A large part of the military retirement pay of the husband in this case was waived in favor of a disability retirement. This destroyed the ability of the nonservice spouse to receive adequate alimony. The parties married in 1974, and after about 45 years of marriage, five kids, and 15 to 20 deployments frequently moving the family around, the wife decided to divorce. In this case, the military-related disability was 100% of the retirement pay. There was no military retirement pay received at all then. The wife only had income of $587 per month for Social Security disability, and so alimony was vital to survive. After a trial, the court awarded the wife $2,500 a month; however, the husband protested and appealed. His contention was that payment of that alimony would have to come from disability pay, and that was exempt from alimony.

On appeal, the Alabama Court of Civil Appeals dutifully recited binding precedent, including the above Supreme Court decision, and ruled, “Because the record establishes that the husband's veteran's disability benefits cannot be considered ‘disposable retired pay,' the trial court lacked the authority to consider any portion of those benefits in determining the alimony award. Accordingly, the judgment of the trial court is reversed, and this case is remanded for proceedings consistent with this opinion.” Id. at 13.

This harsh result occurs over and over for the unsuspecting practitioner. It may appear the non-serving spouse is protected, but a pending disability evaluation could change any agreement if disability pay is involved. Yet, Congress has not changed the law leaving this trap for the unwary. A wise attorney once said, write any law you wish, but just let me write the “provided however” part. True enough here. If you are facing this type of issue, it can help to speak to an experienced ERISA attorney who is familiar with federal law and the loopholes like this one.