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Sunday, March 27, 2011
Friday, November 19, 2010
WIFE GETS RETIRMENT EVEN IF SEVERED WITH DISABILITY ELECTION
FLINT DIVORCE ATTORNEY TERRY BANKERT PRESENTS SEVERAL ISSUES CONCERNING MILITARY DIVORCE.
Presented here is an opinion of first impression of Michigan Court of Appeals concerning the issues surrounding whether a military spouse remains financially responsible to compensate his or her former spouse in an amount equal to the share of retirement pay ordered to be distributed to the former spouse as part of a divorce judgment's property division where the military spouse makes a unilateral and voluntary postjudgment election to waive the retirement pay in favor of disability benefits contrary to the terms of the divorce judgment; Combat-related special compensation (CRSC)(10 USC § 1413a);
link to this site
http://woundedmilitary.blogspot.com/2010/11/wife-gets-retirment-even-if-severed.html
Issues presented by Flint Michigan Divorce Lawyer Terry bankert 1-810-235-1970 (SEO) :
1.Military Divorce;
Members of the Navy who serve for a specified period, generally at least 20 years, are
entitled to retire and to receive retirement pay. 10 USC 6321 et seq. Military veterans in general are entitled to compensation for service-connected disabilities under 38 USC 1101 et seq., which we have referred to in this opinion as VA disability benefits. Further, CRSC is available to an “eligible combat-related disabled uniformed services retiree who elects [such] benefits.” 10 USC 1413a(a). CRSC is “not retired pay.” 10 USC 1413a(g). To be eligible for CRSC, a person must be a member of the uniformed services who is entitled to retired pay and who has a combat-related disability. 10 USC 1413a(c).
2. Does a military spouse remains financially responsible to compensate former spouse in an amount equal to the share of retirement pay ordered to be distributed to the former spouse as part of a divorce judgment's property division where the military spouse makes a unilateral and voluntary post judgment election to waive the retirement pay in favor of disability benefits contrary to the terms of the divorce judgment;
Plaintiff maintained that, once he became eligible for and selected CRSC by reason of his injuries sustained in service to his country, the disposable retirement pay subject to the QDRO was no longer subject to division. Relying on Mansell v Mansell, 490 US 581; 109 S Ct 2023; 104 L Ed 2d 675 (1989), plaintiff further contended that federal law precluded the court from ordering him to give any of his CRSC to defendant, which, admittedly, left defendant with nothing.
3.Combat-related special compensation (CRSC)(10 USC § 1413a); Oakland County Bd. of County Rd. Comm'rs v. Michigan Prop. & Cas. Guar. Ass'n; Feyz v. Mercy Mem'l Hosp.; Mansell v. Mansell; Bandini v. Bandini (IN); Resare v. Resare (RI); Hadrych v. Hadrych (NM); In re Marriage of Warkocz (CO); Black v. Black (ME); Shelton v. Shelton (NV); Whitfield v. Whitfield (NJ); In re Marriage of Krempin (CA); Danielson v. Evans (AZ); Krapf v. Krapf (MA); In re Marriage of Neilsen & Magrini (IL); Johnson v. Johnson (TN); Sharp v. Sharp (TX);
[C]oncurrent receipt of military retirement pay and VA disability benefits is commonly referred to as CRDP, which stands for “concurrent retirement and disability pay.” See Jackson v Jackson, 319 SW3d 76, 77 (Tex App, 2010). Because plaintiff was eligible for retirement pay and VA disability benefits, CRDP was an available option for plaintiff. A person who is qualified for CRDP and who is also qualified for CRSC, such as plaintiff, may elect to receive CRDP or CRSC, “but not both.” 10 USC 1414(d)(1); see also 10 USC 1413a(f) (indicating that CRSC and CRDP must be coordinated under § 1414[d]). During an annual open enrollment period, a person has the “right to make an election to change” from CRDP to CRSC or “the reverse, as the case may be.” 10 USC 1414(d)(2). Plaintiff elected CRSC, which effectively discontinued his retirement pay that had been subject to the QDRO, halting payments to defendant.
4.The Uniformed Services Former Spouses' Protection Act (10 USC § 1408);
The Uniformed Services Former Spouses’ Protection Act (USFSPA), 10 USC 1408,
generally governs the distribution of a spouse’s military retirement pay to a former spouse
pursuant to a court order, including state court final decrees of divorce issued in accordance with the state’s laws and providing for the division of property expressed as a percentage of disposable retirement pay. 10 USC 1408(a)(1)(A) and (2). Section § 1408(c) provides in pertinent part:
(1) Subject to the limitations of this section, a court may treat disposable
retired pay payable to a member for pay periods beginning after June 25, 1981,
either as property solely of the member or as property of the member and his
spouse in accordance with the law of the jurisdiction of such court. . . .
Accordingly, disposable retired or retirement pay2 can be treated by a court as joint
property and thus subject to division in a state court divorce decree. As used in the USFSPA, the term “disposable retired pay” is defined, in relevant part, as “the total monthly retired pay to which a member is entitled less amounts which . . . are deducted from the retired pay of such member . . . as a result of a waiver of retired pay required by law in order to receive compensation under title 5 or title 38.” 10 USC 1408(a)(4)(B).
5.Qualified Domestic Relations Order (QDRO)
The Mansell Court stated that the USFSPA granted state courts
the authority to divide military retirement pay as property, but the definitional section of the USFSPA relative to the term “disposable retired pay” specifically and clearly excluded military retirement pay that had been waived in order to receive VA disability payments, which is a benefit found in Title 38. Id. at 588-589. The USFSPA’s definitional section relied on and quoted by the Court was 10 USC 1408(a)(4)(b), which, as indicated above, excludes from consideration as disposable retired pay amounts waived pursuant to law “in order to receive compensation under title 5 or title 38.” Mansell, 490 US at 589 n 9. Once again, CRSC is compensation received under Title 10, and plaintiff here did not waive his right to retirement pay in order to receive compensation under Title 5 or 38, but rather to receive Title 10 compensation.
Court: Michigan Court of Appeals (Published),November 16, 2010 9:00 a.m.,
No. 292207,Macomb Circuit Court, LC No. 1988-003172-DM,
e-Journal Number: 47324,Judge(s): Murphy, Meter, and Shapiro
NEW MICHIGAN COURT OPINION BASED LAW (case law)
This is an issue of first impression.
NON-,MILITARY SPOUSE RELIEF WHEN OTHER SPOUSE WAIVES RETIREMENT PAY IN FAVOR OF DISABILITY PAY
Here the court held that Michigan now joins those jurisdictions providing relief to the non-military spouse and held that a military spouse remains financially responsible to compensate his or her former spouse in an amount equal to the share of retirement pay ordered to be distributed to the former spouse as part of a divorce judgment's property division, where the military spouse makes a unilateral and voluntary postjudgment election to waive the retirement pay in favor of disability benefits contrary to the terms of the divorce judgment.
WIFE TO GET 50% OF NAVY PENSION
In a judgment of divorce entered in September 1989, the defendant-wife was awarded 50% of the plaintiff-husband's Navy disposable retirement pay as part of the property division, and the judgment incorporated a QDRO to enforce that provision.
QDRO FILED , SPECIFIC LANGUAGE IN IT
The QDRO acknowledged the 50% division of plaintiff's disposable retirement pay, also referred to as his pension, and it prevented plaintiff from making another benefit election "that would otherwise reduce the monthly pension allotment without the written consent [of defendant]."
MILITARY SPOUSE DIAGNOSED WITH AGENT ORANGE
In 2008, plaintiff was officially diagnosed by the government, for purposes of entitlement to disability benefits, as being disabled as a result of combat-related activities and exposure to Agent Orange in Vietnam.
TO GET BENEFITS MILITARY SPOUSE HAD TO WAIVE HIS RETIREMENT AND HE DID
He was declared eligible to elect CRSC, but the election required plaintiff to waive further receipt of his retirement pay. Plaintiff elected to receive CRSC, resulting in termination of his retirement pay and the cessation of funds flowing to defendant under the QDRO.
NON MILITARY SPOUSE FILED AN ENFORCEMENT MOTION
Defendant filed a motion to enforce the divorce judgment and QDRO. Conceptually, and consistent with extensive case law from other jurisdictions, the court was dividing "waived" retirement pay in order to honor the terms and intent of the divorce judgment.
LOWER COURT WOULD NOT INVADE THE BENEFIT
The court held that it was not ruling that a state court has the authority to divide a military spouse's CRSC, nor that the military spouse can be ordered by a court to pay the former spouse using CRSC funds.
LOWER COURT JUST RULED IT HAD TO BE PAID
Rather, the compensation to be paid the former spouse as his or her share of the property division in lieu of the waived retirement pay can come from any source the military spouse chooses, but it must be paid to avoid contempt of court.
REVERSED THAT MILITARY SPOUSE HAD TO ACT LIKE TRUSTEE
To be clear, nothing in this opinion was to be construed as precluding a military spouse from using CRSC funds to satisfy the spouse's obligation if desired.
LOWER COURT ORDERED ½ OF THER BENEFITS NOT RETIREMENT MICHIGAN COURT OF APPEALS SAYS RETIREMENT
Although the court agreed with the trial court that plaintiff must compensate defendant, it reversed the trial court's order directing the plaintiff to act as trustee for the benefit of defendant with respect to half of plaintiff's monthly CRSC, which funds were then to be delivered to defendant because the order required plaintiff to pay defendant from CRSC funds and required plaintiff to pay an amount equal to half of his CRSC and not half of his retirement pay.
SENT BACK TO LOWER COURT TO GET IT RIGHT
The court remanded for entry of an order requiring plaintiff to compensate defendant with monthly payments, from any source or combination of sources, in an amount equal to 50% of his retirement pay that he would be receiving but for his election to waive the retirement pay in favor of disability benefits.
CASE LAW REVIEWED
In Resare v Resare, 908 A2d 1006 (RI, 2006), the family court, after first emphasizing
that it was not ordering the division of any disability benefits, ordered the military spouse to pay sum equal to the 35 percent of the gross pension that would have been in effect had the military spouse not unilaterally modified the stipulated property division with a pension waiver. The Rhode Island Supreme Court, affirming the family court’s ruling, held that the lower court had properly entered its order predicated on breach-of-contract principles. Id. at 1010.
In Hadrych v Hadrych, 140 NM 829, 833; 149 P3d 593 (2006), the New Mexico Court of
Appeals, indicating that it was adopting the majority view, held that the lower court had properly ordered the military spouse to compensate the other former spouse for the reduction in retirement
benefits that occurred when the military spouse converted them to disability benefits. The lower court’s ruling had not identified the disability benefits as being the source for the ordered compensation, leaving it to the military spouse to determine how to pay the compensation and to utilize whatever assets chosen to satisfy the obligation. Id. The appellate court stated that it was critical that “the court order [did] not specifically require that disability benefits provide the source of the funds paid to the non-military spouse.” Id. (citation and internal quotations omitted).
In In re Marriage of Warkocz, 141 P3d 926, 928 (Colo App, 2006), the Colorado Court
of Appeals agreed with the non-military spouse “that the trial court erred in failing to award her the amount she would have received from husband’s military pay had he not applied for, and received, disability benefits.” The court held that, consistent with public policy and decisions in other jurisdictions, a trial court is not precluded from equitably enforcing a separation agreement. Id. at 930. The court stated that neither the USFSPA nor United States Supreme Court precedent requires “courts to completely ignore the economic consequences of a military retiree’s decision to waive retirement pay in order to collect disability pay.” Id.
In Black v Black, 842 A2d 1280, 1284-1285 (Maine, 2004), the Supreme Judicial Court
of Maine held that Mansell and USFSPA do not limit the authority of state courts “to grant postjudgment relief when military retirement pay previously divided by a divorce judgment is converted to disability pay, so long as the relief awarded does not itself attempt to divide disability pay as marital property.”
In Shelton v Shelton, 119 Nev 492, 496-498; 78 P3d 507 (2003), the Nevada Supreme
Court held that a military spouse was contractually obligated under a divorce settlement
agreement to continue paying his former wife $577 per month, even though the agreement indicated that the payment represented half of the military retirement pension and the military spouse had waived that pension in order to receive disability benefits.
We agree with the following sentiments expressed by the Superior Court of New Jersey,
Appellate Division, in Whitfield v Whitfield, 373 NJ Super 573, 582-583; 862 A2d 1187 (2004):
It is important to emphasize the procedural posture of this case. The issue
is one of enforcement of a prior equitable distribution award, not a present
division of assets. Wife does not seek to divide her former husband's disability
benefits in violation of Mansell. Nor does she seek a greater percentage of her
husband's military pension than she originally received at the time of his
retirement pursuant to court order. Moreover, wife does not seek to alter the terms
of her veteran-spouse's retirement plan or to compel the Department of Defense to
make direct payments to her in excess of those permitted by federal law. The
remedy she seeks, and that to which she is entitled, is an enforcement of the
original order which was in effect before her former husband retired and
unilaterally elected the waiver. [The trial court] appropriately accomplished that
result by requiring husband to make up the shortfall in his former wife's equitable
distribution award occasioned by his actions.
The trial court's determination does not hinder husband's receipt of
veterans' disability benefits. Nor does it impinge upon federal statutory rights
husband has under the USFSPA or violate the doctrine of pre-emption. Rather, the
determination is whether under our state law the trial court has the authority to
interpret and enforce a judicial decree entered prior to the retiree's unilateral
election of a method of payment that has tax advantages to him and adverse
consequences to his former wife. We conclude that our court does have that
authority. This was an appropriate remedy to avoid the inequities that would be
imposed on a spouse who had no control over, but suffered the consequences of,
the other's unilateral election to switch retirement benefits to tax-free disability
benefits.
In In re Marriage of Krempin, 70 Cal App 4th 1008, 1015; 83 Cal Rptr 2d 134 (1999),
the California Court of Appeals noted that out-of-state precedents had reached “nearly universal” consensus that equitable action to compensate the non-military spouse is appropriate, on one theory or another, when that spouse’s share of retirement pay is reduced by the military spouse’s postjudgment waiver of retirement pay.
In Danielson v Evans, 201 Ariz App 401, 407-409; 36 P3d 749 (2001), the Arizona Court
of Appeals upheld an order that required the military spouse to pay his former wife the difference between the value of the retirement pay as it was envisioned at the time of the divorce and the reduced amount that she actually received after a waiver.
In Krapf v Krapf, 439 Mass 97, 105-108; 786 NE2d 318 (2003), the Massachusetts
Supreme Judicial Court held, under theories of breach of duty of good faith and fair dealing, that it was proper to order the military spouse to pay his former wife an amount equal to the military retirement pay she would have received under a settlement agreement had the husband not waived the pay in favor of disability benefits. The court stated that there was no violation of Mansell or the USFSPA when the order at issue “merely enforced the defendant’s contractual obligation to his former wife, which he may satisfy from any of his resources.” Id. at 108.
In In re Marriage of Neilsen & Magrini, 341 Ill App 3d 863, 869-870; 792 NE2d 844
(2003), the Illinois Court of Appeals ruled:
[W]e believe that a party's vested interest in a military pension cannot be
unilaterally diminished by an act of a military spouse, and we apply this principle
to the present case. Here, the parties agreed that Susan would receive “25% of the
gross retired or retainer pay due Mark.” It is clear that the parties intended that
Susan would receive a percentage of Mark's total retirement pay and not just his
disposable retired or retainer pay. The parties' intent was incorporated into the
judgment for dissolution. Mark retired and the judgment for dissolution was
implemented. However, Mark thereafter decided to accept an increased amount of
disability benefits. This resulted in a reduction of Mark's disposable retired or
retainer pay. This accordingly reduced Susan's entitlement. Mark certainly had a
legal right to receive disability benefits, but his doing so caused a diminution in
the amount of his retirement pay that Susan had been receiving for over three
years. Mark's decision frustrated the parties' intent and the trial court's judgment
for dissolution. Indeed, to allow Mark to unilaterally diminish Susan's interest in
his military pension would constitute an impermissible modification of a division
of marital property. As such, we affirm the trial court's order of November 3,
2000, in which it ruled that Susan was entitled to an amount equal to 25% of
Mark's military pension as it existed on the date he retired. Because the trial
court's November 3, 2000, order does not directly assign Mark's military disability
pay, it does not offend the United States Supreme Court's ruling in Mansell.
In Johnson v Johnson, 37 SW3d 892, 897-898 (Tenn, 2001), the Tennessee Supreme
Court held that a marital dissolution agreement that divides military retirement benefits gives the non-military spouse a vested interest in his or her portion of the benefits, which cannot thereafter be unilaterally diminished by an act of the military spouse, given that such an act would constitute an impermissible modification and violation of the agreement. The court remanded the case for entry of an order providing the non-military spouse with a monthly payment equal to her share of the waived retirement pay without dividing the military spouse’s disability pay. Id. at 898.
Presented here by
Terry Bankert
http://attorneybankert.com/
Presented here is an opinion of first impression of Michigan Court of Appeals concerning the issues surrounding whether a military spouse remains financially responsible to compensate his or her former spouse in an amount equal to the share of retirement pay ordered to be distributed to the former spouse as part of a divorce judgment's property division where the military spouse makes a unilateral and voluntary postjudgment election to waive the retirement pay in favor of disability benefits contrary to the terms of the divorce judgment; Combat-related special compensation (CRSC)(10 USC § 1413a);
link to this site
http://woundedmilitary.blogspot.com/2010/11/wife-gets-retirment-even-if-severed.html
Issues presented by Flint Michigan Divorce Lawyer Terry bankert 1-810-235-1970 (SEO) :
1.Military Divorce;
Members of the Navy who serve for a specified period, generally at least 20 years, are
entitled to retire and to receive retirement pay. 10 USC 6321 et seq. Military veterans in general are entitled to compensation for service-connected disabilities under 38 USC 1101 et seq., which we have referred to in this opinion as VA disability benefits. Further, CRSC is available to an “eligible combat-related disabled uniformed services retiree who elects [such] benefits.” 10 USC 1413a(a). CRSC is “not retired pay.” 10 USC 1413a(g). To be eligible for CRSC, a person must be a member of the uniformed services who is entitled to retired pay and who has a combat-related disability. 10 USC 1413a(c).
2. Does a military spouse remains financially responsible to compensate former spouse in an amount equal to the share of retirement pay ordered to be distributed to the former spouse as part of a divorce judgment's property division where the military spouse makes a unilateral and voluntary post judgment election to waive the retirement pay in favor of disability benefits contrary to the terms of the divorce judgment;
Plaintiff maintained that, once he became eligible for and selected CRSC by reason of his injuries sustained in service to his country, the disposable retirement pay subject to the QDRO was no longer subject to division. Relying on Mansell v Mansell, 490 US 581; 109 S Ct 2023; 104 L Ed 2d 675 (1989), plaintiff further contended that federal law precluded the court from ordering him to give any of his CRSC to defendant, which, admittedly, left defendant with nothing.
3.Combat-related special compensation (CRSC)(10 USC § 1413a); Oakland County Bd. of County Rd. Comm'rs v. Michigan Prop. & Cas. Guar. Ass'n; Feyz v. Mercy Mem'l Hosp.; Mansell v. Mansell; Bandini v. Bandini (IN); Resare v. Resare (RI); Hadrych v. Hadrych (NM); In re Marriage of Warkocz (CO); Black v. Black (ME); Shelton v. Shelton (NV); Whitfield v. Whitfield (NJ); In re Marriage of Krempin (CA); Danielson v. Evans (AZ); Krapf v. Krapf (MA); In re Marriage of Neilsen & Magrini (IL); Johnson v. Johnson (TN); Sharp v. Sharp (TX);
[C]oncurrent receipt of military retirement pay and VA disability benefits is commonly referred to as CRDP, which stands for “concurrent retirement and disability pay.” See Jackson v Jackson, 319 SW3d 76, 77 (Tex App, 2010). Because plaintiff was eligible for retirement pay and VA disability benefits, CRDP was an available option for plaintiff. A person who is qualified for CRDP and who is also qualified for CRSC, such as plaintiff, may elect to receive CRDP or CRSC, “but not both.” 10 USC 1414(d)(1); see also 10 USC 1413a(f) (indicating that CRSC and CRDP must be coordinated under § 1414[d]). During an annual open enrollment period, a person has the “right to make an election to change” from CRDP to CRSC or “the reverse, as the case may be.” 10 USC 1414(d)(2). Plaintiff elected CRSC, which effectively discontinued his retirement pay that had been subject to the QDRO, halting payments to defendant.
4.The Uniformed Services Former Spouses' Protection Act (10 USC § 1408);
The Uniformed Services Former Spouses’ Protection Act (USFSPA), 10 USC 1408,
generally governs the distribution of a spouse’s military retirement pay to a former spouse
pursuant to a court order, including state court final decrees of divorce issued in accordance with the state’s laws and providing for the division of property expressed as a percentage of disposable retirement pay. 10 USC 1408(a)(1)(A) and (2). Section § 1408(c) provides in pertinent part:
(1) Subject to the limitations of this section, a court may treat disposable
retired pay payable to a member for pay periods beginning after June 25, 1981,
either as property solely of the member or as property of the member and his
spouse in accordance with the law of the jurisdiction of such court. . . .
Accordingly, disposable retired or retirement pay2 can be treated by a court as joint
property and thus subject to division in a state court divorce decree. As used in the USFSPA, the term “disposable retired pay” is defined, in relevant part, as “the total monthly retired pay to which a member is entitled less amounts which . . . are deducted from the retired pay of such member . . . as a result of a waiver of retired pay required by law in order to receive compensation under title 5 or title 38.” 10 USC 1408(a)(4)(B).
5.Qualified Domestic Relations Order (QDRO)
The Mansell Court stated that the USFSPA granted state courts
the authority to divide military retirement pay as property, but the definitional section of the USFSPA relative to the term “disposable retired pay” specifically and clearly excluded military retirement pay that had been waived in order to receive VA disability payments, which is a benefit found in Title 38. Id. at 588-589. The USFSPA’s definitional section relied on and quoted by the Court was 10 USC 1408(a)(4)(b), which, as indicated above, excludes from consideration as disposable retired pay amounts waived pursuant to law “in order to receive compensation under title 5 or title 38.” Mansell, 490 US at 589 n 9. Once again, CRSC is compensation received under Title 10, and plaintiff here did not waive his right to retirement pay in order to receive compensation under Title 5 or 38, but rather to receive Title 10 compensation.
Court: Michigan Court of Appeals (Published),November 16, 2010 9:00 a.m.,
No. 292207,Macomb Circuit Court, LC No. 1988-003172-DM,
e-Journal Number: 47324,Judge(s): Murphy, Meter, and Shapiro
NEW MICHIGAN COURT OPINION BASED LAW (case law)
This is an issue of first impression.
NON-,MILITARY SPOUSE RELIEF WHEN OTHER SPOUSE WAIVES RETIREMENT PAY IN FAVOR OF DISABILITY PAY
Here the court held that Michigan now joins those jurisdictions providing relief to the non-military spouse and held that a military spouse remains financially responsible to compensate his or her former spouse in an amount equal to the share of retirement pay ordered to be distributed to the former spouse as part of a divorce judgment's property division, where the military spouse makes a unilateral and voluntary postjudgment election to waive the retirement pay in favor of disability benefits contrary to the terms of the divorce judgment.
WIFE TO GET 50% OF NAVY PENSION
In a judgment of divorce entered in September 1989, the defendant-wife was awarded 50% of the plaintiff-husband's Navy disposable retirement pay as part of the property division, and the judgment incorporated a QDRO to enforce that provision.
QDRO FILED , SPECIFIC LANGUAGE IN IT
The QDRO acknowledged the 50% division of plaintiff's disposable retirement pay, also referred to as his pension, and it prevented plaintiff from making another benefit election "that would otherwise reduce the monthly pension allotment without the written consent [of defendant]."
MILITARY SPOUSE DIAGNOSED WITH AGENT ORANGE
In 2008, plaintiff was officially diagnosed by the government, for purposes of entitlement to disability benefits, as being disabled as a result of combat-related activities and exposure to Agent Orange in Vietnam.
TO GET BENEFITS MILITARY SPOUSE HAD TO WAIVE HIS RETIREMENT AND HE DID
He was declared eligible to elect CRSC, but the election required plaintiff to waive further receipt of his retirement pay. Plaintiff elected to receive CRSC, resulting in termination of his retirement pay and the cessation of funds flowing to defendant under the QDRO.
NON MILITARY SPOUSE FILED AN ENFORCEMENT MOTION
Defendant filed a motion to enforce the divorce judgment and QDRO. Conceptually, and consistent with extensive case law from other jurisdictions, the court was dividing "waived" retirement pay in order to honor the terms and intent of the divorce judgment.
LOWER COURT WOULD NOT INVADE THE BENEFIT
The court held that it was not ruling that a state court has the authority to divide a military spouse's CRSC, nor that the military spouse can be ordered by a court to pay the former spouse using CRSC funds.
LOWER COURT JUST RULED IT HAD TO BE PAID
Rather, the compensation to be paid the former spouse as his or her share of the property division in lieu of the waived retirement pay can come from any source the military spouse chooses, but it must be paid to avoid contempt of court.
REVERSED THAT MILITARY SPOUSE HAD TO ACT LIKE TRUSTEE
To be clear, nothing in this opinion was to be construed as precluding a military spouse from using CRSC funds to satisfy the spouse's obligation if desired.
LOWER COURT ORDERED ½ OF THER BENEFITS NOT RETIREMENT MICHIGAN COURT OF APPEALS SAYS RETIREMENT
Although the court agreed with the trial court that plaintiff must compensate defendant, it reversed the trial court's order directing the plaintiff to act as trustee for the benefit of defendant with respect to half of plaintiff's monthly CRSC, which funds were then to be delivered to defendant because the order required plaintiff to pay defendant from CRSC funds and required plaintiff to pay an amount equal to half of his CRSC and not half of his retirement pay.
SENT BACK TO LOWER COURT TO GET IT RIGHT
The court remanded for entry of an order requiring plaintiff to compensate defendant with monthly payments, from any source or combination of sources, in an amount equal to 50% of his retirement pay that he would be receiving but for his election to waive the retirement pay in favor of disability benefits.
CASE LAW REVIEWED
In Resare v Resare, 908 A2d 1006 (RI, 2006), the family court, after first emphasizing
that it was not ordering the division of any disability benefits, ordered the military spouse to pay sum equal to the 35 percent of the gross pension that would have been in effect had the military spouse not unilaterally modified the stipulated property division with a pension waiver. The Rhode Island Supreme Court, affirming the family court’s ruling, held that the lower court had properly entered its order predicated on breach-of-contract principles. Id. at 1010.
In Hadrych v Hadrych, 140 NM 829, 833; 149 P3d 593 (2006), the New Mexico Court of
Appeals, indicating that it was adopting the majority view, held that the lower court had properly ordered the military spouse to compensate the other former spouse for the reduction in retirement
benefits that occurred when the military spouse converted them to disability benefits. The lower court’s ruling had not identified the disability benefits as being the source for the ordered compensation, leaving it to the military spouse to determine how to pay the compensation and to utilize whatever assets chosen to satisfy the obligation. Id. The appellate court stated that it was critical that “the court order [did] not specifically require that disability benefits provide the source of the funds paid to the non-military spouse.” Id. (citation and internal quotations omitted).
In In re Marriage of Warkocz, 141 P3d 926, 928 (Colo App, 2006), the Colorado Court
of Appeals agreed with the non-military spouse “that the trial court erred in failing to award her the amount she would have received from husband’s military pay had he not applied for, and received, disability benefits.” The court held that, consistent with public policy and decisions in other jurisdictions, a trial court is not precluded from equitably enforcing a separation agreement. Id. at 930. The court stated that neither the USFSPA nor United States Supreme Court precedent requires “courts to completely ignore the economic consequences of a military retiree’s decision to waive retirement pay in order to collect disability pay.” Id.
In Black v Black, 842 A2d 1280, 1284-1285 (Maine, 2004), the Supreme Judicial Court
of Maine held that Mansell and USFSPA do not limit the authority of state courts “to grant postjudgment relief when military retirement pay previously divided by a divorce judgment is converted to disability pay, so long as the relief awarded does not itself attempt to divide disability pay as marital property.”
In Shelton v Shelton, 119 Nev 492, 496-498; 78 P3d 507 (2003), the Nevada Supreme
Court held that a military spouse was contractually obligated under a divorce settlement
agreement to continue paying his former wife $577 per month, even though the agreement indicated that the payment represented half of the military retirement pension and the military spouse had waived that pension in order to receive disability benefits.
We agree with the following sentiments expressed by the Superior Court of New Jersey,
Appellate Division, in Whitfield v Whitfield, 373 NJ Super 573, 582-583; 862 A2d 1187 (2004):
It is important to emphasize the procedural posture of this case. The issue
is one of enforcement of a prior equitable distribution award, not a present
division of assets. Wife does not seek to divide her former husband's disability
benefits in violation of Mansell. Nor does she seek a greater percentage of her
husband's military pension than she originally received at the time of his
retirement pursuant to court order. Moreover, wife does not seek to alter the terms
of her veteran-spouse's retirement plan or to compel the Department of Defense to
make direct payments to her in excess of those permitted by federal law. The
remedy she seeks, and that to which she is entitled, is an enforcement of the
original order which was in effect before her former husband retired and
unilaterally elected the waiver. [The trial court] appropriately accomplished that
result by requiring husband to make up the shortfall in his former wife's equitable
distribution award occasioned by his actions.
The trial court's determination does not hinder husband's receipt of
veterans' disability benefits. Nor does it impinge upon federal statutory rights
husband has under the USFSPA or violate the doctrine of pre-emption. Rather, the
determination is whether under our state law the trial court has the authority to
interpret and enforce a judicial decree entered prior to the retiree's unilateral
election of a method of payment that has tax advantages to him and adverse
consequences to his former wife. We conclude that our court does have that
authority. This was an appropriate remedy to avoid the inequities that would be
imposed on a spouse who had no control over, but suffered the consequences of,
the other's unilateral election to switch retirement benefits to tax-free disability
benefits.
In In re Marriage of Krempin, 70 Cal App 4th 1008, 1015; 83 Cal Rptr 2d 134 (1999),
the California Court of Appeals noted that out-of-state precedents had reached “nearly universal” consensus that equitable action to compensate the non-military spouse is appropriate, on one theory or another, when that spouse’s share of retirement pay is reduced by the military spouse’s postjudgment waiver of retirement pay.
In Danielson v Evans, 201 Ariz App 401, 407-409; 36 P3d 749 (2001), the Arizona Court
of Appeals upheld an order that required the military spouse to pay his former wife the difference between the value of the retirement pay as it was envisioned at the time of the divorce and the reduced amount that she actually received after a waiver.
In Krapf v Krapf, 439 Mass 97, 105-108; 786 NE2d 318 (2003), the Massachusetts
Supreme Judicial Court held, under theories of breach of duty of good faith and fair dealing, that it was proper to order the military spouse to pay his former wife an amount equal to the military retirement pay she would have received under a settlement agreement had the husband not waived the pay in favor of disability benefits. The court stated that there was no violation of Mansell or the USFSPA when the order at issue “merely enforced the defendant’s contractual obligation to his former wife, which he may satisfy from any of his resources.” Id. at 108.
In In re Marriage of Neilsen & Magrini, 341 Ill App 3d 863, 869-870; 792 NE2d 844
(2003), the Illinois Court of Appeals ruled:
[W]e believe that a party's vested interest in a military pension cannot be
unilaterally diminished by an act of a military spouse, and we apply this principle
to the present case. Here, the parties agreed that Susan would receive “25% of the
gross retired or retainer pay due Mark.” It is clear that the parties intended that
Susan would receive a percentage of Mark's total retirement pay and not just his
disposable retired or retainer pay. The parties' intent was incorporated into the
judgment for dissolution. Mark retired and the judgment for dissolution was
implemented. However, Mark thereafter decided to accept an increased amount of
disability benefits. This resulted in a reduction of Mark's disposable retired or
retainer pay. This accordingly reduced Susan's entitlement. Mark certainly had a
legal right to receive disability benefits, but his doing so caused a diminution in
the amount of his retirement pay that Susan had been receiving for over three
years. Mark's decision frustrated the parties' intent and the trial court's judgment
for dissolution. Indeed, to allow Mark to unilaterally diminish Susan's interest in
his military pension would constitute an impermissible modification of a division
of marital property. As such, we affirm the trial court's order of November 3,
2000, in which it ruled that Susan was entitled to an amount equal to 25% of
Mark's military pension as it existed on the date he retired. Because the trial
court's November 3, 2000, order does not directly assign Mark's military disability
pay, it does not offend the United States Supreme Court's ruling in Mansell.
In Johnson v Johnson, 37 SW3d 892, 897-898 (Tenn, 2001), the Tennessee Supreme
Court held that a marital dissolution agreement that divides military retirement benefits gives the non-military spouse a vested interest in his or her portion of the benefits, which cannot thereafter be unilaterally diminished by an act of the military spouse, given that such an act would constitute an impermissible modification and violation of the agreement. The court remanded the case for entry of an order providing the non-military spouse with a monthly payment equal to her share of the waived retirement pay without dividing the military spouse’s disability pay. Id. at 898.
Presented here by
Terry Bankert
http://attorneybankert.com/
Sunday, August 23, 2009
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