U.S. Military (Ret.): Disability pay is community property in some states - Money, Military Retirement - Air Force Times

U.S. Military (Ret.): Disability pay is community property in some states

Medically retired Air Force Maj. Mark Beres is leading an effort to get the Arizona legislature to enact a law to prohibit any form of veterans disability compensation from being counted as income in divorce settlements.

This grass-roots initiative has spread to other states, including California, West Virginia and Iowa, where retired service members are lobbying their state legislators to forbid family court judges from incorporating disability benefits into any final divorce order.

This is another front in the legal battle over which military benefits are community property in divorce cases. Under the federal Uniformed Services Former Spouse Protection Act, regular military retirement pay may be considered community property by state courts.

State laws are murkier when it comes to service-connected disability compensation, but state courts are, in fact, bringing those payments into the mix.

Veterans have won some victories. In a decision in June 2010, an Arizona appeals court overturned a lower family court that ruled Beres’ Temporary Disability Retirement List benefits were community property that could be divided with his ex-wife.

In 2009, an Ohio appeals court also overturned a lower court decision that a veteran’s disability benefits were a divisible marital asset.

But in Iowa, a disabled veteran who served as a state veteran service officer was jailed in September for contempt of court when he refused to comply with a court order stating that his veterans disability compensation should be counted as income in his divorce settlement. A number of other veterans have had similar experiences.

The legal wrangling hinges largely on interpretation of Title 28, Section 5301, of the U.S. Code, which veterans insist prohibits division and payment of disability benefits to third parties.

Disability pay is designed to compensate veterans specifically for injuries or illnesses incurred in the line of duty. It should not be used to calculate a veteran’s net worth.

But absent any effort to clarify and strengthen federal law — which is unlikely — this battle will have to be fought one state at a time.