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Is military disability pay a marital asset?

If you are a military veteran who has a service-connected disability, then you may be able to receive disability payments from the Department of Veterans Affairs. How VA disability can impact a divorce case in Texas is what we are going to be discussing in today’s blog post from the Law Office of Bryan Fagan. Subjects as diverse as child support calculations, spousal maintenance, and community property division may be impacted by your eligibility for VA disability payments. Understanding the relationship between these areas of your divorce is important considering that there is a small margin for error in any divorce case.

If you have a service-connected VA disability rating of at least 10% then you are entitled to VA disability payments. Your military retirement will be reduced on a dollar-by-dollar basis if your disability rating is under 50%. So, why would you want to waive VA retirement benefits to receive VA disability benefits? The two primary reasons why disability benefits may be preferable to retirement benefits are due to disability benefits not being subject to division in a divorce and disability benefits are not taxable. 

How can you apply for VA disability benefits?

Just because you have a service-connected disability through the military does not mean that you will automatically receive VA disability payments. Rather, you need to follow the process that the military has laid out for veterans and active-duty service members to apply for and receive VA disability benefits. While some people in your position will apply for and receive disability benefits at the same, they that they separate from the military, there is no deadline to apply for disability. It could be years later that you first apply for disability benefits and receive them.

What this means for your divorce is that you should not assume that just because your spouse is not receiving benefits at this moment, he or she will not begin to receive them in the future. The VA will pay on any person's claim who can prove that he or she has a service-connected disability rating of between 10 and 100%. Depending on whether you have a spouse and children you can receive a monthly disability payment from the VA of over $3,500 per month. 

Backdoor division of VA disability benefits

As we have already discussed, VA disability benefits are not divisible in a divorce as community property. Once the funds are deposited into a jointly held bank account then disability payments may potentially be divided in a divorce. What we are describing here is something called “commingling” where separate property and community property are placed together. Rather, it would be wise for you to segregate your separate prop (like VA disability) into a bank account that will never have community property funds within it. This way you can be sure that the bank account in question will never have an issue with commingled funds. 

How can VA disability impact decisions on child support and spousal maintenance?

The questions about child support and spousal maintenance revolve around income. VA disability benefits do count as income when it comes to calculating child support or spousal maintenance. As opposed to the community estate, disability benefits from the VA can be a part of a veteran's income for purposes of setting child support. 

For alimony or spousal maintenance purposes, Texas is an outlier among the rest of the 49 states in our union. Texas family courts will typically not consider VA disability payments as income for calculating spousal maintenance. 

Can VA disability payments be garnished for child support and alimony?

Wage garnishment in Texas typically takes place via a wage withholding order. A wage withholding order is usually submitted to an obligor spouse or parent's employer after a child custody or divorce case. In that way, the employer will know how much money to withhold to pay child support each month. 

Military disability benefits cannot be treated as community property in a Texas divorce. Let’s look at a case where a husband filed an appeal from his divorce arguing that the court incorrectly divided up his military disability benefits. 

In that case, the wife had filed for divorce. In her Original Petition for Divorce, this woman argued that she should receive a disproportionate share of the community estate for a variety of reasons. Her income was much less than her husband’s, she had no advanced education and she had no separate property from before the marriage. Ultimately, the divorce court awarded her more than half of her husband’s military retirement benefits. Her husband immediately appealed the decision.

The husband's main argument was that in awarding his wife 55% of her military retirement pay, the court had included disability benefits in that equation. The wife argued that this was not the case and that the final decree of divorce awarded him his military disability and Social Security disability benefits as a part of his separate estate. 

What did the final decree of divorce say, exactly?

The language as contained in their final decree of divorce stated that the wife was to be awarded fifty-five percent of the husband's disposable military retired pay including any accrued unpaid bonuses, disability plan, or benefits. Under awards to the husband, the same language was used. A domestic relations order was drafted to divide up the military benefits and included stated that only disposable retired pay could be considered community property. Military disability pay would not count as military benefits for division in the divorce. 

What did the appellate court say?

When the husband appealed the trial court orders it went to an appellate court here in Texas. The final decree of divorce contained an award for the husband of his military disability and Social Security disability benefits as separate property. The appellate court found the definition of disposable retired pay did exclude military disability pay. As a result, the appellate court found that the trial court did not make a mistake and award any of the husband’s disability benefits. 

Dividing up marital property in a Texas divorce is not easy

The subject of community property division in a Texas divorce arises with a great deal of regularity. It is also complicated- more complicated than many guides on the internet will lead you to believe. One of the most difficult aspects of community property division to figure out for many couples has to do with how government benefits are divided up. It could be a teacher's retirement or military retirement, there are methods of calculating what percentage of these benefits can be divided in the divorce that relate to your length of service as well as how many years of marriage coincided with that length of service. 

Veterans’ benefits, including military benefits, are no different. Special rules apply that will determine how your military benefits will be divided in the divorce and whether they are even subject to division. We have already seen how military disability benefits are not divisible by a Texas family court. Additionally, because of the example that we shared in the earlier section of today's blog post hopefully, you can understand just how critical it is to make sure that your final decree of divorce is worded clearly and unambiguously. The result, if you don't, is to prolong the case and put you in a position where you spend money that otherwise would not have to.

Military benefits are done through federal law and Texas law determines how property is divided in a divorce. Your attorney will need to be able to divide up those benefits correctly and understand how state and federal law treat these subjects. It is a bad situation to find yourself in when your final decree of divorce is not correct. This will cost you time, money, and stress that otherwise would not need to be spent. Hiring an experienced family law attorney with the Law Office of Bryan Fagan is a great way to help ensure that you do not find yourself in this position moving forward.

Our attorneys and staff have been fortunate enough to be able to represent members of our military and veterans alike in their divorce cases since our office was first opened. In addition, military spouses are among the most frequently seen clients of our office. Texas is home to many military members and veterans, and we are honored whenever we have the opportunity to work with military families to help you all accomplish your goals during a difficult time. Contact us today for a free-of-charge consultation with one of the experienced family law attorneys with the Law Office of Bryan Fagan.

Military retirement benefits

Military pensions can be subject to division in your divorce. If the pension was contributed to during your marriage, then those portions of the military benefits will be divisible in the divorce. Any portion that was contributed before the marriage will count as separate property and will not be divisible. The tricky part for you and your spouse will be to determine how much of the military retirement benefits are community property and then how to divide up that community property portion of your benefits. 

At the time of your divorce, the military pension becomes frozen. Once you or your spouse file for divorce the pension’s value will be what it was on the date of filing. The reason why this law is in place is that it would be possible for a military spouse to take advantage of their spouse being promoted during the divorce and then be eligible to receive more money as a result of that promotion. Cost-of-living adjustments are typically allowed during a divorce, but the pension amount stays steady where it was at the beginning of the case. 

The bottom line is while a military divorce will follow the same procedures and processes as a civilian divorce, there are specific areas where a military divorce can differ from a civilian divorce, as well. The length of your marriage, while you were serving in the military, will also make a difference when calculating benefits. 

If you are married to a military member, then the length of your marriage will have a tremendous impact on your ability to receive benefits. Simply put, if you and your spouse have been married for less than 10 years then you should not expect to receive much of anything in the divorce as far as military benefits. As you are probably aware, Texas is a community property state which means that debts and property accumulated during the marriage will be subject to division in the divorce. 

You and your spouse need to have been married for at least 10 years to become eligible for military retirement pay. In addition, the ten years of your marriage must have overlapped with 10 years of military service to qualify. This is different from a civilian divorce where a spouse would be eligible to receive a portion of their spouse’s retirement benefits upon divorce no matter the length of the marriage. 

As soon as you and your spouse have been married for ten years you would become eligible to receive a portion of your spouse's retirement pay. Here are a few benchmarks to keep in mind as far as retirement pay is concerned. At 15 years, you would be eligible to receive half of the retirement pay and one year of health insurance after the divorce comes to an end. Once you have been married for twenty years or longer you would be eligible for half of the retirement pay, health insurance, and other benefits available through the military. The health insurance would go away once you remarried, however. 

The importance of hiring an experienced family law attorney in a military divorce

You need to include the specific language that the military requires to receive the correct amount of retirement benefits. Your final decree of divorce should include whatever language the military mandates be included in these orders. Failing to include this language in the order can ruin your chances of receiving the property that you worked so hard to obtain in your divorce. You should be accurate when listing how long you or your spouse served in the military and how long your marriage was. 

The government will send the orders back to you if not completed correctly. Keep in mind that this will cost you time in that the attorney will have to go back and correct their work. On top of that, the extra time and effort that it takes to correct these mistakes will cost you time and money. This is adding insult to injury and makes it very difficult to be able to budget for a divorce or plan for your life after the divorce has come to an end. Able to say accurately this is when the divorce ended and here the financial consequences of the divorce are an important part of the case for peace of mind's sake.

No matter how long you and your spouse were married, if he or she won't be retiring for another twenty years then you will have to wait a while to get the money promised to you in the divorce. Your spouse may become the person who must pay you the retirement pay when it does come time for those payments to be made. This sounds ok at the time of your divorce but can become cumbersome ultimately for a person in your shoes given that you have no idea what will become of your spouse after the divorce. 

If your ex-spouse does not pay you the correct amount of money at retirement you will need to keep tabs on him or her and then file an enforcement lawsuit against him or her. Time is a factor that stands to harm almost every divorce at this stage. Instead of dividing up military retirement pay, why not divide up other property instead? This method can help you to get a case immediately rather than having to wait decades. 

You can ask for more equity in the home, a greater amount of child support or spousal maintenance, or anything in between. There are many ways to prepare for a divorce when it comes to community property division. You should begin by going through all of your assets and debts and develop a plan on how to divide them in your divorce. You are only limited by your circumstances and creativity in this regard. Otherwise, having an experienced family law attorney can help you to problem solve and think outside the box when it comes to the division of marital property.

Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan

If you have any questions about the material contained in today’s blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed family law attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas family law as well as about your family's circumstances that may be impacted by the filing of a divorce or child custody case. 

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