RAO Davao City

United States Military Retiree Activities Office Davao City, Philippines

USFSPA & DIVORCE UPDATE August 15, 2008

Posted by Service Officer on August 14th, 2008

The USFSPA Litigation Support Group (ULSG) closely monitors cases filed in state courts where former servicemembers, who are receiving military retirement pay, are locked in disputes with former spouses when that pay is converted, by election, to military disability pay under applicable VA benefits. This is a common move by former servicemembers who receive a VA disability rating because of the tax advantages of receiving disability pay over retired pay.  Former spouses usually dispute such an election and demand that foregone share of military retired pay be rendered to them, even though the former servicemember’s only (or major) source of income is now disability pay. Usually, former servicemembers (and their lawyers) rely solely on the provisions of the Uniformed Services Former Spouses Protection Act (USFSPA) which prevents the treatment of military disability pay as disposable pay for purposes of payments to former spouses.  See USFSPA, 10 U.S.C. § 1408(a)(4)(B).  But state courts continue to ignore that provision and rule against the interests of former servicemembers.

 

It is vital, therefore, that ULSG members and constituents also rely on the relevant provisions of the Veterans’ Benefits Act, 38 U.S.C. § 5301, which provides that payments of benefits due or to become due under any law administered by the Secretary [of Veterans Affairs] shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be … exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary. Congress recently amended the VBA and this applicable provision Id. § 5301(a)(1). , to clarify that, in any case where a beneficiary entitled to compensation, pension, or dependency and indemnity compensation enters into an agreement with another person under which agreement such other person acquires for consideration the right to receive such benefit by payment of such compensation, pension or dependency and indemnity compensation, as the case may be … such agreement shall be deemed to be an assignment and is prohibited. Veterans Benefits Act of 2003, Pub. L. No. 108-183, § 702, 117 Stat. 2651, Dec. 16, 2003, codified at § 5301(a)(3)(A).

ULSG members finding themselves in litigation on questions related to this advisory should instruct their lawyers to brief and argue – from the very beginning of the case, and at every opportunity thereafter – the  Veterans Benefits Act (VBA) issue, in support of their position.  While ULSG, LLC cannot provide individualized legal advice to its members and constituents, or answer individual queries, ULSG leadership believes that this is a prudent course to follow in cases such as this. ULSG would appreciate hearing reports on this issue from those concerned. They can be reached at Leadership@ulsg.org or by mail to ULSG, LLC, 20770 US Hwy 281, Ste 108-12, San Antonio, Texas 78258-7500. [Source: ULSG Advisory 5 Aug 08 ++]

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