For decades, military spouses contributed to their family’s future security, understanding that the military retirement pension earned during the marriage was a shared asset. Florida law reflects this, treating the marital portion of military retired pay as property subject to equitable distribution. However, a unique feature of military retirement – the veteran’s ability to waive retired pay in favor of tax free VA disability compensation – creates a significant complication. This “VA waiver” directly reduces the amount of “disposable retired pay” that state courts are allowed to divide under federal law, often substantially diminishing the former spouse’s anticipated share.
For years, divorce lawyers attempted to mitigate this financial blow to the non military spouse by including “indemnity clauses” in settlement agreements. These clauses essentially required the veteran to reimburse the former spouse directly for any reduction in their pension share caused by a post divorce VA waiver or an increase in the veteran’s disability rating. It was a contractual workaround designed to preserve the financial agreement reached during the divorce.
Then came Howell v. Howell. In 2017, the U.S. Supreme Court delivered a landmark ruling that effectively struck down these indemnity clauses, finding them preempted by federal law. The Court held that ordering a veteran to reimburse their former spouse for waived retired pay amounted to an impermissible, indirect division of the federally protected VA disability benefits.
The Howell decision sent shockwaves through the military divorce community. It removed a key tool used to protect former spouses from the financial consequences of VA waivers, leaving many feeling vulnerable and uncertain. If indemnity clauses are off the table, what recourse remains? Does the former spouse simply have to accept a potentially drastic reduction in their share of this critical marital asset?
The answer is no, but the path forward requires a significant strategic shift. While Howell closed one door, it did not eliminate all avenues for achieving financial fairness. Addressing the impact of a VA waiver now requires proactive, sophisticated planning during the divorce process itself, focusing on alternative strategies that comply with federal law while still protecting the non military spouse’s interests. This complex legal landscape underscores the absolute necessity of working with an experienced Tampa military divorce lawyer who understands the post-Howell reality and knows how to implement effective countermeasures.
Understanding the Core Problem: The VA Waiver and Mansell
To grasp the impact of Howell, one must first understand the underlying issue: the VA waiver and the precedent set by Mansell v. Mansell (1989).
- The VA Waiver: Federal law generally prevents retirees from receiving both full military retired pay and full VA disability compensation. To receive tax free VA disability benefits, a veteran must typically waive, dollar for dollar, an equivalent amount of their taxable military retired pay.
- The USFSPA Limitation: The Uniformed Services Former Spouses’ Protection Act (USFSPA) permits state courts to divide “disposable retired pay.” Crucially, the USFSPA defines disposable pay as gross pay less certain deductions, specifically including amounts waived to receive VA disability pay.
- Mansell v. Mansell: The Supreme Court affirmed in Mansell that the USFSPA means what it says: state courts cannot divide the portion of retired pay that has been waived to receive VA disability benefits. This portion is federally protected and off limits for property division.
This creates the fundamental conflict: Florida law views the pension earned during marriage as a divisible marital asset, but federal law shields any portion waived for VA disability from that division.
The Rise and Fall of Indemnity Clauses
Before Howell, lawyers tried to bridge this gap with contractual “indemnity” or “hold harmless” clauses in Marital Settlement Agreements. A typical clause might read:
“If the Husband elects to waive any portion of his military retired pay in order to receive VA disability benefits, resulting in a reduction of the Wife’s court ordered share of said retired pay, the Husband shall indemnify and hold the Wife harmless by paying directly to the Wife an amount equal to the reduction she experiences each month.”
The logic seemed sound: the court was not dividing the VA pay itself, but merely enforcing a contractual agreement between the parties to maintain the originally intended financial outcome. Many state courts upheld these clauses for years.
Howell v. Howell (2017): The Game Changer
John Howell, an Air Force veteran, and his wife Sandra divorced. Their decree awarded Sandra 50% of John’s future retired pay. Years later, John waived a portion of his retired pay to receive VA disability benefits, reducing Sandra’s monthly payment. Sandra sued in state court to enforce an indemnity clause, demanding John reimburse her for the shortfall. The case went all the way to the U.S. Supreme Court.
The Supreme Court sided with the veteran, John Howell. The Court reasoned that ordering reimbursement was simply an indirect way of achieving what Mansell prohibited: dividing the VA disability related portion of the retired pay. The Court stated that the risk of future reductions due to VA waivers was a known consequence under the USFSPA, and state courts could not simply shift that federally permitted reduction back onto the veteran through contractual indemnification.
The Impact: Howell effectively invalidated indemnity clauses nationwide. Florida courts can no longer order a veteran to reimburse a former spouse for reductions in retired pay caused by a VA waiver. This safety net, however imperfect, was gone. This ruling dramatically increased the financial risk for former spouses, particularly in cases where the service member might apply for or receive an increased VA disability rating after the divorce is final. This is a critical issue for any Tampa military divorce lawyer to address proactively.
Life After Howell: Alternative Strategies for Financial Fairness
So, if indemnity clauses are unenforceable, how does a Tampa military divorce lawyer protect the non military spouse’s financial interests when a VA waiver significantly impacts the divisible pension? The focus must shift from reimbursement after the fact to proactive planning and strategic allocation during the divorce itself. Here are the key strategies available:
Strategy 1: Accurate Income Calculation for Support (The Untouched Tool)
This is, perhaps, the most crucial point Howell did not change. While federal law shields VA disability pay from property division, it does not prevent Florida courts from considering it as income when calculating child support and alimony.
- VA Pay IS Income in Florida: Florida Statute § 61.30 (Child Support) explicitly includes “disability benefits” as gross income. Florida courts consistently include VA disability compensation when calculating child support using the state guidelines. Similarly, for alimony (Florida Statute § 61.08), VA disability pay is considered a financial resource that directly impacts the veteran’s ability to pay spousal support.
- Maximizing Support Calculations: By ensuring all of the veteran’s income, including their tax free VA disability payments, is accurately presented to the court, your Tampa military divorce lawyer can argue for appropriate child support and alimony awards based on the veteran’s true financial capacity. This provides a direct, legally sound way to mitigate the financial impact of the reduced pension share on the former spouse’s budget.
- Tax Free Advantage: When arguing ability to pay alimony, emphasize that VA disability income is tax free. This means $1,000 in VA disability has significantly more spending power than $1,000 in taxable wages or retired pay.
- The Counterbalance: While the former spouse receives less from the pension division as property, they may receive more in support because the veteran’s overall income (including VA pay) is higher. This is often the most direct way to achieve a degree of financial balance post-Howell.
Strategy 2: Negotiation and Offset with Other Marital Assets
Since the waived portion of the pension cannot be divided or indemnified, the focus shifts to the other assets in the marital estate. Florida is an equitable distribution state, meaning assets must be divided fairly, which often starts at 50/50 but does not require it if circumstances warrant an unequal split.
- Quantifying the Loss: The first step is to calculate the anticipated financial impact of the VA waiver on the former spouse’s share of the pension over their expected lifetime. This might involve projecting the retired pay, estimating the impact of current or potential future VA ratings, and potentially using present value calculations (often with input from a financial expert like a CPA or CDFA).
- Negotiating an Asset Offset: Armed with this calculation, your Tampa military divorce lawyer can negotiate for the non military spouse to receive a larger share of other divisible marital assets to compensate for the reduced pension value. Examples include:
- More Home Equity: Receiving 60% or 70% (or even 100% if values align) of the equity in the marital home.
- Larger Share of TSP/401(k)s: Receiving a disproportionate share of other retirement accounts that are fully divisible.
- Keeping Liquid Assets: Receiving a larger share of savings, checking, or investment accounts.
- Allocation of Debts: Having the veteran spouse take on a larger share of the marital debts.
- The “Equitable” Argument: While Florida Statute § 61.075 lists factors for unequal distribution (like dissipation of assets or contributions to the marriage), the fundamental goal is fairness. Your Tampa military divorce lawyercan argue that the significant, federally mandated reduction in the value of one major marital asset (the pension) due to the VA waiver necessitates an unequal division of other assets to achieve an overall equitable outcome for both parties.
- Challenges: This strategy depends heavily on:
- Sufficient Other Assets: If the military pension is the only significant asset, there may be little else to offset.
- Accurate Valuation: Properly valuing all assets (house, business, other retirement funds) is crucial for a fair offset.
- Negotiation Skill: Reaching agreement on an unequal split requires strong negotiation by your Tampa military divorce lawyer, backed by clear financial data. If agreement fails, convincing a judge requires compelling evidence and legal argument.
Strategy 3: Structuring Alimony to Address the Disparity
Alimony (spousal support) is determined based on one spouse’s need and the other’s ability to pay, considering numerous factors outlined in Florida Statute § 61.08 (as recently amended in 2023). The impact of the VA waiver can influence both sides of this equation.
- Increased Need for the Recipient: The fact that the former spouse will receive less (or potentially nothing, with a 100% waiver) from the military pension division directly increases their future financial need for spousal support. Your Tampa military divorce lawyer must clearly present evidence showing how the reduced pension share creates or exacerbates this need.
- Increased Ability to Pay for the Veteran: As discussed, the veteran’s VA disability income is counted when assessing their ability to pay alimony. A veteran receiving both reduced retired pay and substantial tax free VA disability pay often has a higher actual cash flow than their taxable income alone suggests, strengthening their ability to pay support.
- Negotiating Amount and Duration: While Florida’s 2023 alimony reforms eliminated permanent alimony and placed caps on the duration of durational alimony, the amount awarded is still based on need and ability. Arguments can be made that a higher amount of alimony, or alimony for the maximum duration allowed under the new law, is warranted specifically because the VA waiver significantly reduced the property settlement the former spouse would have otherwise received.
- Lump Sum Alimony: In some cases, negotiating for non modifiable lump sum alimony (paid upfront or in installments) might provide more security for the receiving spouse than relying on monthly payments potentially affected by future income changes, though this requires available assets.
Structuring alimony effectively requires a thorough understanding of the parties’ complete financial picture (including VA benefits), Florida’s current alimony factors, and persuasive presentation to the court by your Tampa military divorce lawyer.
Strategy 4: Investigating CRDP/CRSC Eligibility
While not a direct workaround for the Mansell/Howell limitation, understanding Concurrent Retirement and Disability Pay (CRDP) and Combat Related Special Compensation (CRSC) is crucial.
- CRDP: Allows some retirees (generally those with a 50% or higher VA rating) to receive both their full military retired pay and their VA disability pay, eliminating the waiver. If the veteran is receiving CRDP, the full retired pay amount (not reduced by a waiver) becomes “disposable retired pay” and is fully divisible under the USFSPA. Your Tampa military divorce lawyer must investigate CRDP eligibility.
- CRSC: Compensates for combat related disabilities. It is generally not divisible as property, similar to VA disability pay, but it is received in addition to any retired pay, potentially increasing the veteran’s income for support calculations.
Determining eligibility for CRDP or CRSC and understanding its impact requires specific knowledge of these complex programs.
Strategy 5: Securing Obligations with Life Insurance
While not replacing the lost asset value, ensuring that any support obligations (alimony or child support) are secured is critical.
- Mandatory Life Insurance: Your Final Judgment should require the veteran spouse to maintain a life insurance policy naming the former spouse (for alimony) or children (for child support) as beneficiaries, in an amount sufficient to cover the total remaining support obligation.
- Proof and Enforcement: The order must require annual proof that the policy remains in force and the beneficiary designation is correct. It should also state that if the veteran fails to maintain the insurance, the former spouse can obtain their own policy and the veteran will be responsible for the premiums. A Tampa military divorce lawyerensures this language is included.
Conclusion: Proactive Planning is the Post-Howell Imperative
The Howell decision undeniably removed a tool previously used to protect former spouses from the financial consequences of VA waivers. Indemnity clauses are no longer a viable safety net. This reality requires a fundamental shift in strategy for military divorces in Florida involving VA disability benefits.
Protection for the non military spouse now hinges on meticulous, proactive planning during the divorce, led by a Tampa military divorce lawyer who understands the post-Howell landscape. The focus must be on leveraging the tools that remain available under state and federal law:
- Maximize Support: Insist on the accurate inclusion of all income sources, including tax free VA disability pay, when calculating child support and alimony.
- Negotiate Asset Offsets: Quantify the financial impact of the waiver and strategically negotiate for a disproportionate share of other divisible marital assets to achieve overall fairness.
- Structure Alimony Thoughtfully: Argue for alimony amounts and durations (within legal limits) that reflect the increased need created by the reduced pension share.
- Investigate CRDP/CRSC: Determine if these programs apply, as they can significantly alter the divisible amount of retired pay or total income.
- Draft with Precision: Ensure all financial orders, especially those related to support and life insurance security, are drafted with iron clad specificity to facilitate future enforcement.
The VA waiver issue adds a significant layer of complexity to military divorces. Ignoring it, misunderstanding the law, or relying on outdated strategies can lead to unfair and financially devastating outcomes. Whether you are the veteran navigating your benefits or the spouse seeking security, engaging a Tampa military divorce lawyer with specific expertise in this post-Howell environment is absolutely critical to ensuring a just and equitable resolution. Choose your Tampa military divorce lawyer wisely. A knowledgeable Tampa military divorce lawyer is essential. Your Tampa military divorce lawyer can guide you. Trust your Tampa military divorce lawyer.
Frequently Asked Questions (FAQ)
What did Howell v. Howell decide? The U.S. Supreme Court ruled that state courts cannot order a veteran to “indemnify” or reimburse a former spouse for reductions in their share of military retired pay caused by the veteran waiving retired pay to receive VA disability benefits. Such clauses are unenforceable.
Can my Florida divorce decree divide my spouse’s VA disability pay? No. Federal law prevents Florida courts from dividing VA disability payments as marital property. The payments are protected for the veteran.
Does VA disability count as income for alimony or child support in Florida? Yes. While not divisible as property, VA disability payments are considered income under Florida law when calculating child support and assessing a veteran’s ability to pay alimony. A Tampa military divorce lawyer will ensure it is included.
My ex spouse might get a higher VA rating after the divorce. Am I just out of luck? Post Howell, you generally cannot force reimbursement for a future reduction caused by an increased VA waiver. This is why it is critical for your Tampa military divorce lawyer to address this risk during the divorce through strategies like negotiating offsets with other assets or structuring alimony appropriately based on current information and potential future scenarios.
What is CRDP and how does it affect division? Concurrent Retirement and Disability Pay (CRDP) allows some eligible retirees (usually 50%+ VA rating) to receive both full retired pay and VA disability, eliminating the waiver. If CRDP applies, the full retired pay amount becomes divisible, which is very advantageous for the former spouse. Your Tampa military divorce lawyer should investigate eligibility.
Tampa Military Divorce Attorneys You Can Trust
The McKinney Law Group stands with Tampa’s military families. We offer experienced representation designed to protect your family, your future, and your peace of mind.
Contact us at 813-428-3400 or [email protected] today.