New Mexico veterans that are beginning to prepare for divorce may wonder how military benefits can affect the process. Divorce can be confusing, especially when combined with tax rules, retirement regulations and disability laws. A basic understanding of how these different rules interact may help make the process simpler.

Federal law allows a state court judge to order a division of military retirement pay that is consistent with state family law principles. Federal law does not allow disability benefits to be assigned to a former spouse as property, but it does allow for it to be taken to pay spousal or child support debts. The law also allows a veteran to receive VA benefits, which reduce the amount of retirement pay. These provisions can be a source of conflict during a military divorce. One way to avoid this confusion is to enter into a property agreement that specifically addresses what happens when a veteran’s retirement benefits are reduced because the veteran begins to receive VA benefits.

In one recent case, there was no such agreement. The family court judge ordered that one half of the husband’s military retirement pay be given to his ex-wife. The husband later began to receive VA benefits, which meant that his retirement pay decreased. His wife then garnished his bank account to take the difference between what she was getting before and after the change. When the husband moved to stop the garnishment, the court held that his ex had a vested interest in the property that could not be reduced.

A family law attorney may be able to help make the divorce process less confusing by reviewing how the law applies to a specific person’s situation. It may also be possible to help negotiate a settlement.

Source: Forbes, “Military Retirement Pay Veterans Benefits And Divorce Make For Tax Confusion“, Peter J. Reilly, August 12, 2013