In Howell v Howell, the US Supreme Court ruled that a state court cannot offset the loss of a divorced spouse's portion of a veteran's retirement benefits when that veteran waives retirement pay in favor of disability pay
John and Sandra Howell were divorced in 1991 while John was serving in the Air Force. The court awarded Sandra 50% of John's future military retirement payments and in 1992, John retired from the Air Force and began paying 50% of his retirement funds to Sandra.
About 13 years after John's retirement, the Department of Veterans Affairs determined that he was 20% disabled due to a service-related shoulder injury. In order to receive his disability from the VA, John decided to waive about $250 a month of the $1,500 military retirement pay which would decrease Sandra's retirement pay by about $125.
Sandra petitioned the Arizona family court to enforce the original decree. The Arizona Supreme Court affirmed the decision of the family court and ordered that John pay the difference in funds to offset the decrease in pay after the waiver was signed.
The US Supreme Court reversed the decision of the lower court.
The Uniformed Services Former Spouses' Protection Act authorizes the States to treat veterans' "disposable retired pay" as community property divisible upon divorce. The definition of "disposable retired pay" expressly excludes amounts deducted from that pay as a result of a waiver required to receive disability benefits. Therefore, the court determined that the waiver fee is not part of the "community property" that is able to be divided by the court.