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Military disability, pensions and divorce

Financial concerns are often a primary concern regarding most decisions that a California couple makes. This is especially true when the couple decides to divorce. Finances play an important part in deciding exactly how marital assets should be divided as well as many other issues.

Some assets are easily divided and have limited financial implications. However, other assets, depending upon how they are handled, can have significant financial implications. Included among these assets are often investment accounts, retirement accounts and pension plans.

Of particular concern to some is how military pension plans and disability payments are handled. In many instances, the pension payment is considered a marital asset to which the spouse is entitled to a portion. This amount is often a percentage of the amount that the veteran receives; however, if the veteran later becomes eligible for disability benefits, the pension amount may be reduced. While this may not have an adverse financial effect on the veteran, it can reduce the amount paid to the spouse as disability benefits are not considered to be marital assets.

In some cases, courts had been requiring the veteran to pay the difference to the spouse in another form of payment. However, the U.S. Supreme Court recently ruled that this is not the way that this problem should be handled. It was suggested that this is a problem best addressed in the divorce agreement.

What this means for California couples where military disability income comes into play is that this needs to be addressed in the original property settlement. By addressing this possibility as part of the original judgment of divorce, future problems can be minimized. An experienced attorney can help analyze the situation and decide the best way address potential problems ahead of time.

Source: military.com, "Supreme Court Ruling May Cut Spouses' Divorce Pension Payments", Amy Bushatz, May 18, 2017

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