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Currently pending at the Supreme Court of Virginia is a case that will likely significantly impact divorcing military spouses as it relates to the division of military retirement benefits. The crux of the issue relates to the division of military retired pay via a contract executed by the parties resolving the marital estate. Up for decision is whether or not parties can enter into an agreement where the servicemember/retiree can agree to indemnify the military spouse for that portion of military retired pay the servicemember or retiree may waive in order to receive tax-free disability pay.
This issue came to light in early 2022 when the Virginia Court of Appeals in Yourko v. Yourko overturned decades of case law—including two similar decisions by the same court. The holding by the Court of Appeals would reduce the amount of retired pay available for division if the retiree’s receipt of disability pay replaces retired pay (meaning concurrent receipt nor combat-related special compensation applies), which could seriously limit what the former military spouse receives as their portion of the retired pay, resulting in a windfall to the retiree.
The case is currently on appeal to the Supreme Court of Virginia, which will decide whether parties can contract on this matter or whether the Court of Appeals was correct in determining that parties cannot privately contract to circumvent federal law regarding the division of military pensions.
The Geller Law Group believes the Court of Appeals incorrectly interpreted and misapplied federal law on this matter, creating an issue of significant magnitude if their ruling stands. We are prepared and available to assist those who may be impacted by these rulings. Contact us today to set up a consultation.
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