VA Disability Compensation
I receive VA disability compensation. How is my disability payments affect support payments?
This article will address frequently asked questions on issues involving VA disability compensation and its relation to divorce, family support, garnishment and military pension division. Understanding VA Disability Compensation can be a difficult undertaking since some of the rules have many exceptions. Therefore, if we are not be able to answer your specific question, we encourage you to contact our office for further information.
We do ask that you read over these questions and answers carefully so that you may have the fullest information available to help you should you need to contact our office about your legal problem.
Understanding Compensation
I’m getting divorced. How are my disability benefits affected?
Many military personnel, spouses, former spouses and retirees are bewildered and become confused from the myths and misstatements about VA Disability Compensation and its effect on money issues in a divorce. Some people believe that VA Disability Compensation received from the Department of Veterans Affairs can be divided in a divorce, just like a military pension. Others believe that VA Disability Pay is not included when calculating child support and spousal support (alimony). Even lawyers have a hard time understanding whether – and how – a court can order garnishment of VA payments to accomplish the prompt and full payment of family support ordered by the judge. Below are some of the claims, questions, rumors and charges, followed by accurate and straightforward answers.
Congressional Intent
Was it Congress’ intention to protect veterans’ benefits from being awarded to anyone other than the veteran who earned those benefits under any circumstances?
No. Congress wrote the law on veterans’ benefits, found at Title 38 of the U.S. Code, with an eye toward exempting VA benefits from most creditors’ claims; ordinary creditors are barred from execution or garnishment of VA payments. But family members are not ordinary creditors. They are, in fact, the subject of special protections in Title 38, both for child support and spousal support (alimony). The case that lays down the law on this is Rose v. Rose (U.S. Supreme Court 1987). There the Court made it clear that 10 U.S.C. Section 5301 (the “anti-attachment clause” in Title 38) does not apply to court orders which require a veteran to support his or her family. VA benefits can and should be considered as income when the judge is deciding how much support a spouse or children need and what a veteran is able to pay.
Third Party Claims
What does Federal law say about a third party getting at benefits paid by the Department of Veterans Affairs (VA)?
Title 38, U.S. Code, “Veterans’ Benefits,” says at §5301(a)(1) states: Payments of benefits due or to become due under any law administered by the Secretary shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary.
Exceptions to the Rule
Are there exceptions to the rule that allows the judge to consider my ex-husband’s VA disability compensation as a divisible asset in a divorce?
No. Federal law – specifically, the Uniformed Services Former Spouses’ Protection Act, found at 10 U.S.C. §1408 – exempts VA disability payments from division upon divorce. It is not an asset which can be divided at divorce as marital or community property.
State law versus Federal law
Does state laws take precedence over federal law. Are my VA benefits immune from any consideration or garnishment in domestic court?
While part of the statement is correct – that state laws are subordinate to federal laws – the rest of the statement is incorrect. In general, all sources of income must be considered by the court in determining support, whether the income is taxable or tax-free, whether the source is wages, rents, royalties, VA benefits, military retired pay, Combat-Related Special Compensation, Social Security Disability payments or even an inheritance. And the provisions of Title 38 make it clear that Congress intended that VA benefits may be considered as a source of income for support purposes. Not only are there graduated benefit schedules, based on how many dependents a veteran has, but there is an apportionment procedure to use when a veteran is not discharging his or her responsibility for support. The apportionment procedures are found at 38 U.S.C. § 5307.
Tax Exemption
Is VA compensation tax-exempt? What about military retired pay? Who pays each to the veteran/retiree?
VA compensation is tax-exempt, while military retired pay is not. Military retired pay and Combat-Related Special Compensation are paid by the Department of Defense under Title 10, U.S. Code, while veterans’ benefits are paid by the Department of Veterans Affairs under Title 38.
Garnishing VA Benefits
My husband isn’t paying me, and I need to get the court to order a garnishment. Can VA benefits be garnished for child support or spousal support (alimony)?
Yes, but only if the individual who is receiving VA benefits has waived military retired pay to obtain the VA payments. This is set out in Title 42 of the U.S. Code, Section 659, and in 5 C.F.R. Part 581.
VA Benefits Income
Can VA benefits be considered as a source of income in awarding child support or spousal support (alimony)?
Yes, in California your VA benefits are considered a source of income in awarding child or spousal support. In Rose v. Rose (1987), the U.S. Supreme Court reviewed a contempt judgment against a veteran whose sole source of income was his VA disability compensation. He had refused to pay $800 a month in child support, claiming that he was constitutionally allowed to keep these VA benefits for himself. In an extensive review of the statutes and rules governing VA payments, the Court found that “these benefits are not provided to support appellant [the veteran] alone.” It went on to state that: Veterans’ disability benefits compensate for impaired earning capacity, H. R. Rep. No. 96-1155, p.4 (1980), and are intended to “provide reasonable and adequate compensation for disabled veterans and their families.” S. Rep. No. 98-604, p.24 (1984) (emphasis added). Additional compensation for dependents of disabled veterans is available under 38 U. S. C. ‘ 315, and in this case totaled $90 per month for appellant’s two children. But the paucity of the benefits available under §315 [now 38 U.S.C. 1115] belies any contention that Congress intended these amounts alone to provide for the support of the children of disabled veterans. Moreover, as evidenced by §3107(a)(2) [now found at 38 U.S.C. 5307], the provision for apportionment we have already discussed, Congress clearly intended veterans’ disability benefits to be used, in part, for the support of veterans’ dependents.
The Court noted that “children may rightfully expect to derive support from a portion of their veteran parent’s disability benefits.” There can be no doubt that family support is one of the purposes for the VA payments given to a veteran.
The provisions for dependents, found at 38 U.S.C. 1115, are:
Any veteran entitled to compensation at the rates provided in section 1114 of this title, and whose disability is rated not less than 30 percent, shall be entitled to additional compensation for dependents in the following monthly amounts: (1) If and while rated totally disabled and
(A) has a spouse but no child, $150;
(B) has a spouse and one or more children, $259 plus $75 for each child in excess of one;
(C) has no spouse but one or more children, $101 plus $75 for each child in excess of one;
(D) has a parent dependent upon such veteran for support, then, in addition to the above amounts, $120 for each parent so dependent;
(E) notwithstanding the other provisions of this paragraph, the monthly payable amount on account of a spouse who is
(i) a patient in a nursing home or,
(ii) blind, or so nearly blind or significantly disabled as to need or require the regular aid and attendance of another person, shall be $286 for a totally disabled veteran and proportionate amounts for partially disabled veterans in accordance with paragraph (2) of this section; and,
(F) notwithstanding the other provisions of this paragraph, the monthly amount payable on account of each child who has attained the age of eighteen years and who is pursuing a course of instruction at an approved educational institution shall be $240 for a totally disabled veteran and proportionate amounts for partially disabled veterans in accordance with paragraph (2) of this section.
Attaching Compensation
Can I go directly to the VA with an attachment for a veteran’s disability compensation?
You can get a court order to go directly to the VA to attach a veteran’s disability compensation. The U.S. Code – specifically 42 U.S. Code 659, allows this procedure (the garnishment of VA payments) because the individual has waived military retired pay to obtain VA benefits. The VA will give it to anyone to whom the court awards this money when these circumstances are present.
Tax Exemption
These payments are “exempt from taxation… from the claim of creditors, and shall not be liable to attachment, levy or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary”?
Payments of benefits due or to become due under any law administered by the Secretary shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary.
Enforcement
Why does the VA claim that it’s not a law enforcement agency, and thus cannot enforce Title 38 in divorce courts?
It does not have the authority given by Congress, nor the manpower to go into court to intervene whenever a divorce court was considering VA payments in a case involving family support or garnishment.
Help
My ex-husband got VA disability, and now my share of the pension just dropped by several hundred dollars. Is he allowed to do that without getting court permission?
When a military retiree elects VA disability compensation, and he or she has a VA rating of less than 50% or else has Combat-Related Special Compensation, this election decreases the share of the military pension which is available for division, known as “disposable retired pay.” When there is a military pension division order which is paid out through the military retired pay center, then that means a drop in the money which the former spouse gets. Whether the former spouse has a remedy in court depends a lot on the circumstances. You cannot get the judge to require the ex-husband to indemnify you (i.e., to pay back or reimburse the money you’ve lost) if there is no prior requirement for indemnification, either in a written agreement or in a prior court order. The U.S. Supreme Court ruled on that issue in Howell v. Howell, decided May 15, 2017. When there’s NO previous agreement or order requiring indemnification, you cannot get the court to order a pay-back. If there was an agreement or order on this, then there may be a chance of obtaining indemnification.
Reimbursements
The prior court order was entered by agreement; it expressly states that my ex-husband must compensate me for any reduction due to his getting VA payments. The judge signed it. No one appealed it. Now, my ex-husband says that, even though he’s supposed to pay me back, he doesn’t have enough money to reimburse me since he’s taken VA disability compensation.
All VA money is tax-free, so he would get even more money in the end by waiving a piece of the pension. Let’s take an example: Suppose John’s total retired pay is $1,600 and the court awards Mary, his former wife, 50%, or $800. Then John obtains a VA disability rating (less than 50%) and elects to receive VA disability compensation, which equals $600. This means that he waives $600 of the pension to receive VA payments.
Now the pension-share payment from the retired pay center to Mary is only $500 a month instead of $800 (that is, 50% of $1,000 instead of $1,600). She’s short by $300 due to the actions of John in applying for VA payments.
John’s income is now $500 from the pension and $600 from VA. If he’s paying taxes at 20% federal, 5% state, then he’s receiving net: $375 from the pension and $600 (no taxes) from VA, for a total of $975, while Mary (if she’s in the same brackets) will only be getting $375 a month.
If John were to reimburse Mary, then he’d pay to her the missing $300 each month, which is deductible for him on his taxes, and that only costs him $225 in his tax brackets. Thus he still has $750 after taxes, whereas before the VA waiver, he was receiving $800 taxable each month, or $600 after-tax income! And Mary has the full amount ($600 taxable) which the court initially ordered.
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