California Husband’s Election of Disability Pay over Military Retirement Pay Didn’t Wipe Out Wife’s Right to Receive Payment

US NavyA recent case from the Third District Court of Appeal addressed an interesting question. If a marital settlement agreement called for a wife to receive $475 monthly as her community portion of her ex-husband’s military retirement pay, what happens if the husband elects to receive a form of military disability compensation (which is typically separate property) instead of his retirement (which is community property)? In this case, the court concluded that the wife was entitled to her $475 per month, regardless of what the husband elected. The payment represented what would have been her portion of the retirement pay, and she did not lose her right to receive that money simply because the husband made a voluntary and unilateral choice not to receive that retirement.

The husband in this case, Philip Chapman, was an active member of the U.S. Navy from 1971 to 1991, when he retired from the military. From 1974 to 2003, Chapman and his wife, Judy Chapman, were married. As part of the couple’s marital settlement agreement, they agreed that the husband would pay the wife $475 per month, which represented her community portion of his military retirement pay.

Due to his participation in active combat (in both Vietnam and the Persian Gulf), the husband suffered from PTSD. As a result of this, the military gave Chapman a choice. He could take his regular retirement pay, or, in the alternative, he could apply for combat-related special compensation benefits. Since the special compensation was not taxable, but retirement pay was, he chose the special compensation. In 2014, the husband stopped making his monthly $475 payments. The wife sued for a resumption of the payments. The husband argued that he didn’t owe the money to the wife because the payment related to military retirement pay, and he was not receiving any military retirement pay.

The trial court ruled for the wife. and the husband appealed, but he lost. The appeals court was not persuaded by the husband’s argument that his special compensation was not considered retirement pay and therefore was not divisible under community property law. This was correct, the appeals court stated, but not decisive of the case.

What did determine this case was that the husband had agreed to pay the wife $475 as her community portion of his retirement pay and that the special compensation was something that the husband voluntarily elected to receive in lieu of his retirement. The law plainly does not allow a spouse to dodge an obligation to which he agreed in a marital settlement agreement simply by making a unilateral and voluntary election to waive receiving the asset that would have been subject to division as community property. Even though the special compensation was a type of disability pay, which the law generally looks at as separate property, the husband still owed the $475 monthly payment. The California Supreme Court ruled decades ago that a “spouse cannot, by invoking a condition wholly within his control, defeat the community interest of the other spouse.” Even though the special compensation was not retirement pay, that did not prevent the court from requiring the husband to pay the wife an amount equivalent to what her community portion would have been if he had chosen to receive his retirement pay.

If you are experiencing divorce or other family law-related issues, contact the knowledgeable San Diego military divorce attorneys at Doppelt & Forney. Our attorneys have been helping clients throughout Southern California, including in San Diego, Encinitas, La Jolla, and Chula Vista, for years with their marital settlement agreements and other divorce-related matters. For a free consultation about your divorce, reach out to Doppelt & Forney through our website or call toll-free at (800) ROY IS IT (769-4748).

More blog posts:

California Court Rules Retirement Benefits Are a Community Asset in Divorce, San Diego Divorce Lawyer Blog, Jan. 19, 2016

California Family Court Had Exclusive Jurisdiction Under Marital Settlement Agreement, San Diego Divorce Lawyer Blog, Jan. 12, 2016