In Merrill v. Merrill, the Decree divided Husband’s military retirement equally between the spouses. Ten years later, Husband received a 100% disability rating and became eligible for Combat-Related Special Compensation benefits (CRSC), which confers tax free benefits while reducing military retirement pay by the same amount. Wife’s share of the retirement benefits was thus reduced to $133 from $1,116 and as a result, she sought judgment for arrearages and a modified retirement award.
The Court of Appeals determined that a former spouse who has been awarded an interest in the other spouse’s military retirement may not have their interest reduced by the unilateral election of the retiree to receive non-taxable disability benefits in lieu of future retirement payments. However, the court may not compel use of disability benefits for that purpose. Thus, the retiree is required to indemnify the other spouse using other available assets.
Leonard Karp & Katherine Scott are family law attorney and an associate, respectively, with Karp & Weiss, a Martindale-Hubbell “AV” rated law firm, the highest possible rating.