Dividing VA Disability In CA Divorce
VA disability money feels sacred to the veteran who earned it, but the spouse who managed the home front sees monthly deposits that paid the mortgage for years. California courts cannot divide disability pay directly, yet they can consider it when setting support or offsetting other assets. The trick is knowing how much weight the judge will give those tax free dollars without triggering a federal preemption fight that eats up legal fees.
Know What Is On The Table
- VA disability compensation is not marital property under 38 U.S.C. §5301
- Courts may include disability income for child and spousal support calculations
- Waiving retirement pay to receive disability can reduce the former spouse’s pension share
- Special monthly compensation for loss of limb or organ function is usually excluded from support
We recently had a Marine who increased his VA rating from 30 to 70 percent after separation, wiping out $900 of monthly retired pay that his wife was expecting. The judge offset her loss by increasing spousal support $600, reasoning that the disability income replaced what was once community cash flow.
Offset Strategy With Pension Buyouts
When the veteran waives retirement to receive disability, the community pension shrinks. We negotiate a lump sum buyout of the lost share using the present value of the waived amount, discounted at 3 percent over life expectancy. This approach gives the former spouse immediate security while preserving the veteran’s tax free status.
We also draft indemnity clauses requiring the veteran to reimburse the former spouse if the VA rating is later decreased and retirement pay is restored. Courts uphold these agreements as long as they are spelled out in clear dollars, not percentages tied to fluctuating federal benefits.
Present The Right Evidence To The Court
Judges want to see the veteran’s complete VA award letter, not just the direct deposit amount. The letter breaks out base compensation versus special monthly awards, dependency additions, and unemployability ratings. We create a one page chart that shows gross disability, taxable retirement, and net disposable income so the court can compare apples to apples.
For support calculations we argue that disability income should be discounted 15 to 20 percent because it is tax free, a position the Second District Court of Appeal endorsed in dicta. We also remind the court that disability can be reduced or revoked by the VA, so spousal support based solely on those dollars may need a built in review clause.
Disability money is not bulletproof, but it is not community property either. Bring your award letter to our free consult and we will run a support projection that treats the disability fairly while protecting the benefits you earned serving the country.
