The parties divorced in California in 1979. Their dissolution decree incorporated a property settlement that awarded the former spouse a portion of the service member's military retired pay, and the agreement purported to include amounts characterized as disability benefits received in lieu of retired pay. Two years later, the Supreme Court decided McCarty v. McCarty (1981), holding that federal law then in force preempted state community property division of military retired pay. In response, Congress enacted the Uniformed Services Former Spouses' Protection Act (USFSPA) in 1982, authorizing state courts to treat a service member's disposable retired pay as marital property. The statute defined disposable retired pay to exclude amounts waived to receive veterans' disability compensation. After the divorce, the service member elected to receive veterans' disability benefits and, as federal law requires, waived a corresponding portion of his military retired pay. The waiver reduced the amount of retired pay the former spouse received under the decree. She returned to state court and obtained an order requiring the service member to pay her a share of the waived portion, effectively treating the waived amount as divisible marital property. California appellate courts upheld the order. The Supreme Court granted certiorari to decide whether the USFSPA permits state courts to divide retired pay that has been waived to obtain veterans' disability benefits.
Does the USFSPA authorize state courts to treat as marital property the portion of a service member's military retired pay that has been waived to receive veterans' disability benefits?
Under the USFSPA, 10 U.S.C. § 1408(c)(1), state courts may treat as marital property only a service member's disposable retired pay. Section 1408(a)(4) defines disposable retired pay and expressly excludes amounts that the retiree has waived in order to receive veterans' disability benefits. Federal law preempts any contrary state law or court order purporting to divide the waived portion as marital property.
No. The USFSPA does not grant state courts authority to treat as marital property any military retired pay that has been waived to receive veterans' disability benefits. Only disposable retired pay—excluding waived amounts—may be divided.
The Court began with the statutory text. The USFSPA authorizes state courts to treat only disposable retired pay as divisible marital property. Congress then defined disposable retired pay to exclude amounts waived to receive veterans' disability benefits. Because disability benefits are available only if the retiree waives a corresponding portion of retired pay, the waived portion is not disposable retired pay and is therefore not subject to division as property. The Court rejected the argument that the USFSPA broadly lifted McCarty's preemption to permit division of all military retired pay. Congress chose a targeted response: it partially displaced McCarty by authorizing division of only the subset of retired pay that meets the statutory definition. The Court emphasized that statutory limits on the scope of divisible property must be given effect, and it found the definition's exclusion of waived amounts to be clear and controlling. Legislative history confirmed that Congress deliberately protected veterans' disability benefits—and the retired pay waived to obtain them—from marital property division. The Court also dismissed the contention that parties could contract around the statute or that a preexisting settlement agreement validated a state court's order dividing waived amounts. State courts cannot enforce private agreements in a way that conflicts with federal law. Nor could California avoid preemption by characterizing its order as mere enforcement of a decree: to the extent the decree purported to reach waived retired pay, it exceeded the authority granted by the USFSPA. The Court distinguished property division from support obligations, noting that while some federal benefits may be considered for support, Congress did not authorize state courts to treat the waived portion of retired pay as divisible property.
Mansell is a pivotal federal preemption case in the domestic relations context. It teaches that the USFSPA grants only limited authority to divide military retirement benefits and that courts must adhere to Congress's definition of divisible property. For practitioners and students, it clarifies that veterans' disability benefits—and the retired pay waived to receive them—are insulated from property division. The decision has enduring practical effects in divorce planning involving service members and remains a foundation for later Supreme Court guidance, particularly Howell v. Howell (2017), which further disallows indemnification orders designed to offset post-decree waivers.
Mansell v. Mansell is a definitive statement that Congress drew a bright line around the subset of military retirement benefits that may be divided in divorce. By limiting divisible property to disposable retired pay and expressly excluding amounts waived to receive veterans' disability benefits, the USFSPA leaves no room for state courts to reach the waived portion.