September 30, 2005
Case Law Development: Property Settlement Agreements to Divide Military Disability Benefits May Not Be Enforced By State Courts
The Supreme Court of Montana, in a 4-3 decision, held that federal preemption precludes the state from holding husband in contempt for failing to pay VA disability benefits that had been awarded to wife in the prior dissolution action. The award was made pursuant to an property settlement agreement in which Husband agreed to pay Wife a portion of his VA disability benefits each month. In holding that federal law preempted the state in enforcing such an agreement, the court expressly overruled prior precedent distinguishing maintenance agreements from the scope of federal preemption. The court emphasized that a trial court may still consider military disability retirement pay “as a source of income in awarding spousal or child support, or generally as an economic circumstance of the parties justifying a disproportionate award of marital property to the nonretiree spouse."
Two dissenting opinions strongly disagreed that federal law preempted state enforcement of voluntary maintenance agreements involving military disability benefits.
In re Marriage of Lutes, 2005 MT 242; 2005 Mont. LEXIS 416 (September 27, 2005)
Opinion on the web at http://www.lawlibrary.state.mt.us/dscgi/ds.py/Get/File-45266/04-416.pdf (last visited September 29, 2005 bgf)