Regarding equitable distribution of the marital estate in a divorce, does federal law preempt a Massachusetts judge from dividing a spouse’s federal veterans disability benefits? The Massachusetts Appeals Court decided that question in a recent case.
Facts of the Case
The parties in the case, Stacy v. Stacy, married in 1982. Prior to the marriage, the husband was on active duty in the United States Navy. He served from 1960 to 1964. While on active duty, the husband suffered a facial fracture in his sinus region. In 2004, the United States Department of Veterans Affairs (“VA”) deemed the husband 10% disabled. As a result, the husband began receiving disability benefits.
Years later, the VA deemed the husband to be 30% disabled with one dependent (the wife). Accordingly, the VA gave him a lump sum payment of $119,403.96. This amount represented his retroactive VA disability benefits. A second lump sum from the VA followed the first. The second lump sum amounted to $12,792.62. This represented the retroactive additional spousal benefit.
Initially, the husband’s disability payments went into the parties’ joint bank account. Later payments, however, went into the husband’s personal bank account. These later payments included the retroactive lump sum amounts.
The wife filed for divorce in 2017. During the divorce trial, the trial judge found that the husband’s disability funds were marital property, subject to equitable distribution. The trial judge ordered that the husband and wife divide those funds equally. The husband appealed.
Massachusetts Appeals Court
Issue Addressed by the Appeals Court
In this case, the Massachusetts Appeals Court made clear it was only addressing the issue of the veterans disability benefits. The court was not addressing any other benefits under federal law. The court also clarified that it was only addressing this issue for purposes of division of marital property, not child support.
“[T]he question before us is whether Federal law preempts Massachusetts courts from dividing veterans’ disability benefits as part of the marital estate upon divorce. To answer this question we must examine the State law at issue and the applicable Federal law, and then determine whether they are in conflict under the preemption standards established by the United States Supreme Court,” the Appeals Court explained.
The Appeals Court’s Reasoning
According to the Appeals Court, ordinarily the husband’s personal bank account would unquestionably be part of the marital estate under Massachusetts law. Judges have broad discretion to include this property in equitable distribution. Under the applicable state laws, a judge “may assign to either [spouse] all or any part of the estate of the other.” This includes any “separate nonmarital property,” because “[a] party’s ‘estate’ by definition includes all property to which he holds title, however acquired.”
However, the legal doctrine of preemption applies to cases where there is a potential discord between applicable state and federal laws. In this case, federal law governs the bases and procedures for the payment of veterans disability benefits, set forth in title 38 of the United States Code. Moreover, a particular section of that title deals with the intended beneficiaries of veterans’ disability payments.
“Since at least the 1870s the payments made to disabled veterans have been protected by a so-called anti-attachment statute, the current version being 38 U.S.C. § 5301(a)(1),” the court noted. The court explained the purpose of that statute is to ensure that veterans disability benefits actually reach their intended beneficiaries.
The Appeals Court’s Ruling
In this case, the Appeals Court held that the intent of federal law – to ensure payments reach their beneficiaries – preempted the state laws regarding distribution of marital property. “Our conclusion that § 5301 preempts State marital property division laws is further supported by those sections of title 38 that allocate additional compensation for the support of a disabled veteran’s spouse, but expressly provide that the additional compensation is an entitlement of the veteran, rather than the veteran’s spouse,” the court explained. “Moreover…the spousal benefit terminates upon divorce…These sections indicate that the additional compensation to the veteran for the veteran’s dependents is an entitlement of the veteran, not the veteran’s spouse.”
If you are looking for a highly qualified divorce and family law attorney, contact us. We’d be happy to answer any general questions, or discuss how a judge may factor your veterans disability benefits into a divorce. You can schedule a free consultation online with our experienced attorneys at Turco Legal. If you’d prefer to schedule a consultation by phone, call (866) 995-6663.