VA Apportionment Rules Allow Split of a Veteran’s Disability Compensation

Most family law cases include issues of child and spousal support. If the payor spouse is a military veteran receiving disability compensation from the US Department of Veterans Affairs (VA), “Apportionment” rules could come into play.

In most cases, the courts can reach a spouse’s income by means of garnishment to ensure payment of the support amounts ordered by the court. However, in the case of federal VA disability compensation, Congress has protected the compensation from being reached by state courts. At the same time, Congress also created a separate method of dividing the veteran’s disability compensation in a manner to be determined by the VA, rather than by state courts. This process is called “VA Apportionment.”

The unique aspect of VA Apportionment is that the VA pays the family member directly – without the money ever going through the veteran, or through any state payment agency like the Department of Child Support Services. If a person such as a veteran’s estranged spouse, a veteran’s child in the custody of his or her estranged spouse’s, or children who are not living with the veteran (but for whom the veteran is not reasonably contributing support), the VA will take a portion of the veteran’s disability payment and allocate it directly to that individual. Apportionment of a veterans benefits are authorized by Congress in 38 U.S.C. §5307. The VA has codified regulations enacting those rules at 38 C.F.R. §§3.450 – 3.461.

Scenarios Where VA Apportionment Applies

There are several scenarios under 38 C.F.R. §3.450 where the VA will award a family member apportionment of the veteran’s benefits:

• The veteran is incompetent and in the hospital, an institution or a VA domiciliary.
• The veteran is not living with their spouse or children and the veteran is not reasonably supporting their spouse or children.
• The veteran has passed away, but their children are not living with a surviving spouse who is receiving a survivor’s pension or Dependency Indemnity Compensation (DIC).

Two Types of VA Apportionment

There are two types of VA Apportionment. “General Apportionment” is available if the “veteran is not residing with his or her spouse . . . and the veteran is not reasonably discharging his or her responsibility for the spouse’s … support.” 38 C.F.R. §3.450(a)(1)(ii). General apportionment focuses on the degree to which a veteran is supporting their estranged spouse, children, or dependent parents.

The second type of apportionment is “Special Apportionment,” which has nothing to do with the veteran’s degree of support to an estranged spouse, children or dependent parents. Instead, it turns on a dependent’s showing of hardship. When the dependent shows a hardship, the VA can “specially apportion” the veteran’s compensation “on the basis of the facts in the individual case as long as it does not cause undue hardship” to another interested persons. 38 C.F.R. §3.451.

Scenarios where the VA Will Not Apportion Disability Payment

There are several circumstances where the VA will not apportion a veteran’s compensation as defined by 38 C.F.R. §3.458. Here is a summary of those scenarios.

• Where the total amount of veteran’s compensation “does not permit payment of a reasonable amount to any apportionee.”
• Where the spouse of the disabled person has been found guilty of conjugal infidelity by a court having proper jurisdiction.
• Where the spouse of the veteran has lived with another person and held herself or himself out openly to the public to be the spouse of such other person
• Where the child of the disabled person has been legally adopted by another person.
• Where a child of the veteran enters the active military, air, or naval service, any additional amount will be paid to the veteran unless such child is included in an existing apportionment to an estranged spouse.
• Where there have been certain acts of mutiny, treason, sabotage, or rendering assistance to an enemy of the United States or its allies.
• Where there have been certain acts of fraud, treasonable acts, or subversive activities.

The Importance of Addressing the Right to Apportionment in Separation and Divorce Proceedings.

VA apportionment is independent from a separation agreement. Apportionment is a federal benefit available from the VA to a qualifying dependent – not from the veteran. This is an important technical consideration. The proper place for the veteran and the estranged spouse to address the issue of VA apportionment is any separation proceeding or agreement. Take the facts presented in a 2020 Federal Circuit precedential opinion, Batcher v. Wilkie (975 F. 3d 1333).

In a New York state separation proceeding, a veteran negotiated payment of a one-time $7,000 lump sum to his estranged wife in lieu of any payments of future maintenance and support. While the terms of the separation agreement reached by the veteran and his spouse included the spouse’s waiver of certain payments for additional spousal support, it did not preclude the spouse from seeking apportionment of a veteran’s VA benefits.

The VA could not determine from the terms of the separation agreement whether the veteran was reasonably discharging his support responsibility. The VA determined that the veteran’s estranged spouse had shown a financial hardship because her expenses exceeded her income and she had periods of homelessness. The VA awarded a “special apportionment” based on the competing hardships. However, because the separation agreement in this case did not foreclose the right of the veteran’s spouse to independently seek VA apportionment, the Federal Circuit held that the VA properly permitted a special apportionment. And, because it is focused on hardship and not spousal or child support, a state separation agreement plays no role in a “special apportionment” determination.

The Importance of Including VA Disability Compensation in Support Calculations

In most states, and particularly in California, child support is calculated by a complicated formula that takes into consideration ALL of the income of the parties, as well as each party’s tax liability. Because VA disability compensation is not taxable, it must be entered into California’s support calculation as un-taxed income.

If the VA apportions a veteran’s disability compensation AFTER a court has ordered a support amount to be paid, the proper guideline support amount should be recalculated to show each party’s post-apportionment income. It will likely result in a reduction of support paid.

Claiming VA Apportionment

Apportionment is not automatic. The spouse or dependents must apply for apportionment. To file a claim for VA apportionment, the person seeking apportionment must file a VA claim for apportionment using VA Form 21-0788. Upon receipt of the claim, the VA will develop evidence to decide the claim. When the VA decides the VA apportionment claim, it will notify both the veteran and the VA apportionment claimant, and possibly other known interested parties. The VA’s determination may be appealed by either the veteran or the apportionment claimant.

Dias Law Firm, Inc. – We’re Ready to Help Veterans and Their Families.

Our experienced family law attorneys can help you navigate this difficult issue and ensure your rights and needs are taken care of.

For the remainder of 2021, Dias Law Firm, Inc. is waiving our customary first consultation fee for veterans and their families. When you call to make your appointment, just let us know you read this blog and that you are a veteran or the spouse of a veteran and we will waive the fee when you make your first consultation appointment.

By: David M. Lange, Esq.

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