Disabled does not mean wheelchair-bound. It is fairly common for servicemembers who appear able-bodied to retire with at least some portion of their retirement paid as disability. Colorado divorce courts, frustrated that they were prohibited from dividing VA disability, often did an "end-run" around that prohibition by awarding the civilian former spouse increased maintenance to compensate for the reduced disposable retired pay.
Pre-Dissolution Disability Payments
Federal law prevents states from dividing VA disability payments. Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 657 (1989).
Colorado has similarly ruled that divorce courts cannot divide VA disability payments, nor require the servicemember to indemnity the spouse for a VA waiver of retired pay. In re the Marriage of Franz, 831 P.2d 917 (Colo. App. 1992).
However, this prohibition on indemnifying for the VA waiver applies to what is known as prejudgment waiver" of pay. That means if, at the time of a divorce, there was already a VA waiver in effect (i.e. the servicemember received the VA disability determination prior to the dissolution of marriage), the divorce court cannot divide the disability payments, nor require indemnity for the waiver.
But the same does not hold true for what is known as a "post-judgment" VA waiver. . .
VA Disability & Colorado Military Divorces
In a post-judgment waiver situation, at the time of the divorce when the spouse was awarded a share of the military retirement, there was no VA disability determination, and therefore no waiver. Often this may be because the servicemember is still on active duty. However, at some stage after the divorce, the servicemember received a VA disability determination, either because he/she finally retired, or because the servicemember was already retired, but then applied for a disability determination.
In these situations, what was once the unofficial practice of judges to indemnify the spouse for the VA Waiver has now become the law of the land in the majority of states which have considered the issue, including Colorado.
In Colorado, the process began in 2004 with In re the Marriage of Lodeski, 107 P.3d 1097 (Colo. App. 2004), a decision which required indemnity where the order dividing the retirement also specified a dollar amount owing.
In 2006, the indemnity requirement was expanded to all cases where the servicemember, post-judgment (i.e. after the divorce) waived a portion of the retired pay to receive VA disability payments. In re the Marriage of Warkocz, 141 P.3d 926 (Colo. App. 2006). Now, in Colorado as well as a majority of states, the military retiree who has a VA waiver is required to compensate the former spouse, dollar for dollar, for the reduced military retirement due to the VA waiver.