The parties’ marriage was dissolved in 2005. Their separation agreement, which was incorporated into the decree, provided that husband’s military retirement benefits were marital property and would be divided, on his retirement, under the Hunt–Gallo formula. [See In re Marriage of Hunt, 909 P.2d 525 (Colo. 1995).]The agreement further provided that the parties intended to divide husband’s “gross military retirement” and that if husband elected to receive Veterans Administration (VA) disability benefits and his disposable retirement pay was thereby reduced, wife’s share of the benefits would not be reduced. When husband was placed on the TDRL in September 2009, the trial court ordered husband to pay wife her share of his TDRL earnings as determined under the decree.
Husband contended that the trial court erred by awarding wife a portion of his TDRL pay. A military service member is placed on the TDRL if the member has a disability rating of at least 30% but the disability has not yet been determined to be permanent. The Uniformed Services Former Spouses’ Protection Act precluded the trial court from dividing anything other than “disposable retired pay,” as defined in the statute. However, based on 10 U.S.C. § 1408(a)(4)(C) of the Act, an amount equal to the amount of TDRL pay, as calculated based on husband’s percentage of disability when he was placed on the TDRL, must be excluded from the marital property; any amounts in excess of that amount may be divided under the decree. Because the trial court divided all of husband’s TDRL pay under the time-rule formula without considering the extent to which the pay was computed on husband’s disability, the order was reversed. On remand, the trial court must determine and exclude husband’s TDRL pay before dividing husband’s retirement benefits pursuant to the decree.