BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 285|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 285
Author: Wright (D)
Amended: 4/22/09
Vote: 21
SENATE JUDICIARY COMMITTEE : 5-0, 4/21/09
AYES: Corbett, Harman, Florez, Leno, Walters
SUBJECT : Veterans benefits
SOURCE : American Retirees Association
DIGEST : This bill provides that federal disability
benefits awarded to veterans for service-connected
disabilities pursuant to Chapter 11 of Title 38 of the
United States Code shall be exempt from the claims of
creditors, and shall not be liable to attachment, levy, or
seizure by or under any legal or equitable process
whatever, either before or after receipt by the
beneficiary.
ANALYSIS : Existing federal law provides that payments or
benefits due or to become due under any law administered by
the Secretary of Veterans Affairs are exempt from claims of
creditors, and will not be liable to attachment, levy, or
seizure by or under any legal or equitable process
whatever, either before or after receipt by the
beneficiary. (38 United States Code Section 5301(a).)
CONTINUED
SB 285
Page
2
Existing state law generally governs civil actions in which
attachments are authorized. (Code of Civil Procedure
Section 483.010. et seq.)
This bill provides that federal disability benefits awarded
to veterans for service-connected disabilities pursuant to
Chapter 11 of Title 38 of the United States Code shall be
exempt from the claims of creditors, and shall not be
liable to attachment, levy, or seizure by or under any
legal or equitable process whatever, either before or after
receipt by the beneficiary.
The above language mirrors that of 38 Unites States Code
Section 5301. As noted by the Supreme Court in Rose,
disability benefits were intended to support both the
veteran, and his/her family. 38 United States Code
Section 5301 was accordingly enacted to afford some degree
to security to the veteran and his/her family by placing
benefits beyond the reach of creditors and from seizure or
attachment under process issued for collections of debts.
By exempting veterans' disability benefits from claims of
creditors, and prohibiting them from attachment in civil
proceedings, serves to conform state law to existing
federal law.
Background
Disability compensation benefits are tax-free benefits paid
to a veteran for disabilities that are a result of or made
worse by injuries or diseases that happened while on active
duty, active duty for training, or inactive duty training.
These federal disability benefits are outlined in 38 United
States Code 1110 et seq., and 38 United States Code 1131 et
seq. Pursuant to 38 United States Code Section 5301(a),
veterans' benefits are: (1) seeks to conform to federal
law by providing that veterans' disability benefits are
exempt from the claims of creditors, shall not be liable to
attachment, levy, or seizure under by or under any legal or
equitable process whatever, either before or after receipt
by the beneficiary, and (2) seeks to codify similar
protections for veterans' benefits in state law.
In Rose v. Rose (1987) 481 U.S. 619, a veteran was held in
contempt for failing to pay his child support obligations.
SB 285
Page
3
The question before the Supreme Court was whether a
Tennessee state court had jurisdiction to hold a disabled
veteran in contempt for failing to pay child support where
the veteran's only means of paying support was to utilize
benefits received from the Veterans' Administration. After
reviewing Section 3101(a)'s (presently Section 5301)
legislative history, the Court determined that neither of
the section's purposes to avoid the VA's being placed in
the role of a collection agency and to prevent the
deprivation and depletion of veteran's means of subsistence
is constrained by allowing the state courts to hold the
appellant in contempt. (Id. at 630.) The Court further
noted that legislative history establishes that disability
benefits are intended to provide compensation for disabled
veterans and their families. (Id. at 631.) Accordingly,
the Court held that the Tennessee law allowing state courts
to award veterans' disability benefits as child support did
not conflict with, and was not preempted by 38 U.S.C.
Section 3101, which the Court found does not shield
disability payments from seizure under an otherwise valid
child support order. (Id. at 634.)
The Supreme Court's decision in Rose was consistent with an
already existing California appellate case. In Gaskins v.
Security-First National Bank (1939) 30 Cal.App.2d 409, the
appellate court considered whether provisions of the World
War Veteran's Act of 1924 (the Act) applied to debts and
claims for the care of a veteran's minor children. The Act
provided in part that payments of benefits shall not be
assignable, and such payments made under any laws relating
to veterans shall be exempt from the claims of creditors
either before or after receipt by the beneficiary. (Id. at
419.) The court noted that the obligation of a father to
support his minor children was not a debt contemplated by
the Act, but an obligation growing out of the parental
status and public policy. (Id. at 417.) Refusing to
assume that the federal government ever intended to enable
veteran's receiving benefits to refuse to discharge their
duty to support the children, the court found that the Act
did not exempt benefits from claims for the care of minor
children. (Id. at 418.)
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SB 285
Page
4
SUPPORT : (Verified 4/22/09)
Air Force Association
American Ex-POWs
American Legion Department of California
American Retirees Association
American Veterans of WWII and Subsequent Wars
Armed Forces Retirees Association of America
Association of the US Army
California Alliance for Families and Children
California Association of County Veterans Service Officers
California Council, Military Officers of America
California State Commanders Veterans Council
Fleet Reserve Association, West Coast
Fleet Reserve Association, Southwest
Fresno Veterans Memorial Museum
Jewish War Veterans
Legion of Valor
Marine Order of the Purple Heart
National Association for Uniformed Services
Operation Firing for Effect
Paralyzed Veterans of America
Reserve Officers Association of the US - California
Department
The Retired Enlisted Association
Veterans of Foreign Wars
Vietnam Veterans of America, California Council
ARGUMENTS IN SUPPORT : The author's office states
although United States Code, Title 38, Section 5301 is very
clear in its wording and intent, civil court judges
nationwide, including courts in California have routinely
ignored the U.S. Code and calculated veteran's disability
compensation into divorce settlements as a divisible asset
and not treated the same as SSI in calculating child
support awards. Very often these payments are the only
assets a veteran may have. Unlawful attachment creates
hardship for those veterans who rarely have the resources
to hire legal help to contest the taking of their benefits.
RJG:do 4/22/09 Senate Floor Analyses
SB 285
Page
5
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****