Family Law

Property Division in Divorce: Disability Benefits

By Kristina Otterstrom, Attorney
How disability benefits factor into your divorce.

There are many factors that go into dividing property in a divorce case. A final divorce order will split all of a couple’s assets, including real property, bank accounts, pensions, retirement savings, and even disability benefits. Depending on your particular circumstances and where you live, you or your spouse’s disability benefits can be considered marital property. This means that both spouses could have a claim to disability benefits.

What Are Disability Benefits?

Disability benefits include all payments received due to a workplace injury or other disability. Payments may include worker’s compensation payments and/or Social Security Disability Insurance (SSDI).

When and how disability benefits are paid is a key factor in classifying benefits as marital or separate property. State law usually controls whether benefits are treated as marital or separate. However, if you receive benefit payments regularly, it’s likely that a judge will deem the benefits to be marital payments, which should be divided between you and your spouse.

How Will Worker’s Compensation Payments Be Divided?

Worker’s compensation payments for a work-related injury typically cover the disabled person’s medical bills and lost wages. If you or your spouse suffered a permanent disability from a work-related incident, it’s likely that the worker’s compensation payments will continue long after your divorce.

Certain states follow a time-based analysis in assessing whether worker’s compensation payments are separate or marital property. For example, if the workplace injury occurred during the marriage, then any disability benefits could be considered marital property. If the payments are made regularly, like wages, they will probably count as income when calculating child support and alimony.

Other states may break down the award if portions of it are meant to cover future medical expenses or compensation, for example, for an injured spouse's loss of a limb. In those cases, certain amounts of the award will be treated as the disabled spouse’s separate property.

Special Considerations for Social Security Disability Insurance Payments

SSDI payments are based on your own earnings record and typically won’t change just because you’re getting divorced. Your eligibility for SSDI is based on your work record, your disability, and your age—not your spouse’s. Nevertheless, if you’re ordered to pay child or spousal support as part of a divorce, a court can garnish portions of your disability payments to meet those obligations.

If you're 62 years or over, you may have been receiving your spouse’s SSDI benefits while you were married. This payment won’t end upon your divorce unless:

  • you were married less than 10 years to your disabled spouse
  • you get remarried, or
  • you are entitled to a larger Social Security benefit based on your own work record.

If your disabled former spouse dies, you may still be eligible for SSDI survivor benefits. To qualify, you must meet the following requirements:

  • you were married to your ex-spouse for 10 years or more
  • you are 60 years old or older, or are disabled and at least 50 years old
  • you have not remarried, and
  • you aren’t entitled to a larger benefit based on your own Social Security record.

Disability Benefits and Retirement

As discussed above, regularly paid disability benefits are treated like earnings or income. Typically, this means that those benefits count toward calculating a child support and alimony, but aren’t an actual asset that can be divided.

However, once the disabled spouse retires, those benefits may no longer be treated as income. Specifically, the disability payments may be considered an asset if the recipient spouse would have received a pension upon retirement, except for the disability. For example, disability payments may become a disability pension for a policeman who would have received a pension at age 55, but couldn't work that long due to an injury. This type of pension is typically treated like a retirement account, which is subject to division in a divorce. If so, the court will then divide the benefits based on either the equitable division method or community property approach, depending on where you live.

There are many ways to treat disability benefits depending the the particular circumstances in your case. If you have questions, you should review the issue with a local divorce attorney.

Questions for Your Attorney

  • Am I entitled to any part of my spouse’s disability benefits?
  • How will disability benefits be valued in my divorce?
  • Are private disability benefits separate property or marital property?
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