Divorce, disability benefits, pensions: assets or income?Posted April 2010. Filed under Property & Financial Matters
Are disability benefits considered marital assets? Many people assume that they are and will thus be counted in the division of marital property. It’s not quite that simple. There are two basic facts about disability benefits in the context of divorce:
- Disability benefits paid out on a regular basis (like workers comp, for instance) are treated as earnings, not assets. Thus, they count as income for purposes of calculating spousal support and child support.
- This is true until the disabled spouse reaches an age when s/he could have retired with a pension benefit.
When that would-be retirement age comes, things change. Say you are on disability but would have been eligible for a public or private pension at retirement (often age 65 but as young as 55). At that time, your disability payments can lose their character as income. When that happens, your disability benefit becomes a disability pension. And a pension is an asset subject to division with a divorced spouse.
These are just the basics. If disability payments are in play when you’re ending your marriage, you want to make sure the disposition of those benefits is done right, for the present and for the future. Make sure your legal counsel has knowledge and experience in this area.
An important note: A military disability is an entirely different creature. I’ll write about that in another post.
Tags: divorce and pensionsTo respond: firstname.lastname@example.org.