Although many couples still use the traditional marriage vows that include a promise to remain together “in sickness and in health,” it is not unusual for a marriage to fall apart after one spouse applies for long-term disability insurance (LTD) benefits. The reasons are not necessarily related to the disability, but the stress of the LTD application process and the financial strain that often comes with an early exit from the workforce can contribute to making long-term disability and divorce frequent companions. Spouses in this situation often have practical questions about LTD benefits in divorce proceedings, particularly whether to treat LTD as a marital asset in divorce calculations. The answer is that the divorce impact on long-term disability payments is likely to depend on the confluence of several factors, especially timing, but your ability to influence the outcome of your long-term disability and divorce decisions may be stronger than you think.
What Happens When You Divorce Someone on Disability?
The division of property in a divorce can be a complex undertaking. Each state sets its own laws, but at a macro level the states can be divided into two broad groups: community property states, in which all marital property is divided equally between the two spouses in the event of a divorce, and equitable distribution states, in which marital property is divided fairly but not necessarily equally. Separate property is considered exempt from this division process in all states, but courts in some equitable distribution states are urged to consider each spouse’s individual resources in determining what may be an equitable outcome in a particular case. Individual resources and earning potential or limiting factors are also often considered in making alimony determinations in many states, and of course all sources of income are considered in evaluating a parent’s child support obligations nationwide.
Can a Spouse Get Disability Benefits in Divorce?
A spouse may sometimes get LTD benefits in divorce proceedings. While some other forms of disability benefits, such as those received under Social Security Disability Insurance (SSDI) are usually exempt from distribution as marital property, payments received as benefits under a private long-term disability income insurance policy may not be treated as “separate” property during a divorce. The rules governing division of property during a divorce are set at the state level, so state laws and the rules of the courts that oversee family law cases in that state will go some distance toward structuring what the divorce impact on long-term disability payments may be. As a general rule, however, there are two main considerations that are likely to be weighed in determining whether to treat LTD as a marital asset in divorce.
What Assets Are Untouchable in Divorce?
The equitable distribution vs. community property distinction can affect how much each spouse receives from the value of an asset that has been determined to qualify as marital property, but in general most states will follow broadly similar rules in making their marital vs. separate property determinations, regardless of the principles state laws apply in dividing the assets classified as marital property. Consequently, understanding how these determinations are made can be crucial to evaluating whether your own divorce impact on long-term disability benefits.
Long-Term Disability and Divorce: Marital vs. Separate Property Basics
In the simplest cases, property that belongs to either spouse prior to the marriage is reserved to that spouse during the division of property if the couple someday gets divorced. Property that either spouse acquires during the marriage is typically treated as marital property. This can set up a scenario for contentious discussions over the handling of LTD benefits in divorce proceedings, particularly when the long-term disability benefit period overlaps substantially with the beginning or end of the marriage. Lump-sum settlements received during the marriage for long-term disability claims may also be at risk.
Long-Term Disability and Divorce: When Is Property Received During the Marriage Separate Property?
Certain types of property are usually considered exceptions to the general rules that divides assets into marital vs. separate property depending on whether they were acquired during vs. before the marriage, respectively. Assets presented to either spouse as a gift, or left to either as an inheritance or bequest, are generally considered separate property even if the spouse receives the gift or inheritance during the course of the marriage.
On the other hand, assets that would normally be considered separate, because they belonged to one spouse prior to the marriage, may be considered marital property instead if they have become “commingled” with shared assets over the course of the marriage. Common pathways to “commingling” include the use of joint accounts and using previously separate assets to purchase shared property, such as when one partner uses savings from before the marriage to form the bulk of a down-payment on a shared home.
Is Disability a Marital Asset?
One of the most important factors in deciding divorce impact on long-term disability benefits can often be what timeframe the benefits have been intended to cover. If you have been receiving LTD benefits that were intended to replace wages you would otherwise presumably have been earning during the marriage, then any assets remaining to you from those benefit payments may classify the LTD as a marital asset in divorce proceedings.
LTD Benefits in Divorce Proceedings: Can My Ex-Wife Get My Disability Benefits?
Another factor you may want to consider concerning long-term disability and divorce, and one you may wish to discuss with an attorney, is the status of any lump sum settlements or retroactive payments you may have received as part of the process for resolving your long-term disability claim. The rules for division of marital property in your state, along with the circumstances and timeline of your particular divorce and disability claim, can all affect the divorce impact on long-term disability payments. Often, however, one of the most important factors in determining a divorce impact on long-term disability payments will be whether the benefit payments were meant to make up for income the recipient would have been earning during the marriage, had he or she not become disabled.
Divorce Impact on Long-Term Disability Payments: Do You Have To Pay Back Disability?
If one of the parties in a divorce gave up substantial career opportunities, or suffered loss of income themselves as part of their process for taking care of their partner during recovery from a disabling accident or serious illness, such as cancer, judges in some states may consider awarding that spouse what is known as rehabilitative alimony. Rehabilitative alimony gets its name from the fact that it is intended to help an ex-spouse whose financial circumstances coming out of a marriage are straitened by the sacrifices this partner made to further the other’s educational or career goals, or to take on additional support duties for their shared household.
Long-Term Disability and Divorce: Determining Spousal Support
The balance can also swing the other way. In many states, judges are required to consider the “standard of living” both partners enjoyed during the marriage, and if your ex now has a significantly higher income than you look likely to have in the near future, you may be able to persuade the court that they should pay you alimony for a set period. Alimony determinations can certainly be affected by the amount of income available to you, but it is not guaranteed that judges in all states will consider long-term disability benefits exempt as they weigh whether an award of spousal support is appropriate or fair. Estimating the divorce impact on long-term disability payments in a particular situation may need to account not just for whether the judge treats LTD as a marital asset in divorce, but on whether your ex is seeking alimony, and on what grounds.
Managing Divorce Impact on LTD: Negotiating a Settlement
For many people balancing long-term disability and divorce, negotiating a settlement with their former partner can be less stressful, and offer greater flexibility and control, than letting a court decide whether to treat LTD as a marital asset in divorce financial considerations. Often these settlements are reached through mediation, a form of alternative dispute resolution (ADR) in which a trained neutral guides the parties through conversations aimed at identifying areas of common ground and seeking possible compromise solutions to the matters in dispute between them.
Family courts in general tend to encourage mediation, so a decision to pursue mediation will often get support from a judge. Some states even require ADR in divorces with children as a matter of course. While any agreement you reach with your soon-to-be-ex will still need to be submitted to the court for approval, family law judges do typically approve settlements reached between the parties in a divorce as long as the terms do not appear manifestly unfair to either side, or unreasonable for ongoing enforcement. If you are concerned about the handling of LTD benefits in divorce proceedings, you may be able to take a proactive step by addressing the question of LTD as a marital asset in divorce yourself during mediation.
Long-Term Disability and Divorce: Preparing for the Road Ahead
The timing of your disability payments relative to the beginning of your marriage and the date when you separated are among the factors most likely to determine whether a court treats your LTD as a marital asset in divorce. Other factors that can affect LTD benefits in divorce proceedings include alimony determinations, and of course any child support payments you may need to make going forward. Although your preferred outcome is by no means guaranteed, divorce mediation may prove a useful tool for helping you to exert some control over divorce impact on long-term disability payments in your situation by providing a structured environment in which to negotiate with your former partner. Whether you attempt mediation or are determined to proceed with litigation, you may want to have conversations with both a family law attorney and a professional working in disability law concerning how you can balance long-term disability and divorce.
