A not-uncommon question arises when a divorce is planned and one spouse is receiving disability payments for a policy that existed either prior to or was acquired during the marriage. The disability policy is now in ‘pay status’. Is the non-disabled spouse entitled to receive any of those disability payments made during the marriage or thereafter?
To preface the answer to this question, we need to assume that the disability payments have not been excluded either by a prenuptial agreement or by a marital settlement agreement made pursuant to the divorce. We also should exclude from our discussion payments made to a disabled spouse for injuries sustained during military service. With these exclusions out of the way, we can respond to the question.
To first point to be covered is to find out why the payments are being made. The Florida supreme court in 1989 (Weisfeld vs. Weisfeld) ruled that if disability payments are being made to a spouse for the loss of future wages and future medical expenses these payments are “the separate property of the injured spouse.” Thus, the payments are non-marital and not subject to equitable distribution, that is, the division of the net marital estate (martial assets less marital debts) during the divorce. For example, if the spouse receiving disability payments is disabled due to depression that prevents a return to work, those payments are deemed to cover future lost wages and therefore are non-marital and belong solely to the disabled spouse. If disability payments are to provide compensation for ‘pain and suffering’ and disfigurement, these, too are deemed not-marital and are outside of the net marital estate.
In the event of a divorce, it is important to read the disability policy and any information delivered to the disabled spouse accompanying the payments to ensure the purpose of the payments. This may determine if the payments are marital (i.e., really retirement payments that may be marital) or purely for the spouse’s disability.