Disability Benefits Not Marital Assets until Retirement Age: Court

December 2, 2004 (PLANSPONSOR.com) - The North Dakota Supreme Court has ruled that a divorce court was in error when ruling that a husband's disability payments resulting from his job as a California corrections officer were early retirement program payouts.

>Justice Mary Muehlen Maring, writing for the court, ruled that a divorce court wrongly awarded one-quarter of Edward Striefel’s disability payouts to his wife upon separation. Maring asserted that the benefits were separate property and not marital assets.. The divorce court had held that the benefits were, in effect, an early retirement program payout and meant to replace the regular longevity based retirement program payments he would have received had he remained at work.

>Striefel, who had moved to North Dakota from California after being placed on disability status in 1993, received a free college education paid for by California’s workers’ compensation fund. When he finished school, he began drawing state disability benefits, which paid him 50% of his salary for life, tax-free, with a cost-of-living adjustment. He then took a job as a part-time school district worker.

>Following his divorce from his wife and the subsequent divorce court ruling, Striefel appealed to the state Supreme Court, asserting that the lower court had erred. In her ruling, Maring agreed, stating that the benefits were in fact not marital property. Once Striefel passes retirement age however, the benefits will be considered to be providing income for retirement, and will then be subject to division, the court said.

>The nuance of the ruling is that until the age of retirement, disability benefits are considered to be predominantly providing support and not retirement income, and are therefore not marital property. Only when the disabled reaches the age of retirement are the benefits consider martial property, since they are meant at this time to provide both support and retirement income. Once they are considered marital property, the benefits should be split, according to Maring.

>The case, Striefel v. Striefel, is available here here .