Divorce, Disability Pensions, Pensions, Retirement Assets and Equitable Distribution

Equitable distribution is one of the matters that I deal with most often as a divorce attorney for New York and LongIsland. Though all the intricacies involved in equitable distribution can be a concept that’s difficult to understand without a background in family law, it can become more challenging when an individual is facing the concerns of splitting unique elements, such as retirement benefits.

It’s relatively well know that the marital portions of retirement plans like 401ks, pensions and deferred compensation plans, ¬†are typically subject to equitable distribution in the case of a divorce. However, determining the right course of action can become more complex when it comes to disability pensions. After all, the divorce lawyers and the New York courts in cases of disagreements need to determine whether the asset is one that was accumulated during the marriage and what is appropriate as far as equitable distribution, or something that should be regarded like a personal injury award.

Corporate, government, teachers, fire department and police-based pensions are typically divided in much the same way as any other pension. The courts make use of something called the “Majauskas” formula, in which the marital share of a pension is determined by dividing the number of marriage months by the number of overlapping months spent on the job, or years of service. For instance, ten years of marriage divided by 20 years of time on the job, earning towards the pension at the time of retirement, makes the marital portion 50%. There are also other ways to distribute a pension benefit which you can talk to your divorce lawyer about.

The complicated part of managing equitable distribution in divorce comes to when someone is injured on the job. In those cases, the person might be entitled to a disability pension awarded as part of their service. Depending on the way that the disability pension is calculated, it can either be regarded as a partial marital property, or separate property. In most situations, a disability pension, when addressed by a divorce attorney and New York court, will be treated as part marital property, and part separate property for the purpose of equitable distribution.

In simple terms, part of the pension is seen as compensation that a person received for an injury, separate to their marital holdings, and the other part is considered “deferred” compensation, which is shared as marital property. Usually, the deferred aspect of a disability pension is the amount of pension that the spouse would have already had access to, without the disability award. That means that when it comes to understanding the marital portion of the pension, and its value, the court will need to remove the typical value of the separate portion within the pension, from the overall value of the pension.

In the case of Howe vs Howe, an appeal was launched with the New York Supreme Court by the plaintiff (husband), after the wife had been awarded a “Majauskas” share of the entire pension that the plaintiff received from the New York City Fire department. The plaintiff approached the Supreme court to request that a portion of his disability pension be regarded as his own separate property, despite the fact that there was a lack of evidence available for distinguishing between the disability and “non-disability” portions of the pension.

In a cross-appeal, the defendant (wife), asked the court to hold to the decision that the plaintiff’s Victim Compensation Fund from September 11th, should not be counted as compensation for personal injuries, under the outline given by Domestic Relations Law 236(b). In other words, she wanted to outline that the award was marital property. After assessing the case, the supreme court decided that the disability part of the plaintiff’s pension, as well as his separate property in that pension, should be determined through a properly-drawn order. They decided to modify the judgement accordingly. In regard to the cross-appeal, the Supreme Court also found that the plaintiff’s September 11th compensation is compensation for economic loss for personal injuries under the set guidelines, and therefore separate property.

When it comes to understanding the actions of a divorce lawyer in cases of equitable distribution and disability benefits, the best way to address the situation is as follows. The portion of a disability pension that can be used to represent the amount of deferred compensation that was gathered during the length of the marriage can be seen as marital property, and therefore vulnerable to equitable distribution. However, regarding the portion of the disability pension that makes up compensation for personal injuries sustained by the pensioned spouse, that amount should be seen as separate property. Since separate property is not divided during equitable distribution, the amount of compensation offered for an accident or disability cannot be divided in divorce.

To learn more about the complexities of dealing with equitable distribution and the separation of assets in divorce, speak to me, your local divorce attorney, Mr. Darren M. Shapiro at your earliest convenience. You can contact me either through my online form, or over the phone at 516-333-6555 to arrange your free initial consultation session.

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