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Disability Income and Personal Injury Proceeds in Equitable Distribution

by | May 20, 2021 | Firm News |

By Jennifer L. Garber

Disability Income and Personal Injury Proceeds in Equitable Distribution and Calculation of Maintenance

Domestic Relations Law § 236 (B)(1)(d)(2) provides that “compensation for personal injuries” is separate property not subject to equitable distribution. Disability payments are deemed compensation for personal injuries. D’Ambra v. D’Ambra, 94 A.D.3d 1532, 1535 (4th Dept 2012); Miceli v. Miceli, 78 A.D.3d 1023, 1025 (2d Dept 2010); Masella v. Masella, 67 A.D.3d 749, 750 (2d Dept 2009)(the proceeds of the defendant’s disability insurance policies are his separate property and the proceeds of the defendant’s Social Security disability benefits also are his separate property, and are not subject to equitable distribution). This means that a Court cannot allocate a portion of personal injury compensation (such as a settlement from a lawsuit) to the non-recipient spouse.

However, parties should be aware that the calculation of maintenance may include the income that a disabled spouse receives for his/her disability. See Tiger v. Tiger, 155 A.D.3d 1386, 1388-89 (3d Dept 2017); Owens v. Owens, 107 A.D.3d 1171, 1174 (3d Dept 2013). As set forth by Justice Dollinger in C.F. v D.M.F., 2018 NY Slip Op 50924(U) (Decided on June 7, 2018)(Supreme Court, Monroe County) “[s]eparate property in a New York divorce is like a lime dropped into a summer cocktail: it remains “separate” but its output — the squeezed pulp of additional generated income — may provide a sweet or bitter taste — depending on which spouse is sipping the concoction — in the calculation of a maintenance award.” In the Second Department, it has also been held that separate property assets may be a source of family support. Cody v. Cody-Evans, 291 A.D.2d 27 (2nd Dept 2001). The Court C.F. v D.M.F. made clear that both payment for lost wages or income and awards for personal injuries may be considered income for the maintenance calculation, explaining that “[t]he statute makes no such distinction: it includes the full amount of those benefits as available income.”