Month: October 2019

Disability Payments Taken in Lieu of a Pension Are—Sometimes—Considered Marital Property

Disability Payments Taken in Lieu of a Pension Are—Sometimes—Considered Marital Property

Grisafo v. Hollingshead, 8th Dist. Cuyahoga No. 107802, 2019-Ohio-3763 (Sep. 19, 2019)

Issue:  Is an individual entitled to a portion of his/her former spouse’s disability benefits?

Decision:  In this particular case, at the time of the court’s decision, no.  In this case, the parties’ separation agreement provided, in part, that Wife was entitled to 50% of her former Husband’s pension benefit from the Ohio Police and Fire Pension Fund (OP&F).  After the separation agreement was executed and incorporated in the final divorce decree, the parties completed a Division of Property Order (DOPO)—the Order that must be used to divide all State of Ohio retirement benefits in a divorce.  The DOPO has multiple types of payments that can be selected to divide, including disability monthly benefit.  The DOPO completed for this matter only indicated that Wife would receive part of Husband’s age and service retirement benefit—the standard retirement benefit.

Subsequent to the divorce and the filing of the DOPO with OP&F, Husband was deemed disabled and awarded full disability pension benefits.  Because the DOPO filed with OP&F only provided Wife with a portion of time and service retirement benefits, she did not receive any portion of Husband’s disability benefits.  Wife filed multiple motions with the trial court requesting that she immediately receive a portion of Husband’s disability benefits.  Wife argued that Husband would never receive retirement benefits and therefore, unless the court awarded her a portion of the disability benefits, she would be denied any portion of his OP&F benefit.

The trial court rejected Wife’s arguments.  Instead, the trial court found that as of the time Wife filed her motions, Husband was not eligible for a time and service retirement—he could not retire under OP&F until September 2020 at the earliest.  As such, currently, the disability payments were considered income replacement, which is not marital property.  As the trial court explained, if Husband was not disabled but still working, then Wife would have no claim to his wages.  However, the court noted that once Husband reaches retirement age, and assuming he chooses to continue his disability benefit instead of converting to a retirement benefit, then Wife may have a claim for a portion of Husband’s disability benefit at that time.  Although the disability benefit is still separate property in nature, when it is taken in lieu of a retirement benefit, courts have held that they represent retirement benefits and can be divided.  See Cockerham v. Cockerham, 2017-Ohio-5563, 83 N.E.3d 999 (5th Dist.).

Wife appealed the trial court’s decision.  The Eighth District Court of Appeals affirmed the trial court’s decision and, again, informed Wife that she may have a claim to a portion of the disability payments after Husband is eligible for retirement.

Discussion:  This case represents two main points.  First, although the DOPO may seem simple on its face, unwary drafters can find out, often too late, that the way the plans interpret the DOPO is actually complex.

Second, this case demonstrates that disability payments can be considered marital property.  We agree with the trial court and Eighth District’s assessments that, in general, disability payments are income replacement until the disabled individual reaches retirement age.  At that point, at least a portion of the benefit, is taken in lieu of retirement benefits, which are marital in nature and can be divided.

How We Can Help:  We have experienced experts available to discuss the division of disability benefits.  Having devoted a full chapter of Dividing Pension in Divorce, 5th Edition to the topic and having testified in many of the most important cases on disability, we can help you craft a winning argument for your client.