Disability Benefits Separate from Retirement in Divorce Settlements

 Posted on May 03, 2018 in Family Law

Divorcing spouses can divide the retirement benefits from a government employee pension by using a qualified domestic relations order or equivalent state order. However, a QDRO does not necessarily include disability benefits that are administered through the same pension fund. Police officers and firefighters may rely on disability benefits if they are injured in the line of duty and unable to continue working. Determining whether disability benefits are a marital property depends on whether the benefits are a replacement for lost income or early withdrawal from a retirement plan.

Recent Case

In the case of In re Marriage of Farrell, a woman argued that she should receive half of the disability benefits her former husband is receiving from the City of Chicago’s Fireman’s Annuity and Benefit Fund. The spouses divorced in 2010 after 19 years of marriage. As part of the divorce settlement, the former husband agreed to give his former wife half of his retirement payments upon his mandatory retirement as a Chicago firefighter at age 63. The former husband was injured on the job in 2013, after which he was put on active duty disability leave. The former wife filed a court order to receive a share of his disability benefits, which she claims are part of his retirement pension. The former husband countered that the disability benefits are not from his retirement fund but are to replace his income until he reaches retirement age.

Court Decisions

An Illinois circuit court ruled and an appellate court affirmed that the disability benefits were not subject to division as part of the divorce agreement. The courts cited several reasons for their decisions:

• The agreement stated that the former wife would receive half of the former husband’s retirement benefits, and the husband has not yet retired;
• Illinois pension law states that firefighters with an annuity and benefit fund may collect disability benefits in lieu of retirement until they reach the mandatory retirement age;
• The agreement stated that the former husband would retain all other interests in the fund outside of retirement benefits, which were given a specific value;
• The agreement made no mention of disability benefits;
• The former wife waived her right to spousal maintenance in the agreement; and
• Awarding her part of the disability benefits would be equivalent to awarding maintenance.

Dividing Retirement Benefits

Laws regarding government pensions as marital properties are complex and can vary depending on the size and nature of the governmental entity. A Kane County divorce attorney at Geneva Family Lawyers can help you determine a fair division of retirement benefits as part of your divorce agreement. To schedule a free consultation, call 331-588-6611.

Source:

http://www.illinoiscourts.gov/Opinions/AppellateCourt/2017/1stDistrict/1170611.pdf