You be the Judge: Equitable Distribution

If you are involved in divorce proceedings, this may interest you.

Upon divorce, the marital assets are subject to an equitable distribution.  At that time, there are a variety of considerations in determining what type of distribution between the husband and wife is "equitable."

Retirement pensions are amongst the marital assets which are subject to equitable distribution.

In a recent case, the wife sued for divorce after the husband retired because he was unable to continue working as a police officer.  He began receiving a monthly disability pension payment which represented about 40% of his final year's salary.

YOU BE THE JUDGE:  Should a disability pension be subject to equitable distribution?

At trial, the husband produced evidence that his benefits were a substitute for wages lost because his disability prevented his employment.  In fact, the pension payment in the future was conditioned on the continuation of that disability. 

After trial, however, the Chancery Division, Family Part, ruled the entire pension was subject to equitable distribution because the husband had failed to show any part of the pension payment was exempt.

The Appellate Division reversed.  Although the pension was paid in the same fashion as other retirement plans, that was not important.  That part of a pension paid for retirement is subject to equitable distribution, but not the part to compensate a party for a personal disability. 

Thus the court's goal was to balance the non-pensioner-spouse's legitimate claims to a marital asset, without affecting funds intended to compensate the pensioner-spouse for disabilities.
 
The statute governing disability pension payments does not set out a procedure for determining what part of the payment pertains to the disability, as opposed to other retirement benefits.  But the appellate court held that could be established with expert assistance.  The case was remanded to the trial court so this evaluation could be made.