Alimony & Spousal Support

Lump Sum vs. Monthly Payments

In the Family Law Case of Yuhas v. Yuhas, PICS Case No. 13-3066, (Pa. Super. October 28, 2013), the Pennsylvania Superior Court concluded that husband’s monthly payments of disability  received after the parties’ separation which were contingent on husband’s continuing disability were income and not marital property for purposes of equitable distributions pursuant to the Divorce Code and case law. See Drake v. Drake, 725 A.2d 717, (Pa. 1999)

Husband and wife, both 51, were married on June 4, 1988 and separated on July 20, 2007. Wife worked as a nurse anesthetist. Husband was a board certified vascular surgeon for 13 years before undergoing surgery for carpal tunnel syndrome, which left him unable to operate.

The “Disability Income Policy” was issued in 1988 shortly after husband and wife’s marriage. The premiums were paid by the parties from their personal funds from late in 1988 until April 1993 and then in August 1993, November 2006 and April 2007. All other premium payments were paid through husband’s medical practice.

Husband was approved for benefits in July 2007. He received a lump sum retroactive payment of $71,000 covering the period from January 2007 to July 30, 2007. The parties agreed that the payment was marital property. Therefore, husband received monthly disability checks for $10,200, contingent upon proof of husband’s continuing disability, i.e., his inability to work at his former occupation as a surgeon.

Wife filed a complaint in divorce on October 8, 2007. The master determined that all of husband’s monthly disability benefits were marital property pursuant to Drake v. Drake, 725 A.2d 717, (Pa. 1999).

The trial court sustained husband’s exception to the master’s report concerning characterization of the monthly disability payments. The master incorporated the trial court’s directive that monthly disability payments received after September 2007 were to be deemed income and not marital property.

Here, wife questioned whether the trial court erred in concluding that the disability payments received by husband after separation were not marital property. Wife argued that Drake and Focht v. Focht, 32 A.3d 668, (Pa. 2011), controlled.

After considering Drake and Focht, the court concluded that this case did not fall within the confines of 23 Pa.C.S. §3501(a)(8) because it did not arise from an injury that led to a right to institute a suit for damages. The payments were not “payments received as a result of an award or settlement for any cause of action or claim.” They were an insurance benefit from an insurance policy contract that ensured replacement of income if husband became unable to work as a surgeon.

Moreover, both Drake and Focht, involved lump sum payments, not monthly payments contingent upon proof of continuing disability. Any accrual, i.e., the existence of an enforceable right, was conditioned each year on husband’s submission and the insurance company’s actions on that submission.

The court concluded that the trial court’s decision to identify husband’s monthly disability benefit after separation as non-marital property was consistent with the language of the Divorce Code and case law. Furthermore, husband’s testimony and documents clarified that the payments were not guaranteed for husband’s lifetime. They were conditional on husband’s continuing disability.

Reference: Digest of Recent Opinions, Pennsylvania Law Weekly, (November 5, 2013)

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