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Worker's Compensation Benefits Received During Marriage May Be Marital Property

In a per curium opinion by the Court of Appeals issued on July 13, 2010 (Cunningham v Cunningham, Docket No. 285541, for publication), the Court held that a worker's compensation award received during a marriage can be considered marital property.

The parties were married in 1982 and in 2007 Plaintiff wife filed for a divorce. When Defendant was 16 (and prior to marriage) he suffered a severe and permanent disability while employed in construction work.After the injury, he filed for Worker's Compensation benefits. While this claim was pending, defendant married plaintiff in 1982. The worker's comp claim was ultimately resolved in 1987. Defendant received a lifetime award of benefits paid on a monthly basis as well as a lump sum payment of $150,000. The entire retroactive award was put into the parties' joint savings account. The parties used $90,000 of this lump sum to make a down payment on the marital home.

At trial, defendant requested that the $90,000 used as a down payment be considered his separate property. The trial court agreed with defendant's position. The Court of Appeals agreed with the trial court in part, holding that an award of worker's compensation benefits are to be considered marital property only to the extent that they compensate for wages lost during the marriage (between the beginning and end of the marriage). Therefore, the portion of the $150,000 retroactive award representing compensation for lost wages before the parties' marriage could potentially be considered defendant's separate property. In this case, however, the $90,000 down payment on the home lost its character as separate property when it was deposited into a joint account and used, along with other marital funds, to purchase the marital home.

Conclusion: Worker's compensation benefits are to be considered marital property to the extent that they compensate for wages lost during the marriage.

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