I have previously written about different classes of property that most of the time will be considered to be separate property of the party during the divorce. Periodically, divorce lawyers have to deal with situations where one of the parties becomes disabled during the marriage and begins to receive disability payments, either social security disability or payments under a private disability insurance policy.
In a recent case, Masella v. Masella, 2009 N.Y. Slip. Op 08190 (2nd Dept. 2009), the Appellate Division, Second Department, held that the proceeds of the defendant’s disability insurance policies are his separate property. Similarly, the court held that the proceeds of the defendant’s Social Security disability benefits also are his separate property, and are not subject to equitable distribution. The reason that Social Security benefits are not subject to equitable distribution, is because Social Security benefits are not a pension. With respect to the disability insurance, any disability insurance payments constitute compensation for personal injury and would not be subject to equitable distribution.