Are Workers’ Comp Benefits Factored in a Michigan Divorce Settlement?

Asset division in a divorce is one of the most contentious and often complex phases of the proceeding. There are specific rules governing the various types of assets, be they automobiles, bank accounts, real estate, or workers’ compensation benefits.

When it comes to the latter, questions of entitlement to benefits invariably arise during the division of assets. It is obvious they would, given the value of workers’ comp benefits.

Classifying Workers’ Comp Benefits in a Divorce

During a divorce, assets fit into two categories: separate or marital. Separate property is a property that is not acquired during the marriage and thus belongs solely to one of the spouses. In most cases, separate property is not divided during a divorce.

Marital property, on the other hand, does get divided. Marital property consists of assets that the couple has accumulated during the marriage, generally through work and investment. Some assets acquired during the marriage, such as inheritances, typically don’t count as marital property. However, workers’ comp benefits do.

What Are Workers’ Comp Benefits?

Workers’ compensation insurance is a program that streamlines the compensation process for injured workers by automatically compensating them in most situations. Instead of suing their employers for negligence, injured workers file a workers’ comp claim for certain benefits.

Depending on the situation of the injury, the benefits may include:

• Medical treatment
• Wage-loss benefits
• Specific-loss benefits for loss of the use of a body part or function
• Total and permanent disability benefits
• Lump-sum payment

Of these benefits, the wage-replacement and wage-loss benefits are divisible in a divorce.  Keep in mind that determining whether workers’ comp benefits are marital property is not as easy as it might sound.

For example, the timing of an award for benefits can present some issues. Consider a worker who is injured on the job and is awarded benefits before the divorce is final. The other spouse may have a claim to half of the award.

However, if the settlement happens after the divorce, then one spouse may have trouble demonstrating their claim over a portion of the award.

It is also important to understand that workers’ comp benefits will only be awarded if certain conditions are met. One of them requires that a couple must be married for at least ten years before the divorce for an ex-spouse to collect half of their ex-spouse’s workers’ comp benefits.

The Takeaway

Workers’ comp benefits are a valuable source of income that is often considered marital property. However, certain divorce cases present difficulties that complicate matters and make the division of workers’ comp benefits problematic.

Sadly, it is common for spouses to erroneously grant or give up their rights to workers’ comp benefits. For this reason, having an experienced workers’ comp attorney is essential to help avoid these unfortunate outcomes.

At Gucciardo Family Law, we have helped thousands through this tough time and are ready to listen and fight for you. Contact our office to speak with an experienced divorce attorney and learn more about workers’ comp issues and divorce.