In a January 15, 2013 decision in Alvarado v. Alvarado, Richmond County Supreme Court Justice Catherine M. DiDomenico, held that the husband’s veteran’s and Social Security disability benefits are separate property for purposes of equitable distribution. Moreover, the veteran’s disability benefits could not be considered on a maintenance award. The Social Security benefits could.

As discussed in the comment, below (far more detailed than may be appropriate for this blog), veteran’s disability payments should be able to be considered when making maintenance awards in divorce actions.

In Alvarado, as a result of his military service in the United States Marine Corps prior to the marriage, the husband was now receiving monthly veteran’s disability benefits. The husband successfully argued to Justice DiDomenico that the veteran’s benefits were not to be considered. The Uniformed Services Former Spouse’s Protection Act (USFSPA) declared them to be separate property. 10 U.S.C. § 1408. The Court rejected the wife’s argument that veteran’s disability payments should be considered for purposes of maintenance.

Congress enacted USFSPA in direct response to the 1981 U.S. Supreme Court decision in McCarty v. McCarty, 453 U.S. 210, which had held that federal law as it then existed completely pre-empted the application of state divorce property law to military retirement pay. USFSPA authorized state courts to treat disposable retired pay as marital property. However, Federal disability benefits remained excluded, and any military retirement pay waived in order for the retiree to receive veterans’ disability benefits also remained excluded. Mansell v. Mansell, 490 U.S. 581 (1989).

Justice DiDomenico noted that while the Second Department had yet to address the issue, the Third and Fourth Departments had held that state courts are prohibited from distributing veteran’s disability benefits in an action for divorce. The Court cited Hoskins v. Skojec, 265 AD2d 706 (3d Dept. 1999), leave to appeal denied,  94 NY2d 758 (2000), and Newman v. Newman, 248 AD2d 990 (4th Dept. 1998). Similarly, Justice DiDomenico ruled, Social Security Disability Benefits are separate property and are not subject to equitable distribution. DRL § 236 (B) (1) (d) (2); Miceli v. Miceli, 78 AD3d 1023 (2d Dept. 2010).

However, as Justice DiDomenico held, Social Security Disability Benefits are to be considered by the Court when determining a payor spouse’s ability to pay maintenance, citing Cerabona v. Cerabona, 302 AD2d 346 (2d Dept. 2003). and Carl v. Carl, 58 AD3d 1036 (3d Dept. 2009).  Justice DiDomenico also noted that in Carl, it was stated that while disability benefits obtained from other sources may be considered for purposes of maintenance, veteran’s disability payments are precluded from consideration.

In Carl, the Third Department held that disability benefits, generally, although separate property, were among the factors to be considered in determining maintenance. The total amount of each party’s income, including income each receives from separate property that is not otherwise subject to equitable distribution, may be considered (referencing Domestic Relations Law §236[B][6][a][1]). The fact that a portion of that income is derived from an asset determined to be separate property not subject to equitable distribution does not render that income immune from consideration in calculating a party’s maintenance obligation.

In a footnote, however, the court in Carl noted that the disability benefits at issue here were not the result of a veteran’s disability which would otherwise be precluded from consideration with respect to maintenance (citing the USFSPA and Hoskins, supra).

Comment: It is suggested that Hoskins does not require such a result. Veteran’s disability benefits may be considered with respect to maintenance.

Hoskins considered a separation agreement that provided for a division of benefits. It was held in Hoskins that although a court in an action for divorce or separation “cannot order as spousal maintenance the allocation of compensation received by a veteran derived from military pay waived in order for the retiree to receive veterans’ disability benefits,” parties are free to contractually determine the division of these benefits.  The USFSPA does not restrict a recipient of disability benefits from entering into a contract with a spouse regarding the dispersion of benefits received. In a footnote, the court in Hoskins stated ” Federal law preempts the authority of state courts to consider veterans’ disability benefits as property divisible upon termination of a marriage (citing Mansell v. Mansell, supra, and Newman, supra).”

Again, both Mansell and Newman restated that veteran’s benefits are not marital property. As was held in Newman, “VA disability benefits are not subject to equitable distribution.” VA disability benefits are based solely upon a disability resulting from personal injury suffered or disease contracted in the line of duty; such benefits are separate property.

In Alvarado, Justice DiDomenico rejected the Wife’s argument that the 2012 decision of the Third Department in Nizolek v. Nizolek, 93 AD3d 934 (3d Dept. 2012) supported the consideration of veteran’s disability benefits on a maintenance award. Justice DiDomenico noted that in Nizolek, the Third Department held only that the Family Court, deciding an application for spousal support in an ongoing marriage, may consider veteran’s disability benefits “under the broad language of Family Court Act §412″. Justice DiDomenico pointed out that the court in Nizolek expressly distinguished an application for “spousal support” under the Family Court Act from an application for “maintenance” under Domestic Relations Law §236(B).

Holding that veteran’s benefits should be considered in rendering an award for spousal support under Family Ct Act § 412, the court in Nizolek noted that F.C.A. §412 provides that “[a] married person is chargeable with the support of his or her spouse and, if possessed of sufficient means or able to earn such means, may be required to pay for his or her support a fair and reasonable sum.” The Nizolek decision did mention that it is Domestic Relations Law §236, and not the Family Court Act, that governs awards of maintenance and distributive awards in matrimonial actions.

While disability benefits are separate property, not subject to equitable distribution upon the termination of a marriage (see Domestic Relations Law § 236[B][1][d][2] ), they are not necessarily excluded when considering an application for support in Family Court (see e.g. Family Ct Act § 413[1][b] [5][iii] [specifically provides that veterans' benefits shall be included as income for purposes of determining a parent's child support obligation] ). Indeed, we find nothing in the broad language of Family Ct Act § 412 which would suggest that a spouse’s separate property cannot be considered in determining an award for spousal support. Rather, an award of spousal support under Family Ct Act § 412 is broadly “determined by evaluating the assets, earning potential and circumstances of the parties involved” [citations omitted], and “[v]eterans’ disability benefits are intended to ‘provide reasonable and adequate compensation for disabled veterans and their families ’ ” [citation omitted]  Thus, we hold that Family Court did not err in considering respondent’s disability benefits in the context of petitioner’s application for spousal support.

However, there appears to be no reason to distinguish the Domestic Relations Law from the Family Court Act. As with F.C.A §413, Domestic Relations Law §240(1-b)(b)(5)(iii), used to determine child support in matrimonial actions, specifically provides that both disability benefits and veterans benefits are to be included in a parent’s income for the purposes of making a child support award.

On the other hand, Family Court §412, declaring a married person’s obligation to support a spouse, does not specify what the court may consider when awarding a fair and reasonable sum of spousal support having “due regard for the circumstances of the parties.”

The fact that veteran’s disability benefits may be separate property under D.R.L. §236(Part B)(1)(d), and not distributable under D.R.L. §236(Part B)(5), does not mean that such benefits may not be considered in an award of temporary maintenance under D.R.L. §236(Part B)(5-a) or permanent maintenance under D.R.L. §236(Part B)(6). Again, “the fact that a portion of that income is derived from an asset determined to be separate property not subject to equitable distribution does not render that income immune from consideration in calculating a party’s maintenance obligation. Carl, supra, citing Gann v. Gann, 233 A.D.2d 188 [1st Dept. 1996] ).

Indeed, the new temporary maintenance law for divorce actions expressly incorporates the C.S.S.A. definition of income. D.R.L. §236(Part B)(5-a)(b)(4)(a). Thus, it includes veteran’s and disability benefits. An award of temporary child support in a divorce action under D.R.L. §236(Part B)(7)(a), also references the C.S.S.A. provisions of D.R.L. §240(1-b).

As to permanent maintenance, “the income and property of the parties” (including distributed marital property) is to be considered.§236(Part B)(6)(a)(1). The statute does not limit consideration to marital property. Any other factor a court finds just and proper may also be considered. §236(Part B)(6)(a)(20).

The fact that veteran’s disability payments may not be divided, distributed, or allocated does not mean that such benefits cannot be considered for maintenance purposes.

Federal law governing payment of veteran’s disposable retirement pay to his or her spouse as division of property does not preclude award of alimony against spouse receiving disability pay and, once awarded, does not relieve paying spouse from paying such alimony obligations, even though most of paying spouse’s income consists of military retirement designated as disability.  Allen v. Allen, Fla.App. 2 Dist.1994, 650 So.2d 1019, rehearing denied.

Justice DiDomenico certainly followed available precedent. However, it is submitted that the appellate courts should reconsider the issue.

The husband was represented by Bruce G. Behrins, Esq., of Staten Island. The wife was represented by Eric M. Gansberg, Esq, also of Staten Island.