Does My Divorce Affect My Disability Settlement?

Not usually—but it varies by state. All states agree that marital assets (property acquired by both parties during the marriage) are subject to being shared in divorce settlements. The question is whether DI settlements qualify as marital assets.

The Social Security Act states that disability payments are not subject to “levy or attachment.” The majority of state courts interpret this to mean that Social Security Disability Insurance (SSDI) benefits are not considered marital assets; however, some states with equitable division laws interpret things differently. 

These states may consider lump-sum disability settlements to be marital assets if they were part of some sort of communal property, such as a joint bank account. Other states prohibit splitting disability settlements but will allow them to be considered when determining the total net worth of assets. And some equitable division states prohibit splitting or considering disability settlements entirely.

This depends on whether your disability payments are from Social Security Income (SSI) or Social Security Disability Insurance (SSDI):

• SSI disability benefits are needs-based and are calculated according to the financial resources you have available. If you either lose or gain net income after your divorce, this will be taken into consideration when determining your SSI benefits.
• SSDI benefits are calculated based on your work history, so your divorce should not affect the amount of SSDI benefits you receive—unless you owe court-ordered alimony or child support, in which case your SSDI benefits could be garnished.

As a general rule, SSDI benefits are considered income and are taken into account when determining alimony. Need-based SSI payments are not.

If you are 62 years old or over and were receiving a spouse’s benefits while married, you should continue to receive it after your divorce, except under the following conditions: 

• You were married for 10 years or less
• You get remarried
• You become entitled to greater Social Security benefits with your own work record

You could be eligible to collect dependent Social Security benefits based on your ex-spouse’s work record if all of the following criteria are met:

• You were married to your former spouse for at least 10 years
• You are at least 62 years of age
• You are unmarried
• You are not entitled to a larger benefit using your own Social Security record