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Workers' Compensation & Divorce

Some divorces feature Rhode Island workers' compensation issues, which impact child and spousal support and the division of assets. The loss of income and the injured employee being at home and out of work is often the beginning of the end of a marriage. But what are the ramifications if one of the parties is on workers' compensation?

Workers' compensation benefits are considered in a divorce depending on the type of benefits that fall into three categories: wage replacement, medical coverage for the injuries sustained at work and compensation for disfigurement (scars) and loss of use of a body part.

Wage replacement checks are considered income to the recipient when considering child support and alimony. Child support in a Rhode Island Divorce is based upon "guidelines" that consider each party's gross income. Since workers' compensation benefits are not taxable, the amount received by the injured employee is "grossed up" to a level that approximates the gross income that produces the net amount received. As an example, $700 in weekly comp ($3,010 per month) is grossed up to ~ $3,950 per month using the guidelines. Child support is then determined using the grossed up amount.

The second aspect of workers' comp benefits, the payment of medical bills, is not a consideration in a divorce. The third aspect, the money received for disfigurement to an employee's body or for the loss of use of a body part, is considered personal property and not a marital asset to be divided (unless the money has been received and is commingled into a joint account with the spouse).

Some workers' compensation cases lead to a final settlement known as a commutation. Commutations compensate the injured employee for future wage loss and medical expenses. Future wage replacement and future medical bills are losses that may be for periods after the entry of a Final Judgment of Divorce and thus may not be considered a marital asset subject to equitable distribution.

Therefore, it is very important to consider where the settlement money is placed. If placed in the sole name of the injured employee, it should escape division in a divorce while if placed into a joint account, it becomes a marital asset to be divided. Even if the settlement is not considered as an asset to be divided, it may still be considered in other situations such as when an injured employee is in arrears in child support, or in determining if the injured employee needs alimony to support herself/himself after the divorce.

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Law Office of Steven J. Hirsch, Esq

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