Is Social Security Disability Money Considered Marital Property in Michigan Divorce Cases?
When couples divorce, the court often divides marital property equitably between the spouses. In community property states, all property either spouse obtained during the course of the marriage is considered to belong to both parties and is divided accordingly. In noncommunity property states, such as Michigan, division is a little trickier because property is mainly considered to belong to the party who obtained it. In any case, Social Security disability payments are not usually considered marital property due to federal court rulings.
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No Court Precedent
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As of 2011, there are no federal or state court rulings stating directly that Social Security benefits are or are not marital property. However, federal courts have determined that similar benefits, such as military or railroad retirement benefits, are not marital property. The U.S. Supreme Court holds the position, also as of 2011, that the right to Social Security benefits is not considered property of any sort because Congress may amend the Social Security eligibility or benefit amounts at any time, including eligibility for disability payments.
No Community Property
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In states where there are community property laws, benefits that a spouse already received may be considered property of the marriage and be divided equitably upon the dissolution or divorce of the marriage. However, Michigan is not a community property state, as of 2011. Thus, if a spouse earned disability benefits in the past, those benefits would generally be considered to belong to that spouse rather than to the marriage as a whole.
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Federal Preemption
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Most state courts have ruled that state laws cannot preempt the federal law regarding Social Security benefits. Furthermore, federal courts have ruled that state courts are not allowed to enforce an agreement between the parties to divide Social Security benefits, even if both parties willingly agree to such a division. Thus, even if a Michigan court was of the opinion that Social Security disability benefits are marital property, it would not be able to act on this belief.
Past Benefits
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If the disabled party saves his Social Security benefits in a bank account, these benefits are exempt from division of marital property in Michigan or any other state. However, if the benefits are mixed with other property -- i.e., if the bank account isn't solely for disability benefits, but also for gifts and other sources of income -- the benefits are not exempt because Michigan courts cannot determine how much of the funds in the account come from disability payments as opposed to other sources.
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