divorce and social security benefits: navigating complex...

The audio portion of the conference may be accessed via the telephone or by using your computer's

speakers. Please refer to the instructions emailed to registrants for additional information. If you

have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

Presenting a live 90-minute webinar with interactive Q&A

Divorce and Social Security Benefits:

Navigating Complex Rules for Support

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

TUESDAY, SEPTEMBER 29, 2015

Karen T. Kugler, Partner, McGee Kugler Family Law, Osseo, Minn.

Seth D. Kramer, CFLS, Attorney, Law Office of Seth Kramer, Marina Del Rey, Calif.

Tips for Optimal Quality

Sound Quality

If you are listening via your computer speakers, please note that the quality

of your sound will vary depending on the speed and quality of your internet

connection.

If the sound quality is not satisfactory, you may listen via the phone: dial

1-866-869-6667 and enter your PIN when prompted. Otherwise, please

send us a chat or e-mail [email protected] immediately so we can

address the problem.

If you dialed in and have any difficulties during the call, press *0 for assistance.

Viewing Quality

To maximize your screen, press the F11 key on your keyboard. To exit full screen,

press the F11 key again.

FOR LIVE EVENT ONLY

Continuing Education Credits

In order for us to process your continuing education credit, you must confirm your

participation in this webinar by completing and submitting the Attendance

Affirmation/Evaluation after the webinar.

A link to the Attendance Affirmation/Evaluation will be in the thank you email

that you will receive immediately following the program.

For additional information about continuing education, call us at 1-800-926-7926

ext. 35.

FOR LIVE EVENT ONLY

Program Materials

If you have not printed the conference materials for this program, please

complete the following steps:

• Click on the ^ symbol next to “Conference Materials” in the middle of the left-

hand column on your screen.

• Click on the tab labeled “Handouts” that appears, and there you will see a

PDF of the slides for today's program.

• Double click on the PDF and a separate page will open.

• Print the slides by clicking on the printer icon.

FOR LIVE EVENT ONLY

Divorce & Social Security

Benefits

By: Karen Terese Kugler, Esq. and

Seth D. Kramer, Esq.

Explanation of Social Security Benefits

There are two main types of social security benefits related to disability:

– Social security disability insurance (SSDI) • For individuals with enough work credits

• Provides a greater amount of monthly income.

– Supplemental security income (SSI). • For individuals without sufficient work credits

• Provides a much smaller amount of monthly income.

– Some individuals that are not fully eligible for SSDI may receive benefits under both the SSDI and SSI programs.

6


Is It SSI or SSDI?

SSI SSDI

What is it? Disability benefits are based on

financial need

Disability benefits are based

on prior work and work credits

Work history? Party did not work very much and does

not have enough work credits

Party has worked 5 out of the

last 10 years before application

for benefits

Approximate

benefit amount

Maximum of $733 per month (for

2012)

Varies based on work

credits… but higher than $733.

The average benefit is $1,111

per month

Additional cash

benefit for children

No Yes

Date benefits begin The date the party made an application

for benefits

The date the disability began

Asset Limit Individuals generally are not eligible for

SSI if they

have resources in excess of $2,000 (or

$3,000 for a couple).

Certain resources are excluded, most

commonly a home, an automobile, and

household goods and personal effects

No

Reduced by earned

income?

Yes

For example, a person whose income

consists of $500 in gross monthly

earnings would receive $525.50 in

federal SSI payments (($500 - $85) / 2)

= $207.50 countable earnings

FBR $733 - $207.50 = $525.50 federal

SSI

No

However, if the earned income

is too high this may trigger a

termination of benefits

This chart is a summary of the difference between the programs. SSDI is sometimes called RSDI, for retirement, survivors, and disability insurance. The terms RSDI and SSDI are used interchangeably.

7

Explanation of Social Security Benefits: The Process of Obtaining

Benefits Step 1: Initial Application • The party applies for SSI, SSDI, or both, either in person at their

local SSA office or via the web.

• A SSA worker will be assigned to the party’s case and is supposed to obtain copies of the medical & vocational records for the party.

• The party may be asked to attend an Independent Medical Examination (IME) or Special Examination to determine if they are disabled under the rules.

• The worker reviews the record and determines if the party is eligible for benefits.

• It is extremely common for parties to be rejected at this stage.

8


Benefits Step 2: Request for Reconsideration

• If the worker rejects the party’s claim, the party receives a notice and then has 60 days to make a “Request for Reconsideration.”

• A SSA worker will have the party update their information, will review the file with this additional information, and will determine if they believe the party is eligible for benefits.

• Just as with the initial application, it is extremely common for parties to be rejected at this stage despite severe disabilities.

9


Benefits Step 3: Hearing with Administrative Law Judge (ALJ) • If the party is denied benefits at the Request for Reconsideration

stage of the process they can request a hearing within 60 days of the denial.

• The party’s best chance of receiving social security disabilities is likely at the hearing stage of the process.

• It is very beneficial if the party has a social security law attorney to represent him or her in this process. The hearing is held in front of an Administrative Law Judge (ALJ) and the hearings generally last 1 to 2 hours. The party will testify and be asked questions by his/her attorney and the ALJ. There may also be a medical expert and a vocational expert present who may testify.

10


Benefits Step 4: Appeal to Appeals Counsel or Federal District Court.

• After the hearings level of the process, a party can appeal to the appeals counsel and then can file a case in Federal District court, but this is not especially common.

11


You cannot obtain social security disability benefits for temporary disabilities

• In order to qualify for SSI or SSDI, an individual must be unable to engage in substantial gainful activity (SGA) by reason of a medically determinable physical or mental impairment expected to result in death or last at least 12 months.

• This means that in order to qualify for social security disability the impairment in question is usually a permanent and severe one.

• Five states (California, Hawaii, Rhode Island, New Jersey & New York), Puerto Rico, and the railroad industry have programs that partially compensate a party for the loss of wages caused by temporary, non-occupational disability or maternity. Those programs are known as temporary disability insurance (TDI) because the duration of the payments is limited. Federal law does not provide for a federal-state insurance system for short-term disability.

12

Explanation of Social Security Benefits: How Eligibility Is Determined

• Option 1: Meets the Listings

– 20 CFR Part 404, Subpart P, Appendix 1.

– Each listing describes in detail the level of medical impairment necessary for each medical condition

13


• Option 2: Equals the Listings – Often parties have a number of different

medical conditions that cause them to be disabled, or alternatively their condition is equal in severity to a similar listing but does not exactly meet the definition in the listings.

– In this situation, a party can receive benefits based on medically equaling the listing or combination of listings.

14


• Option 3: Vocational Impairment – 20 CFR Part 404, Subpart P, Appendix 2

– Often parties cannot meet or equal a medical listing, but they are unable to work due to the restrictions they have due to a disability.

– In this situation the Social Security Administration will analyze if the party is able to engage in substantial gainful employment (SGA).

15

Issues Specific to Divorce Back Pay & Assets Attributable to Soc. Sec. Benefits • A significant period of time may elapse between the application for

benefits (or onset of disability) and the award of benefits.

• When benefits are finally awarded, the party will usually receive “back pay” for monthly benefits that accrued during this time period.

• The back pay amount can be substantial, especially in SSDI cases.

• Social Security benefits (including back pay) are generally treated as a spouse’s separate (non-marital) property and generally will not be subject to division. However, this is not true in all jurisdictions.

– Hisquierdo v. Hisquierdo, 439 U.S. 572 (1979).

– Marriage of Hillerman, 109 CA.3d 334 (CA 1980) (In California social security benefits are non-marital)

– Dinges v. Dinges, 16 Neb. App. 275 (Neb. Ct. App. 2008) (In Nebraska portion of asset acquired by using back pay is non-marital)

– In re Marriage of Zahm, 978 P.2d 498 (Wash. 1999) (In Washington social security benefits may be included as a part of an equitable distribution)

16

Issues Specific to Divorce

Overpayments • Sometimes the social security administration makes a

mistake, and pays the claimant too high a benefit amount. Even if this mistake is due to no fault of the claimant, the claimant will be required to pay the overpayment back. This could arguably be a marital debt. – Lisa M.H. v. Gerald C.H., 35 A.D.3d 1188 (NY 2006) (In New York

the overpayment is a marital debt)

– Unpublished: Johnson v. Johnson, No. 45A03-1202-DR-94 (Ind. Ct. App. Jan. 29, 2013) (In Indiana overpayment was a marital debt).

17

Issues Specific to Divorce Derivative Benefits

– Due to retirement not disability

– Payable to a spouse or ex-spouse after the employee’s retirement

• Ex-spouse does not need to be retired to collect benefit.

• Irrelevant if ex-spouse is remarried

• Must have been married to employee for at least 10 years

• Cannot currently be remarried.

• Must have been divorced for at least 2 years (unless the ex-spouse is already receiving benefits).

– 42 USC § 402(b) & 416(d)

18

Issues Specific to Divorce

Derivative Benefits

– Children of retired person may receive social security benefits.

– A child will receive up to 50% of the parent’s PIA (primary insurance amount – base amount of the parent’s benefit).

– However, the child’s benefit is subject to a family maximum (150-188% of PIA for retirement benefit recipients).

19

Ways to Structure Alimony & Child Support Considering Social Security

Issues • Children can receive funds from social security for their

own disability (through SSI) or due to their parent’s disability (through their parent’s SSDI).

• The funds a child receives for their own disability (child’s SSI) should not be used to calculate a parent’s income for child support.

– A child’s income is not a parent’s income. States base child support awards based on parental income and a parent’s obligation to provide support exists despite a child’s own income.

• 59 Am. Jur.2d, Parent and Child § 77, p. 169

• Armstrong v. Armstrong, 544 P.2d 941 (Cal. 1976)

20


Issues • The funds a child receives based on a parent’s

disability (parent’s SSDI) may be factored into child support.

– 42 U.S.C. § 407 protects social security benefits from legal process is subject to an exception found in 42 U.S.C. § 659.

– Jugovich v. Jugovich, No. A08-0156, 2008 WL 4778019 (Minn. Ct. App. Nov. 4, 2008).

– Kimbrell v. Kimbrell, 884 S.W.2d 268 (Ark. 1994).

– Brown v. Brown, 849 N.E.2d 610 (Ind. 2006)

– CA Family Code § 4058 & 4504

– In Re Marriage of Daugherty, 232 Cal. App. 4th 463 (2014) 21


Issues • Depending on the state, a disabled person may want to request

that child support be reduced while a social security case is

pending.

• The majority of jurisdictions will treat back-pay as a child

support payment to be credited towards the child support

obligation (including future obligations). – Wisconsin: ___________________

– Montana: In re Marriage of Cowan, 928 P.2d 214, 220 (Mont. 1996)

– South Dakota: Crago v. Donovan, 594 N.W.2d 726, 731 (S.D. 1999)

• However, some jurisdictions will not make this credit, so if an

obligor pays the ongoing obligation while waiting to receive

social security benefits the back-pay is given as a windfall to the

obligee. – Minnesota: Floding v. Gillespie, ___ N.W.2d ___ (Minn. 2015)

22

http://scholar.google.com/scholar_case?case=14362553673628002363&q=floding+v+gillespie&hl=en&as_sdt=4,24







Issues • Since SSI is a need based program, it is treated as

public assistance when determining a party’s income for child support and is generally excluded as income for determining support.

– 42 U.S.C. § 407 protects SSI benefits from legal process and SSI is generally not subject to the 42 U.S.C. § 659 exception that applies to SSDI benefits.

– Minn. Stat. § 518A.29(h)

– Davis v. Office of Child Support Enforcement, 20 S.W.3d 273 (Ark. 2000)

23


Issues When there is a special needs child who receives SSI, the parents may want to carefully consider how child support is structured.

• Child support will reduce SSI. One third of the child support received is countable income which causes a dollar for dollar reduction in SSI.

– http://www.socialsecurity.gov/policy/docs/policybriefs/pb2004-02.pdf

• SSI is required to receive Medicaid in about 36 states.

• Option: Parents could have the divorce decree direct that the non-custodial parent pay support to a special needs trust. – For requirements see 42 U.S.C. § 1396p(d)(4)(A)

• Option: Obligor could pay child’s expenses directly to provider. 24

http://www.socialsecurity.gov/policy/docs/policybriefs/pb2004-02.pdf




Issues While a party is in the process of attempting to obtain social security disability benefits they may need to find ways to prove that income should not be imputed to them in some states.

– Minnesota statute does not directly exempt a disabled person from having income imputed to them if they do not receive social security benefits.

– Engelking v. Engelking, No. A09-2260, 2010 WL 3632479 (Minn. Ct. App. Sept. 21, 2010).

25


Issues Spousal maintenance can reduce some disability payments.

• If an obligee is receiving SSDI, spousal maintenance will not reduce the social security benefits received.

• If an obligee is receiving SSI, spousal maintenance will reduce the benefits received.

26


Issues If an obligee is receiving SSI, spousal maintenance will reduce the benefits received.

• The first $20 of spousal maintenance will not reduce the SSI amount, but all spousal maintenance above that amount will reduce the SSI benefit dollar for dollar.

• I the party receives $400 in SSI, and the party then receives $300 in spousal maintenance, then SSI would be reduced to $120 per month.

• Further, spousal maintenance is taxable to the party, while SSI is not taxable.

• How to cope?

– Increase a property award and award property that is a non-countable asset

– Direct alimony to be paid to a special needs trust. 27

Discovering & Using Information Found on Social Security Forms

• Social Security files can be a gold mine of information that

is useful in family court cases. Here are some documents

that may be found in an SSA file that may be relevant to

family court proceedings

• Due to confidentiality concerns these documents should be

provided under a Sealed Source Documents cover or a

Protective Order should be obtained, so that they do not

become public record. It is also important to analyze

whether the party has waived privilege by placing his or

her medical condition in issue 28

Possible Item in SSA File What is it? Potential Use(s)

Mental Residual Functional Capacity

Assessment Form

OMB No. 0960-0431

A form filled out by the party’s doctor

or by SSA’s medical expert assessing

the party’s mental condition, and how

it limits daily activities.

To support or undermine a spousal

maintenance claim.

To support or undermine a parenting

time or custody request.

To undermine an imputation of

potential income in a child support

case.

Physical Residual Functional

Capacity Assessment Form

OMB No. 0960-0431

A form filled out by the party’s doctor

or by SSA’s medical expert assessing

the party’s physical condition, and how

it limits daily activities.


maintenance claim.





case.

A letter written by their treating

physician on the physician’s own

stationary.

Medical opinion letter To support or undermine a spousal

maintenance claim.





case.

Request for Medical Opinion Form

(this is a form used by DHS -- DHS-

2114-ENG).

Used by social services to determine

eligibility for programs such as GA,

some parties will provide this to SSA

in support of their case.


maintenance claim.





case. 29

Possible Item in SSA File What is it? Potential Use(s)

Special Medical Examination In determining eligibility for

benefits, SSA may send a party to a

special medical examination with a

medical expert employed by the

SSA. These reports are generally

less favorable to a finding of

disability. A medical expert may

also testify at the hearing stage.

To undermine a spousal

maintenance claim.



Party’s Medical Records Medical Records To support or undermine a spousal

maintenance claim.





case.

Vocational Assessment or

Vocational Records

Some parties will have vocational

assessments as a part of their file.

There may also be records from day

treatment programs, or other social

services agency. A vocational expert

may also testify at the hearing stage

of the process.


maintenance claim.





case.

30

Structuring the Settlement Agreement

• SSDI benefits paid on behalf of the child of the disabled person are generally paid directly to the custodial parent (even if that is not the disabled party) by SSA. – See CFR § 404.2021(c)

– A custodial parent of a child receiving SSDI benefits should contact the SSA and apply to be the minor child’s representative payee. Benefits paid for children must be managed and used in a particular way, so the party should review the responsibilities of being a representative payee.

31

Social Security Legal Resources

Social security law is a form of administrative law and guidance is found primarily in the Code of Federal Regulations (CFR) – specifically Title 20, Chapter III, of the CFR, Parts 404, 405 and 416. Additionally, the Program Operations Manual System (POMS) contains the information that SSA employees use when processing social security claims. I have found POMS helpful when SSA employees have wrongfully denied a claim or limited benefits, and have cited to POMS to convince them to change their decision. The Hearings, Appeals, and Litigation Law Manual (HALLEX) is helpful in understanding some of the procedures of the social security law process. All three of these sources can be found at http://www.ssa.gov/.

32

http://www.ssa.gov/

Questions?

Karen Terese Kugler McGee Kugler Family Law

106 Central Avenue, Suite C

Osseo, MN 55369

(763) 447-6250

Email: [email protected]

Website: www.mcgeefamilylaw.com

Seth D. Kramer Law Office of Seth Kramer

4223 Glencoe Ave., Suite A225

Marina Del Rey, CA 90292

(310) 474-3030

Email: [email protected]

Website: www.la-family-law.com

33

mailto:[email protected]

http://www.mcgeefamilylaw.com/

mailto:[email protected]

http://www.la-family-law.com/



