Hi all, my girlfriend is separated from her husband, and is also on long-term disability with one of the big 5 banks. She’s been on it long enough that it’s paid out partially by the insurance company and partially by CPP (not sure if that’s the same as CCPD).
When she eventually goes through the separation and divorce process, she will be asking for spousal support and will most likely receive it. If that happens, will she need to claim it with her employer? Could it affect her LTD or even the CPP portion? She is very afraid of this being the case as one lawyer told her this could happen. Does it depend on the insurance company? Any ideas for how we could confirm this, if it varies from company to company?
It all depends on what her LTD policy/contract states. She needs to get a copy of her master policy to find out if spousal support is considered earned income. I’m surprised her lawyer didn’t know this, as this is contract law 101. From the experienced lawyers I have spoken to spousal support very rarely will reduce LTD or CPP-D payments…HOWEVER there is very big but…
BUT…If the ex spouse has a remotely competent lawyer then LTD and CPP-d payments absolutely will be used to reduce or eliminate her spousal support payments as per the formulas the courts use to determine spousal support.
One extreme example is my good friend (he’s retired with low-ish income ) recently found out his much younger ex wife was finally approved for LTD payments. The resulting calculation by a judge not only eliminated his need to pay his ex spousal support, but now she must pay him a small monthly spousal support because her after tax income is now higher than his retirement income.
Hi, thank you so much for your reply! I didn’t see it until now. I like the suggestion of reviewing her LTD master policy.
As for the example given, I don’t think that should be a problem. Her soon-to-be-ex works for a municipal government. The caveat could be if his lawyer successfully argues we are common-law and our combined income affects things. However, we’ve been trying to keep our finances separate.
Anyway, I’ll ask her to get a copy of the LTD policy, or whatever policy covers LTD.
Yes getting the master policy is always a good idea.
Also make sure you have your ducks lined up before she applies for spousal support and get experienced legal advice. If you have been living together for over a year your income will be included in the spousal support calculation, and if your combined income (including her LTD payments) is similar to his income he’ll have no problem avoiding paying spousal support if he has a remotely competent lawyer.