Until recently, there hasn’t been a way to ensure divorce settlement and child support payments continue if
the person making those payments, “the Payor,” becomes totally disabled. While some people in white
collar and professional/technical jobs may have disability income insurance through work or carry
personal disability income insurance, it only insures a portion of their income, typically 40% to 60%.
Many people don’t have any disability income coverage other than Social Security. So, if the Payor
becomes disabled, it ranges from difficult to impossible to continue divorce settlement and child
support payments to an ex-spouse, “the Recipient,” on top of paying his/her own bills. The Payor’s only
option has been to file for a reduction in the obligation based on his/her current financial circumstances,
which is costly and stressful for both the Payor and Recipient.
We will refer to divorce settlement payments throughout this document. Divorce settlement payments
refer to all payments the Payor is required to make, as stipulated by the divorce decree, in addition to
child support (e.g., spousal support, private school tuition, college tuition, medical insurance premiums,
activity fees and expenses, payments to buy the Recipient out of the Payor’s business, etc.)
Most people don’t think about the impact a Payor’s disability has on the Payor…
- If the Payor petitions the court to reduce divorce settlement payments and files with the state
to reduce child support payments because his/her income has been reduced as a result of
being disabled, the Payor incurs legal fees in addition to continuing the payments while going
through the process. Even if the divorce settlement and/or child support payments are
reduced (versus eliminated), the Payor is still paying something while trying to pay his/her
own bills out of a substantially reduced income. - If the Payor has agreed to or the court has ordered “guaranteed payments,” the Payor is
obligated to make the payments regardless of his/her financial circumstances. - On top of the financial impact of a disability on the Payor, the Payor is dealing with a serious
medical issue. The Payor may not be physically or mentally able to address the ongoing
divorce settlement and/or child support payments because of the medical problem. If the
Payor has remarried, the Payor’s attorney will be forced to work with the Payor’s current
spouse, who is under a tremendous amount of stress from managing the disabled Payor’s
affairs and the financial crisis that has resulted from his/her disability. This is a nightmare for
everyone involved.
The Recipient’s financial suffering, if the Payor becomes disabled, is more obvious…
