Opinion ID: 2155826
Heading Depth: 3
Heading Rank: 1

Heading: Wage Replacement Component

Text: [¶ 12] The wage replacement component of a workers' compensation benefit is designed to replace earnings lost to the employee resulting from a work injury. Cummings, 540 A.2d at 779. When those benefits are received as weekly or periodic compensation, they are treated as ordinary earnings for purposes of a marital property analysis. See id. If received during the marriage, they are marital property. Id. When received after the marriage, they are not included in the marital estate. Id. at 780. [¶ 13] A more complex analysis may be necessary when the benefits are received, not in the form of periodic compensation, but in a lump sum award. As always, the analysis must start from the understanding that when the lump sum award is received during the marriage, it will be presumed to be marital unless proved to be otherwise. [9] That proof may be accomplished by demonstrating that the award is intended to compensate the recipient for earnings that would not have accrued during the marriage. See id. [¶ 14] Washburn received the lump sum award in November of 1994. The divorce judgment was entered on January 5, 1999. Washburn offered evidence that, in allocating the award, the hearing officer assumed that Washburn had a life expectancy of 31.1 years. From the hearing officer's allocations, the court concluded that the wage replacement component was intended to compensate Washburn for lost earnings throughout his remaining lifetime, that is, from receipt of the lump sum award in November of 1994 through approximately November of 2025. [¶ 15] The court found that Washburn met his burden of proving that part of the wage replacement component was not marital property because it represented earnings that would have accrued to Washburn after the divorce. The court therefore apportioned the wage loss component between the years of marriage and the post-divorce years through 2025, using the date of the divorce judgment as the end point of the marriage. The marital component of the wage replacement was determined by applying the ratio of marital years (4.1 years of marriage following receipt of the award  November 1994 to January 1999) to Washburn's life expectancy as of November 1994 (31.1 years). That ratio yielded a marital property component of approximately 13%. [¶ 16] In sum, the court determined that the amount of the wage replacement award attributable to the time after the receipt of the lump sum award during which the parties remained married was marital property and that the remaining amount represented wage replacement for the years following the divorce. Because Washburn's post-divorce earned income would be nonmarital property, wage replacement for those earnings would similarly be nonmarital. We find no error in the court's application of the law to the wage replacement component. The court correctly allocated replacement for marital earnings to the marital estate and set aside replacement for nonmarital earnings as Washburn's separate property. [10]