Opinion ID: 1359168
Heading Depth: 2
Heading Rank: 2

Heading: intent to provide retirement income

Text: (1a) In Saslow, supra, 40 Cal.3d 848, we recognized that [t]he primary purpose of disability benefits is to compensate the disabled spouse for lost earnings  earnings which would normally be separate property ( id. at p. 860). The benefits, if acquired with community funds, become community property only insofar as they are intended to provide retirement income. ( Id. at p. 861, fn. omitted.) The Court of Appeal concluded any finding of an intent during the marriage to use the disability benefits as retirement income was precluded by the fact that here, unlike in Saslow, husband had invested up to $60,000 a year in his professional corporation's tax-qualified pension plan, a plan that was worth approximately $600,000 at the time of separation and was to become available for distribution when he reached the age of 59 1/2. We disagree. Husband's investment in the pension plan did not preclude the trial court from finding the parties intended to supplement the retirement income produced by the plan with benefits from the disability insurance. The court could reasonably infer income from both sources would be required to maintain the standard of living the parties were deriving from husband's lucrative solo medical practice, particularly since further contributions to the pension plan would be cut off if he fulfilled his wish to retire at age 50. Other evidence tends to support the trial court's view, expressed in oral findings, that, prior to the parties' separation, the disability insurance in dispute was acquired and maintained out of community funds for the purpose of providing retirement income. Husband testified he hated medical practice, and wife gave testimony of husband's determination to retire by the time he was 50, no matter what happened, and of his tale of a physician who also hated medical practice and had deliberately let his back deteriorate in order to claim disability benefits. Husband's experience of hurting his back in lifting his small daughter, while it did not produce an injury significant enough to require disclosure on disability insurance applications, may have raised in his mind the possibility of following the other physician's example. Saslow, however, indicates that in apportioning disability insurance benefits between community and separate property, the court should consider the spouses' intent not only at the time the disability insurance was originally purchased, but also at the times that decisions were made to continue the insurance in force rather than let it lapse (40 Cal.3d at p. 861). Spousal intent at the latter time is especially important when a basic change of circumstances, such as the parties' separation, has intervened since the insurance was originally purchased. Here, of course, there is no indication or suggestion that husband had any intent of providing community retirement income when, after the parties' separation, he used his separate funds to renew the disability policies for additional terms.