Appellate Court Rules That A CalSTRS Disability Allowance Is Not Community Property

The case is called “IN RE MARRIAGE OF WALKER”. It is a 2012 sixth appellate district case. In it, the Court held that a CalSTRS retirement disability allowance is not community property because it replaces lost earnings during the period of post-separation, preretirement disability.

The Court wrote that the wife in the case, Elena, was not been deprived of her community property share of her ex husband, Ralph’s, service retirement by Ralph’s receipt of a CalSTRS disability allowance. Elena received her entire community property share of Ralph‟s service retirement when the domestic relations orders (DRO) “ordered CalSTRS to place her community property share of Ralph‟s service retirement (service credits, contributions, and interest) into a separate nonmember CalSTRS account, over which she has independent control. The Court notes that Ralph did not elect to receive a disability allowance in lieu of a service retirement. He was not eligible for a service retirement at the time when he became disabled, and his disability allowance will terminate when he becomes eligible for a service retirement, if not sooner if he ceases to remain disabled.”

The Court considered these facts undisputed and since the retirement income was viewed as replacing Ralph’s lost earnings while he was disabled and before he received his retirement, it was Ralph’s separate property.

The Court’s decision is a correct one. Where Elena went wrong was her failure to understand that the disability payments were not anything that Ralph earned during the marriage and it was not in any way tied to his employment service during the marriage. Simply, it was there to pay Ralph because of his disability post separation and before he was eligible to obtain his retirement benefits.

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