Question: I am 46 years old and my wife is 42. We have two children, ages 13 and 11. During our divorce proceeding, I suffered a stroke that left me disabled. Fortunately, I had been paying for a long-term disability policy that will provide 60 percent of my prior income ($5,400 monthly) with offsets for Social Security Disability that I have applied for until I turn 65. In addition to my 401(k) plan and my wife’s state retirement, we have some investments and savings, along with our home and cars that are subject to debt. My wife’s income (she is a teacher) is nearly $4,000 monthly.

The hearings were suspended while I was getting rehabilitation, but now my wife’s lawyer wants the judge to value my disability payments as an asset and divide them as property because the premiums were paid from money we earned during our marriage, and I became disabled before we were divorced. My lawyer tells me this might happen, but it doesn’t sound fair to me because it will mean that my wife will get most of the assets, and I will be left mainly with reduced income for 19 years.

Answer: If you live in one of the states that ascribe to the minority rule – including Arkansas, Colorado, Illinois, Indiana, Maryland or Minnesota -- you might have a problem.

However, the courts in the majority of states generally rule that disability benefits such as yours are not marital property even though premiums were paid with marital funds. Instead, disability benefits are considered to be a replacement for lost earning capacity and, therefore, a replacement for your lost income.

We agree that it would be totally unfair to you to value these benefits as property. But remember this good news: when you become eligible for Social Security Disability, your children will be entitled to a benefit while they are under age.

Question: My wife and I are involved in a nasty split that involves our pensions and property. I believe that our house, which we built on a lake 20 years ago and which has appreciated greatly, should be sold so we can take advantage of the capital gains exclusion for couples. From the equity, we can each purchase another home. However, my wife loves the house and wants it on her side of the ledger. This means that our largest asset will go to her, and I will have to dig into my retirement and incur taxes if I ever hope to buy another home. Since there are no other assets of this magnitude that can be sold, and since we put everything we had into our home, this does not seem fair.

Answer: While consideration of the taxation of future events and sales is generally considered speculative, if there are clear tax benefits and detriments, the courts can order sales to accomplish these benefits or avoid detriments. In these situations, however, there must be sufficient evidence before the judge to present the reasons why the tax implications should be considered. Generally, this evidence must come from an expert such as a certified public accountant.