Guy v. Guy

Supreme Court of Idaho
560 P.2d 876 (1977)

ELI5:

Rule of Law:

Benefits from an employer-funded group term disability insurance policy are community property when the right to the benefits is acquired during the marriage as an emolument of employment. These benefits are treated as deferred compensation earned by the community's labor.

Facts:

In 1964, while employed by Litton Industries, Walter Guy became insured under a group term disability policy for which his employer paid all premiums.
Walter Guy and Elizabeth Guy began a relationship around 1965 and were validly married on October 30, 1970.
During their marriage, Walter's employer continued to pay the premiums for the group disability policy, which had no cash or loan value and was renewed for successive terms.
On June 30, 1973, while still married, Walter was determined to be totally disabled due to advanced arteriosclerosis.
Five days after his disability determination, Walter's employment was terminated, and in January 1974 he began receiving monthly disability benefit payments under the policy.
The disability payments are scheduled to continue until Walter reaches the age of 65, so long as his disability persists.

Procedural Posture:

Walter Guy and Elizabeth Guy initiated a divorce action in an Idaho magistrate court.
The magistrate court issued a judgment and decree holding that Walter Guy's future disability benefits were community property and divided them equally between the parties.
Walter Guy, as appellant, appealed the magistrate court's decision to the district court.
The district court affirmed the judgment of the magistrate court.
Walter Guy, as appellant, appealed the district court's decision to the Supreme Court of Idaho, with Elizabeth Guy as the respondent.

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Issue:

Are future benefits from a group term disability insurance policy, paid for by an employer and vesting during the marriage, considered community property subject to division upon divorce?

Opinions:

Majority - Shepard, J.

Yes. Future benefits from a group term disability insurance policy paid for by an employer as a benefit of employment are community property if the right to those benefits vests during the marriage. The court reasoned that any asset acquired during marriage is presumed to be community property. The disability benefits here were not a gratuity but a fringe benefit of employment, constituting a form of deferred compensation for community labor. The court explicitly adopted a 'source of the benefit' analysis, holding that because the right to the benefits was earned through employment during the marriage, the benefits themselves are community property. It rejected the 'inception of title' doctrine for term policies, viewing each premium payment as creating a new contract, and distinguished California's 'purpose of payment' analysis, which focuses on whether the payments replace post-marital earnings or compensate for pain and suffering.

Analysis:

This case establishes the 'source' test in Idaho for classifying employer-provided disability benefits in divorce proceedings. By rejecting the 'purpose of payment' analysis used in other jurisdictions, the court affirmed that fringe benefits earned through labor during the marriage are community property, regardless of when they are paid out. This decision solidifies the treatment of employment benefits as deferred compensation and strengthens the community property presumption for assets acquired during the marriage. It provides a clear precedent for classifying other similar employment-related benefits, such as retirement pensions and life insurance, in future Idaho divorce cases.

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