Article written by Attorney Brittani Pelissier
As seen in the Spring 2026 Issue of New Hampshire Trial Lawyers Quarterly
Workers’ compensation and family law don’t usually overlap. Until they do.
A client is injured at work and begins receiving weekly indemnity benefits. Maybe there is a lump sum settlement on the table. Maybe they are partially disabled and trying to return to work. Maybe Social Security Disability is also in play. At the same time, they are going through a divorce or dealing with a parenting matter involving child support obligations. And that’s when the questions start.
Are workers’ compensation benefits considered income? Can they be divided in a divorce? Can they be garnished for support purposes? What happens when the client’s earning capacity changes? How do you deal with a client who is partially disabled, but not completely out of work?
In New Hampshire, workers’ compensation benefits can function as income, property, and evidence of earning capacity all at once, and how those benefits are treated depends entirely on the context. Importantly, the same dollars may be treated differently depending on whether the court is addressing support, property division, or both.
This article is meant to bridge the gap by breaking down how workers’ compensation benefits are treated in child support, alimony, and property division cases and by highlighting the practical issues that tend to come up when these cases overlap.
Child Support
Workers’ Compensation as Income
Under RSA 458-C:2, IV, “gross income” includes “all income from any source . . . including . . . workers’ compensation . . . benefits.” There is no working around this language. If your client is receiving weekly indemnity benefits, whether temporary total or partial, those payments are going to be included in the child support guideline calculation under RSA 458-C:3.
From a workers’ compensation perspective, it helps to understand what those weekly payments actually represent. Under RSA 281-A, indemnity benefits are wage-replacement benefits tied to the employee’s average weekly wage (AWW), as calculated under RSA 281-A:15. Temporary total disability (TTD) benefits are paid pursuant to RSA 281-A:28 when the employee is unable to work at all, while temporary partial disability (TPD) benefits under RSA 281-A:31 apply when the employee has returned to work but is earning less because of the injury. Diminished earning capacity (DEC) benefits, as defined under N.H. Admin. Code Lab 510.03 and authorized pursuant to RSA 281-A:48, may also apply where an employee’s ability to earn has been reduced due to the injury. All of these benefits are designed to replace lost earning capacity, which is precisely why they are treated as “income” under RSA 458-C.
The New Hampshire Supreme Court has also made clear that lump sum recoveries count as “gross income” for child support purposes. In re State ex rel. Taylor, 153 N.H. 700 (2006). In In re Taylor, the Court specifically noted that “the child support guidelines treat lump sum workers’ compensation settlements as gross income’” and therefore held that it would be inconsistent to treat lump sum personal injury settlements any differently. 153 N.H. at 705. The Court also made clear that funds may be treated as income for child support purposes even if they are treated as property in another context. Id. at 705-706. This becomes especially important when both child support and property division are in play.
Treatment of Lump Sum Recoveries
While lump sum settlements are included as income, the more practical issue is how they are treated. In In re Taylor, the trial court prorated the obligor’s lump sum recovery over his remaining life expectancy to calculate a monthly support obligation. 153 N.H. at 702. The Court held that this approach was within the trial court’s discretion when supported by findings of special circumstances. Id. at 709. The Court distinguished between impermissible “income averaging” and permissible prospective allocation of a lump sum recovery, recognizing that a one-time payment may represent long-term lost earning capacity. Id. at 707-708.
That discretion is not automatic. Before the trial court can prorate, it must make a written finding under RSA 458-C:4, II that strict application of the guidelines would be “unjust or inappropriate” due to special circumstances. In In re Taylor, the trial court’s written finding that the obligor had received a substantial settlement and faced uncertainty about future employment due to permanent disability was what allowed the court to allocate the funds over time. Id. at 709. Without that finding on the record, no deviation from present-income guidelines is permissible.
As a practical tip, the real issue is not whether a lump sum is included, but rather how it is structured for support purposes. In appropriate cases, you should be prepared to argue for allocation over time rather than treating the full amount as immediately available income. And you need the medical evidence to back up that argument. Functional Capacity Evaluation (FCE) reports, Independent Medical Examination (IME) reports, vocational assessments, and DOL filings from the workers’ compensation file will be central to making or defeating the special circumstances finding.
Workers’ Compensation Benefits Can Be Garnished for Support
Workers’ compensation benefits are generally protected from assignment under RSA 281-A:52. But there is an important exception: they can be used to satisfy child support obligations. RSA 281-A:52, II explicitly allows enforcement of child support against compensation awards, and New Hampshire law treats workers’ compensation payments as “income” for purposes of income assignment under RSA 458-B. See RSA 458-B:1, IX.
That said, garnishment limits still apply. Under the Consumer Credit Protection Act (CCPA), as applied by the New Hampshire Supreme Court in Ctr. for Gastrointestinal Med., Inc. v. Willitts, wage assignments for support generally cannot exceed 50% of disposable earnings when the obligor is supporting another dependent.137 N.H. 67, 69 (1993). The Court made clear this cap applies regardless of fault. Id.
So, while support obligations have priority, they are not unlimited.
Before seeking or challenging a wage assignment against workers’ compensation benefits, it’s worth calculating the obligor’s actual weekly disposable earnings and confirming whether the 50% or 60% cap applies. A support order that exceeds the CCPA cap is reversible error under Willitts, but the underlying support obligation remains. Enforcement simply must proceed through other available remedies, such as contempt and attachment of assets.
Future Earning Capacity and Imputed Income
Child support is not just about current income. It’s also about the ability to earn. Workers’ compensation claims often involve reduced earning capacity, but that reduction is not always total or permanent. A claimant may not be able to return to their prior job but may still be capable of some level of work. That distinction becomes critical in child support cases.
A common scenario is a partially disabled claimant receiving benefits but capable of some limited work. At that point, the family court must decide whether to rely solely on workers’ compensation benefits, or whether to impute additional income. Under RSA 458-C:2, IV(a), courts may impute income if a parent is voluntarily unemployed or underemployed, “unless the parent is physically or mentally incapacitated.” The key question therefore becomes whether the reduced income reflects a legitimate medical limitation, such that the parent is “incapacitated”, or something less than that.
Here, the workers’ compensation file becomes critical. Medical records, Workers’ Compensation Medical Forms (Form 75 WCA-1), IME reports, FCE reports, vocational assessments, and DOL forms will often be central to that determination. In family cases involving an underlying workers’ compensation case, you should be making targeted discovery requests to obtain these materials and get the information needed to determine the claimant’s true disability and earning capacity.
Modification After Injury or Return to Work
Workers’ compensation cases are dynamic, and child support orders need to track real income. Under RSA 458-C:7, child support can be modified any time upon a showing of a substantial change in circumstances. Going out of work on TTD, returning to work at reduced wages, or resolving a workers’ compensation claim, whether through settlement or a return to full duty, can each constitute a sufficient change in circumstances to justify modifying a child support order. You should be ready to move quickly whenever a workplace injury causes a material change in the obligor’s income, or when improvement in the obligor’s condition enables a return to work. Build the evidentiary record with evidence from the workers’ compensation file to establish the current earning-capacity picture for the court.
Interplay with Social Security Disability (SSDI)
In more serious cases, workers’ compensation benefits may overlap with Social Security Disability Insurance (SSDI), which adds another layer.
On the workers’ compensation side, the New Hampshire Supreme Court held in In re New Hampshire Youth Development Center, that entitlement to SSDI eliminates an injured worker’s right to statutory cost-of-living adjustments (COLAs) on workers’ compensation benefits. 152 N.H. 86, 687 (2005). In family law practice, this matters because a workers’ compensation obligor’s expected benefit stream may not increase over time as projected once SSDI is in play. This should be accounted for in any long-term support or alimony calculation based on the obligor’s workers’ compensation income.
On the child support side, New Hampshire law allows dependency benefits paid to a child because of a parent’s disability to be credited against the parent’s child support obligation. In In re Angley-Cook, the Court held that Social Security retirement dependency benefits received by the custodial parent on the child’s behalf should be included in the noncustodial parent’s gross income for guideline purposes and then credited against the support obligation. 151 N.H. 257, 268-260 (2004). The rationale is straightforward: those benefits derive from the contributing parent’s own earnings history, they are payable directly for the child’s benefit, and they function as a practical substitute for child support.
In re Taylor extended In re Angley-Cook to SSDI disability dependency benefits, holding that an obligor receiving SSDI is entitled to a dollar-for-dollar credit for the monthly SSDI benefit paid directly to the child. 153 N.H. at 709-710. That rule does not, however, extend to Supplemental Security Income (SSI). In In re Lister, the New Hampshire Supreme Court declined to apply the same credit because SSI is means-tested and based on the child’s own disability and needs, not the parent’s earnings.
Thus, when SSDI is involved, you need to look at the entire benefit structure, not just the workers’ compensation payments in isolation. Confirm whether SSDI dependency benefits are flowing directly to the child, distinguish SSDI from SSI, and confirm whether SSDI entitlement has suppressed workers’ compensation COLAs that would otherwise factor into the income picture.
Alimony
Alimony in New Hampshire is governed by RSA 458:19‑a and focuses on the requesting party’s demonstrated need and the other party’s ability to pay, along with factors like the length of the marriage; the parties’ age, health, occupation, amount and sources of income, vocational skills, and employability; and the property awarded under RSA 458:16‑a.
Workers’ compensation benefits are part of the income analysis and inform the court’s assessment of both current ability to pay and future earning capacity. In alimony cases, the distinction between temporary incapacity and long-term disability becomes critical. A short-term injury may justify temporary relief. A permanent or long-term disability is far more likely to support a final alimony award or a lasting change in alimony obligations. Keep in mind that RSA 458:19‑aa establishes statutory guidelines for the amount and duration of alimony and authorizes deviations upon written findings tied to the statutory factors. Any calculation that relies on workers’ compensation income should be reconciled with those guidelines and findings requirements.
Good Faith Inability to Work vs. Voluntary Underemployment
This is where credibility matters tremendously. Courts will look closely at whether a party’s inability to work is legitimate and supported by medical evidence or exaggerated and/or inconsistent with other evidence. If your client is claiming total disability in a workers’ compensation case while simultaneously engaging in activities that appear to demonstrate they’re capable of working, you can expect that to come up in the family case.
Again, the workers’ compensation file will be central here in either supporting or rebutting claims about earning capacity. If you represent the injured party, use that record proactively to document the real-world limitations on earning capacity. If you represent the other side, use the same record, along with surveillance evidence, IME findings, and any return-to-work offers, to support the argument that income should be imputed.
Modification Standards
Alimony modifications require a substantial and unforeseeable change in circumstances. A workplace injury or recovery may constitute a substantial change in circumstances, but modification is not automatic. The Court will evaluate the severity of the injury, the duration of disability, the likelihood of recovery, and the injured party’s efforts to mitigate their income loss. Workers’ compensation status alone is not enough. The court is looking at the real-world impact on actual earning capacity.
Sequencing: Property First, Then Alimony
In New Hampshire, the trial court must first determine and equitably distribute marital property under RSA 458:16-a before turning to alimony. The alimony analysis then accounts for what each party received at the property stage. Matter of Cohen, 172 N.H. 78, 83 (2019), makes this sequencing explicit. In Cohen, the trial court erred by classifying employment-related benefit payments as income for alimony purposes when they should have been treated as marital property subject to equitable distribution. Id. at 91. The Supreme Court vacated and remanded, requiring the trial court to first divide the property and then recalculate alimony accordingly. Id. at 94.
In the workers’ compensation context, the same risk arises when a lump-sum settlement is received and retained during the marriage: it is simultaneously marital property subject to distribution and a source of income for support purposes. A court that counts the same settlement as income for alimony without first addressing it as property, or awards it as property without adjusting the income picture, may be double counting the same asset. Make sure the record shows the court analyzed both frameworks in sequence and without duplication.
Property Division
Workers’ Compensation Settlements as Marital Property
Under In the Matter of Heinrich & Heinrich, workers’ compensation proceeds received during the marriage are marital property subject to equitable distribution under RSA 458:16-a, regardless of what they are meant to replace. 164 N.H. 357, 363 (2012). Thus, timing is everything and can significantly affect how a settlement is treated. In Heinrich, the settlement was received one day before filing for divorce, and it was still determined to be fully divisible. Id. at 358.
New Hampshire courts apply what is called the “mechanistic approach”. Id. at 361. If the award or settlement was acquired during the marriage, meaning before the decree of divorce or legal separation, it is martial property subject to equitable distribution. The Heinrich Court expressly rejected the “analytical approach” used in other jurisdictions, under which courts apportion proceeds between the portion replacing pre-divorce marital wage loss and the portion replacing post-divorce earnings. Id. That approach, the Court explained, does not fit New Hampshire’s statutory scheme, which subjects all property of divorcing parties to distribution “without regard to title, or to when or how acquired.” Id. The purpose of the award, whether it was meant to compensate for lost wages, medical expenses, or permanent impairment, is irrelevant to classification. It all goes into the marital estate if received before the decree.
This should raise a red flag for practitioners. The difference between settling before filing and after the divorce is final can drastically change the outcome. Under RSA 458:16-a, courts have broad discretion. Timing shapes the argument, but the mechanistic rule makes the classification question binary: in or out of the marital estate turns solely on when the proceeds were received.
Allocation Arguments Still Matter
Allocation arguments still have practice value. Not all components of a workers’ compensation settlement are the same. Depending on the type of settlement (i.e., lump sum settlement vs. non-compensable settlement), a settlement may include wage replacement, medical benefits, and compensation for permanent impairment. While you cannot exclude any portion from the marital estate based on its purpose, those components can still matter at the distribution stage.
Permanent impairment awards are arguably more personal in nature, as they compensate for loss of bodily function rather than lost income. That distinction can support an argument for unequal division. That argument must be made through the RSA 458:16-a, II factors, not through re-characterization of the asset as non-marital property. The court has the discretion to consider the parties’ employability, future needs, and economic circumstances when dividing the marital estate under RSA 458:16-a. So, while you may not be able to exclude portions of a settlement outright, you can still argue for unequal division, or frame certain components (like impairment or future medicals) as affecting future need under the RSA 458:16-a, II factors.
Medical Components
Future medical benefits are not income and are not easily divisible, but they still have value, particularly in settlement negotiations, and should not be overlooked. If a non-compensable settlement closes out future medicals, the claimant assumes future risk, and the settlement value presumably increases. That increase in value may be subject to division. So even though medical benefits themselves are not “income,” they directly affect valuation of the martial estate.
Practical Considerations
Workers’ compensation benefits do not exist in a vacuum. When family law enters the picture, those benefits take on multiple roles at once—income, property, and evidence—and the Court will analyze the benefits differently depending on the issue(s) in front of it.
New Hampshire law provides some clear guideposts. Workers’ compensation benefits count as income for child support and can be garnished for support obligations, subject to federal limits. Settlements received during the marriage are marital property subject to equitable distribution. Social Security Disability dependency benefits must be credited against child support, and courts must sequence property division before alimony to avoid double counting the same asset.
Beyond that, these cases are highly fact-driven. Timing, the type of benefit, and the supporting medical and vocational evidence can all materially affect the outcome. And positions taken in one forum will not stay there. Workers’ compensation files, including medical records, expert reports, and sworn statements, are fully discoverable in family court, and inconsistent claims about disability or earning capacity can quickly undermine credibility.
From a practical standpoint, attorneys should approach these cases with a coordinated approach. That means obtaining and understanding the full workers’ compensation file, understanding the benefits that are at issue, paying close attention to timing, and thinking early about allocation and future earning capacity. It also means ensuring compliance with garnishment limits, properly crediting SSDI benefits, sequencing property and alimony analyses correctly, and anticipating the need for modification as circumstances change.
At the end of the day, success in these cases comes from recognizing early that you are not handling two separate matters. You are handling one case with overlapping legal frameworks that need to be addressed together.
