What Happens to a Personal Injury Award in a Divorce?

In divorce proceedings, personal injury lawsuit awards are handled differently from state to state. However, most use an analytic approach that evaluates each component of a personal injury award based on what damages is being recovered. At least a portion of the total award will be considered community property and included in the spouses’ combined assets.

Because liabilities are also considered in a divorce case, debts associated with the lawsuit may be considered in the final divorce decree. If the award was received before the injury victim entered into the marriage, then it may affect whether or not it’s included in the divorce settlement. A personal injury lawyer Washington DC trusts can clarify this.

In the community property state of California, all income earned during the marriage is considered community property. It is the only state using this particular model for asset division in a divorce. Liabilities are divided the same way. For most states, with the exception of states like New York, the final allocation of assets is usually more complicated. New York treats all personal injury settlement funds as separate property. In general, most states will only include any funds received during a marriage.

Income is always community property, and any income that is lost due to the accident is included in a divorce settlement. Sometimes an accident will require one spouse to provide a large amount of care when the injured spouse is immobile or unable to perform daily functions, resulting in both spouses losing income. This will be an itemized component of the lawsuit settlement as well, and will also be community property.

Property damage awards are usually dependent on who actually owns the damaged property. This is primarily only a component of an auto accident case, and the recovered damages for a personal vehicle will be personal property of the owner if the other spouse has not contributed to the purchase of the vehicle. This usually applies to vehicles purchased prior to the marriage. If clear ownership cannot be established, property damages in a settlement are often divided as community property.

Pain and suffering is a non-economic compensatory damage that normally only applies to the injured party, but there is an exception when the final injury settlement includes financial damages for loss of consortium. Loss of consortium is often filed as a separate lawsuit because the actual standing for the claim belongs to the uninjured spouse or their children. How these funds are divided will depend on how the settlement was filed and what damages are covered.

Many times in a divorce when one spouse is left permanently disabled, the other spouse will not be involved in the ongoing care of the injured former spouse. All lawsuit benefits that address future medical needs will normally be applied as personal property of the injured divorcee because of the intent of the recovered damage. Those funds are to be used in making necessary medical provisions for the disabled spouse, but this can also be largely dependent on the actual structure of the settlement as stated in the final injury damage recovery agreement.

Settling the assets and liabilities can become complicated easily and often leaves ample points of contention if the divorce case settlement is complex. It is easy to see the necessity for having experienced and effective counsel in both a personal injury case as well as a divorce case.

Thanks to our friends and contributors from Cohen & Cohen, P.C. for their insight into the effects of divorce on a personal injury award.