Dividing a Personal Injury Settlement in a Divorce
When working through a divorce, property division is often the most important and consuming component of the process. This process may be complicated if a personal injury settlement is involved because what can be divided in a settlement is heavily dependent on the circumstances of the case and the state legislation.
In some cases, it may not be possible to divide any of the settlement, whereas in others only certain parts may be subject to division. It all depends on what and how much of the settlement is considered communal property.
Communal property is considered by many states to be any property, assets or earnings acquired during a marriage, meaning they are subject to division in a divorce. Anything acquired prior to the marriage is considered separate, or individual property, and is not subject to division in a divorce.
In a personal injury case, compensation for different damages may be considered either communal or individual property.
Usually, but not always, compensation for damages including pain and suffering are awarded solely to the injured spouse and not subject to division. Compensation for lost wages or property damage may be considered community property.
For some states, a personal injury settlement is considered communal property. Other states consider some components of the settlement to be communal, and others to be separate property. In addition, states differ on how they divide communal and separate property, meaning that a personal injury will vary greatly from state to state.
Community Property States
In a divorce settlement, a community property state equally divides all communal property between both spouses. So, in a community property state that considers a personal injury settlement to be communal property, the whole settlement is equally divided. Other communal property states will equally divide only the components of a settlement that are considered communal property.
The Equitable Division States
Majority of states follow the equitable division approach, which divides all communal property in a divorce fairly, rather
than equally. Equitable division states vary in how they treat personal injury awards. Whereas some equitable division states may consider the whole settlement as communal property, others, such as New York, consider the settlement to be separate property belonging only to the spouse awarded the settlement. In cases where some or all of the settlement is considered divisible, the communal components will be divided in a way the courts think is fair. So, if the spouse initially awarded the settlement has significantly more separate property, then the court may award a majority of the communal assets of the settlement to the other spouse.
There may be exceptions to these guidelines if:
- The personal injury settlement happened outside of the marriage
- The settlement money was commingled with marital assets
- The settlement award is specifically allocated early on
As it may be evident, the division of a personal injury settlement in a divorce is mostly dependent on what state you live in, and the circumstances of your case and marriage. Hiring an experienced personal injury and/or divorce lawyer, like personal injury lawyer Fort Lauderdale FL trusts, in your area will be beneficial in understanding and navigating your specific case.
If you have a question about divorce in Arizona, please call to speak to one of our experienced Scottsdale divorce and Phoenix Arizona attorneys at (480)305-8300.
Thanks to our friends and contributors from Needle & Ellenberg, P.C. for their insight into personal injury settlements.
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