In divorces involving one spouse who received a personal injury settlement, a portion of that settlement may go toward the other spouse depending on the circumstances. Even if the other spouse wasn’t involved in the case, he or she may still be entitled to an amount of the settlement.
When a Personal Injury Settlement Is Marital Property
Throughout a marriage, any property accumulated is generally considered marital property that may be equitably distributed to both spouses in the event of a collaborative divorce. Subsequently, as long as a personal injury settlement or verdict is received prior to the finalization of a divorce, that settlement qualifies as a marital asset. However, if a former spouse receives the settlement after a divorce is final, then this will go entirely to the sole recipient.
Not claiming the settlement as a marital asset may be beneficial for the spouse not involved in the case. If the amount is only considered part of the awarded spouse’s total assets, it may be possible to argue that the settlement contributes to a greater amount of wealth that warrants alimony payments from him or her. This way the other spouse may be able to receive a portion of that sum even if it isn’t considered a marital asset.
Types of Compensation That a Spouse Could Recover in a Personal Injury Case
There are three main kinds of compensation that plaintiffs in a personal injury case may be able to recover if they are injured in an accident. These include economic, non-economic, and punitive damages. Economic damages, or special damages, could include a variety of financial damages such as medical bills, property damage, lost wages, and the cost of ongoing treatment. Meanwhile, non-economic damages, or general damages, include compensation for less financially definable pain and suffering, along with loss of consortium due to damaged relationships with spouses, and other subjective damages.
In addition to economic and non-economic damages, some cases may result in the awarding of punitive damages. These damages are compensable if an at-fault party’s actions are found to warrant additional damages as a form of financial punishment for that party. The amount of punitive damages that claimants may be able to recover in personal injury cases will vary depending on the case and location.
Personal Damages vs. Marital Property
Unlike economic damages, non-economic damages such as pain and suffering, loss of consortium, and emotional distress are considered “personal” as they provide compensation for the pain and psychological distress unique to the victim. In some states, personal damages are considered different from joint assets.
Personal damages are generally considered the individual’s property, which prevents them from being evenly divided in a divorce. As a result, portions such as “loss of consortium” and “pain and suffering” don’t qualify as marital assets. On the other hand, some economic damages awarded in personal injury cases may be divisible between both spouses, including damages for medical bills and lost wages that affected both spouses while married.
If a spouse claims that a personal injury settlement is a marital or joint asset, it’s possible to claim a portion of the monetary damages, but personal damages such as pain and suffering won’t be considered a part of the joint asset. This distinction is something that attorneys may need to consider if personal injury settlements are involved in a divorce. Attorneys may be required to collect documentation that details the types of damages awarded and the total monetary amount awarded.
The potential inability to recover a portion of personal damages often makes it more ideal for the total recovery amount to be considered part of a spouse’s total assets. In these cases, the total settlement amount may count toward alimony.
When dividing property, personal injury settlements may count toward marital assets or a spouse’s individual property. To help determine how to divide this type of property, it’s often best to consult with a divorce attorney throughout the divorce process.