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What Happens to a Personal Injury Award in a Divorce?

Personal injury lawsuit awards are often treated differently in a divorce, depending on the state. However, most states use an analytic approach that usually evaluates each component of a personal injury award based on what is being recovered. At least a portion may be considered community property and included in all assets. Liabilities are also divided in a divorce case, so the amount of debts accumulated associated with the lawsuit may also be calculated in the final divorce decree. Many times the question can also include marital status at the time the injury occurred, even though the settlement was paid after the marriage. This settlement could easily be considered by the court in an equitable distribution state as personal property of the injured party.

Community Property

In a community property state like Arizona or California, all income during the marriage is considered community property. 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. In many cases, New York treats all personal injury settlement funds as separate property. In general, most states will only include any funds received during a marriage.

Loss of Income

Income is almost 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 may be an itemized component of the lawsuit settlement as well, and will also be community property.

Property Damage

Property damage awards are usually dependent on who actually owns the damaged property. This is commonly a component of an auto accident case. 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, and 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. It can be incredibly helpful to consult with your car accident lawyer to determine how your current property damage settlement structured before moving forward with your divorce

Pain and Suffering

Pain and suffering is a non-economic compensatory damage that normally only applies to the injured party, but there is an exception to this classification when the final injury settlement also 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 the damages actually cover.

Long Term Physical Medical Funds

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.

It is easy to see the necessity for having experienced and effective personal injury lawyer in both a personal injury case as well as a divorce case. Settling the assets and liabilities can become complicated easily; and often leaves ample points of contention if the divorce case settlement gets intricate.  If you’re involved, or have ever been involved in a personal injury claim and are now are in the process of a divorce, it may be in your best interest to reach out to an attorney that will defend you rights.

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

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