If you’re getting divorced and you — or your spouse — has received a personal injury settlement in the past, it’s important to stay mindful of how this settlement could affect your divorce proceedings. Each state has legislation that determines how personal injury awards are divided up in a divorce. Most states use a comprehensive approach that evaluates each component of a personal injury settlement in order to determine which components may be considered communal property.
Part of a personal injury award may be considered community property, just like other assets that the couple owns together.
What is community property in a divorce?
In community property states, all income acquired during the marriage may be considered the property of both spouses, even if one spouse was the primary earner. Many states consider personal injury settlements (or portions of a settlement) to be community property. In some states, however, the final allocation of assets — including the allocation of personal injury settlement funds — may be treated as separate property.
In order to understand how a personal injury settlement could affect communal property divisions in a divorce, it’s important to consider the types of damages that were awarded in the settlement:
1. Pain and Suffering
Pain and suffering is often considered to be a non-economic compensatory damage that acknowledges the validity of an injured victim’s pain and suffering. Damages awarded for pain and suffering are typically considered to be individual property that apply only to the accident victim, rather than to the victim and his/her spouse.
2. Compensation for Medical Treatment
In divorce proceedings with a skilled divorce lawyer Peoria IL trusts where one spouse is permanently or substantially disabled, this individual may have been relying on his or her partner for ongoing medical care and support. All lawsuit damages that address medical needs are normally considered to be personal property of the injured divorcee, and not the communal property of both spouses. The exact division of property in this case may vary depending on the details of the injury settlement and the extent of the injuries. It can also be largely dependent on the actual structure of the settlement as stated in the final injury damage recovery agreement.
3. 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.
It is easy to see why it may be beneficial to hire an experienced and effective personal injury lawyer if you’re dealing with a personal injury case, but it might come as a surprise that a personal injury lawyer could also be helpful in a divorce case. If you have ever been involved in a personal injury claim and you’re now involved in a divorce, it may be in your best interest to reach out to an attorney that will defend your rights.
Thanks to our friends and contributors from Smith & Weer, P.C. for their insight into divorce and personal injury awards.