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Is Personal Injury Compensation Considered in Divorce Settlements?

by gclatworthy on October 4, 2012

During the process of virtually all divorces, both spouses will need to decide upon how any shared assets will be divided. In most cases, shared property includes assets such as houses, vehicles and any minor children, but what many divorcing spouses don’t know is that personal injury compensation may also need to be divided, even if it was only awarded to one spouse.

Who Owns the Compensation Award?

In order to determine whether a personal injury compensation award needs to be divided or not, it will first need to be determined who owns the award. In some states, shared assets that one or both spouses obtained during the course of a marriage are considered community property. Our divorce attorney Orlando contact explains that this means that even if only one spouse was awarded personal injury compensation during the marriage, his or her spouse may still be entitled to a portion of the award during a divorce. If the spouse received the award before entering into the marriage, his or her spouse may have a harder time trying to receive a portion of the award.

Mixed Property

Depending upon the state in which the divorce is taking place, some property may also be considered mixed property. Mixed property is the term that is used when one spouse brought an asset into a marriage, but the asset then became the property of both spouses. An example of this may be where a husband receives a personal injury structured settlement before becoming married. During the marriage, both the husband and the wife lose their jobs and they both rely upon the husband’s settlement to survive. If the couple divorces, the wife may be entitled to a portion of the personal injury structured settlement, even though it was initially not considered community property.

Marital Arrangements

In some cases, a prenuptial or post-nuptial agreement is put in place to clearly spell out exactly who will receive what assets if the marriage is dissolved. These arrangements will often list the couple’s shared assets, as well as their separate assets, and in most cases, provisions will be laid out in order to describe what will happen if one spouse receives a large sum of money, such as a personal injury award. If such an arrangement is in place, the process of dividing assets, including personal injury compensation, will generally go a lot smoother, as neither spouse can contest the division. In some cases, however, a spouse who feels that he or she deserves more can move to have the agreement altered.

Hiring an Attorney

In most cases, partnering with an attorney before the divorce process begins can be helpful. An attorney can help both you and your spouse to decide upon the division of assets, including personal injury awards, in an equitable way, and an attorney can also assist you in completing the necessary paperwork to put your divorce into effect. Most divorce attorneys only work with one spouse or the other, but in situations where a divorce is uncontested and both spouses have already come to an agreement regarding the division of assets, a divorce attorney may work with both individuals.

If you’re currently considering a divorce and you’re concerned about the potential for inequality in the division of your assets, you may also want to consult with an attorney before beginning the divorce and division process. Doing so now may help you to protect your assets from being unfairly divided, and you may also be more prepared if the division becomes contested.

Author Georgina Clatworthy is a legal writer and former law blog editor, and contributes this article for the Katz & Phillips divorce attorney Orlando-based law firm.  Their attorney’s appreciate that dealing with a divorce can be stressful and will work with their clients to ensure that a fair and amicable division of assets is reached.

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