If you or your spouse has been awarded a personal injury settlement and are in the process of considering or getting a divorce, you may be wondering whether or not it’s considered marital property. So, is a personal injury settlement considered marital property? The answer depends on the circumstances. Your spouse may have a right to part of the settlement, but how much will depend on what type of damages are being compensated for and when the settlement is received.
Marital vs. Separate Property
When the court divides property and debts, the process is referred to as equitable distribution. When this happens, the court will classify the couple's assets as either marital or separate.
Marital assets are the assets you and your spouse obtain during the marriage. This includes investments you make and the income you earn while married. Any property used for the benefit of the marriage (even if it started out as separate property) is typically considered marital property, despite who’s name is on the title of that shared property.
The assets that you and your spouse owned before you got married, or accrued during the marriage as a gift or inheritance, are considered separate assets by the court.
Only marital assets can be divided between the spouses. Separate assets are not subject to division and will stay in possession of the original owner.
Types of Personal Injury Settlements
The following types of settlement awards are typically considered marital property and will be divided equitably between the parties:
Awards intended to provide compensation for out-of-pocket expenses and other damages, such as medical expenses or lost wages.
The following types of settlement awards are typically considered separate property and will be awarded to the original owner:
- Awards intended to provide compensation for pain and suffering. This capital will be applied to compensate for any disability, disfigurement, or debilitation sustained.
While these are the standard practices that the courts tend to follow, the classification of assets as separate or marital will still need to be proven by the party who alleges certain assets should be separate.
Each party has the opportunity to waive their right to payment if they so choose. Because of this, it may be used as a bargaining chip when negotiating other portions of the divorce.
We Can Help
If you’ve been injured due to someone else’s negligence, our attorneys are here to help. At Persinger & Persinger, L.C., we have handled countless personal injury cases, and we can help you with yours, too. Don’t hesitate to contact our office with your case right away.