Is a Personal injury Settlement Part of Marital Property During a Divorce?

It’s one of the first questions someone involved in a personal injury case has when they are divorcing – will the proceeds have to be divided with my divorcing spouse? It’s a good question and there are a number of answers. In short, it all depends.  

Crystal Collins Spencer can answer your questions in a personal or remote consultation. One conversation can make a tremendous difference in the outcome of your divorce, and in the direction that you take to protect your assets.

Divorce in Florida

Florida is an equitable distribution state. That means any division of assets does not have to be equal, but the distribution does have to reflect the degree of contribution to a marriage.

In other words, the nonworking spouse has made a valuable contribution to the marriage in childcare, for example, so that will be considered in lieu of a salary.

The court makes decisions about equitable distribution unless the partners make the decision for themselves.

Marital Property

All assets brought into the marriage are considered to be “marital property,” but there are exceptions. In the case of inherited wealth, directed to one spouse, and deposited in that person’s bank account, that spouse alone would usually receive those assets.

Personal property attained before the marriage and in one name will generally remain that individual’s possession. In the case of a personal injury settlement, the monies can be substantial. 

In the case of a car accident, not only was your car destroyed but you have serious medical bills and rehabilitation ahead. A settlement is reached with the negligent at-fault party and you are awarded $500,000. After paying your attorney you still have substantial amount sitting in your bank account.

Do you have to divide that with your spouse who you are divorcing? Generally, if you are awarded before the divorce decree is final, it could be a marital asset. But there are situations where it must be divided.

Dividing a Personal Injury Award or Settlement

The settlement is usually considered marital property unless it has been itemized and can be divided into past losses versus future compensation. Negotiating itemization may be part of your lawyer’s advocacy on your behalf.

Most settlements are not itemized, but if they are, they may be divided along these lines:

Past Losses – The dollars set aside to pay medical bills out of a joint account or to compensate for lost income in the past may be part of the marital estate.

Future Losses – The amount of the settlement designed to compensate the injured for his/her pain and suffering (a non-economic damage) and his/her future loss in income might not be divided as they are personal property, intended to compensate the victim alone.

Loss of Consortium – The non-injured party may make a successful argument that he or she should be compensated for loss of consortium (companionship) as a result of the accident.  When the non-injured spouse joins the lawsuit and files a claim for loss of consortium, if successful, it would be directed to benefit that individual alone.

Exceptions – Comingling of funds may present an extra layer of difficulty in dividing the settlement. For example, if some medical bills were paid out of the joint account where the settlement was deposited, the non-injured party can claim that she/he should be compensated for paying part of the bills out of the joint account. In some cases, your lawyer may need to trace the settlement money to answer how much of the settlement was used to pay bills and therefore should be reimbursed.

Your Florida Divorce Attorney

There may be a lot of money in question following a personal injury settlement, and dividing assets in a divorce is not always clear cut. Early in the process, you are advised to have an experienced advocate by your side.

Crystal Collins Spencer has spent more than 30 years fighting and advocating for spouses during a divorce. Having aggressive representation may mean you are ultimately awarded more property during your divorce than you would have had you gone it alone.

You only have one chance to make it right. Do not have regrets. Call our Pensacola or Sandestin office at 850-795-4910 to begin the conversation.