Whether you are planning to file a personal injury claim or have won a settlement, if divorce is in the cards, you may want take a moment to learn how this money can be protected from your spouse.
Community Property vs. Separate Property
Every state has its own laws, rules, and procedures for handling assets in a divorce. In general, there will be community property and separate property. If your state identifies assets, known as a community property state, in this way, it will be important to know the difference between the two. If your state is a non-community states, the assets are considered to be equitable property and will be divided equally. It should be noted that there are currently nine community property states which are: Louisiana, Arizona, California, Texas,Washington, Idaho, Nevada, New Mexico, and Wisconsin.
Separate Property – Property owned by one spouse prior to the marriage, that was acquired through a gift or descent, and personal injury awards (not including loss of income or earning capacity).
Community Property – Property that was acquired during the marriage and owned by both spouses.
It does not matter whether the title of an asset is only in one spouse’s name. For example, if one spouse purchases a car with money earned during the marriage, it is community property even if the title of the car is in one person’s name.
Why Defining Property Matters
In general, community property is divided between both spouses during a divorce. It does not have to be equal, but rather can be anything that is considered to be just and right by the judge. Separate property can be kept by the owner during a divorce. This is why it is important to define a personal injury award or settlement as being community or separate property. If you label it as community property, your spouse will likely be entitled to a portion of it when you divorce him or her.
Can a Personal Injury Settlement Be Accessed in a Divorce?
The short answer is: it depends. If your personal injury award is community property, then yes, it may be divided by the judge between each spouse. That being said, a judge may consider the reasons for receiving compensation. For example, in a personal injury claim there are economic and non economic damages. The former may include medical costs, treatment, lost wages, and so forth. If the settlement is deemed as being community property, a judge may consider what the injured spouse will need to continue recovering from the accident.
Damages That May Be Separate Property
- Pain and suffering
- Emotional distress
- Disfigurement
- Loss of consortium
- Loss of limb
Damages That May Be Considered Community Property
- Loss of earning capacity while married
- Damages to compensate one spouse for any damages that occurred to community property
- Workers compensation and disability payments may also be considered as community property.
Final Tips for Protecting a Personal Injury Award
- Keep the award completely separate.
- Do not commingle any of the settlement with any community property (i.e. bank account).
- Make sure you let a lawyer know about the award and/or pending divorce.
- Ask your personal injury lawyer, like to be clear about what damages are communal and what damages are seperate.
If you are concerned about a personal injury award and a divorce, call a lawyer right away.
Thanks to our friends and contributors from Rispoli Law PLLC for their insight into personal injury practice.