As a law firm who practices both personal injury cases and divorces, we know that people going through a divorce are concerned about their assets and how the assets will be divided in a divorce. A common question for those who have been involved in a car accident case, or any other personal injury case is what happens to the personal injury settlement check? Is that considered part of the community property and will your spouse get any of it? The answer will depend on which state you live in.
There are two approaches to the division of personal injury claims in a divorce: the Community Property Approach and the Equitable Division Approach.
There are 9 states that follow the community property approach of the division of personal injury settlements in a divorce. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin all follow the community property approach. In these states, depending on the way personal injury settlement is awarded, the money is generally considered community property if it is rewarded for lost wages, and separate property if rewarded for pain and suffering.
Even if you live in a state that follows the Community Property Approach to the division of personal injury settlement and the fund distributed are for your pain and suffering and considered separate property according to your state’s laws, if you commingle the funds to an extent that will prevent a court to clearly differentiate what portion of the commingled funds are separate property, your separate portion of the personal injury settlement may still be considered community property and divided equally with your spouse. For example, money received for pain and suffering as a result of a broken arm that was eventually put in a joint account, and used to purchase items or to make improvements on the marital home may still lead to the items purchased or improvements in the marital home to be considered as community property. Because the party asserting a separate property claim generally has the burden to prove that property is separate and not community, it is important to always be careful how you handle your personal injury settlement.
Most states other than the 9 listed above follow the Equitable Property Approach to the division of personal injury settlements in a divorce. In these states, the division of a personal injury settlement is considered on a case by case analysis and what is fair for both parties.
If you live in California or New York, those states have their own rules. In California, all of the settlement is often considered community property and in New York, the exact opposite is true.
If you are looking for a great divorce attorney have any further questions or concerns about your divorce process and how your personal injury settlement may be divided in a divorce, contact a divorce lawyer in North Houston today.
Thanks to our friends and contributors from A.T. Law Firm for their insight into division of personal injury settlement in a divorce.