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On Behalf of | Feb 27, 2015 | Settlements

Personal Injury Settlements

I am not a divorce attorney or tax attorney so usually when these type of questions are asked – I tell my clients to consult those experts. Nevertheless, I found this blog educational and informative. I hope our clients and potential clients will find the information useful too.

Diane L. Danois, J.D., recently posted a blog to the Huffington Post on what happens to a personal injury award or settlement when the injured plaintiff divorces. Ms. Danois says it depends. It depends on whether you live in a community-property or equitable distribution state. It depends on how the money was allocated in the award or settlement. It depends on the date of the accident, the date of your separation or the date of your divorce. How a personal injury award or settlement is treated in the context of divorce is highly fact-dependent. The question is always why or why not the money should or should not be treated as a marital asset. Some of the criteria may include an analysis of the damages themselves, for example, whether the damages were for pain and suffering, lost wages, loss of companionship, or damages to property. There are a number of different approaches to distinguishing personal injury settlements or awards as marital versus non-marital assets. These approaches are also considered in the context of where the divorcing couple resides. Florida is an equitable distribution state, unlike California which is a community property state. Equitable distribution means that marital assets are divided equitably according to the couple’s financial circumstances – not necessarily 50-50. All property acquired by either spouse during the marriage is presumed to be marital property unless it was acquired through a narrow set of conditions prescribed by statute. For example, some courts have taken a very straight-line approach, treating any personal injury award or settlement as “personal,” belonging solely to the individual injured spouse as non-marital, not subject to division in divorce. Some courts, on the other hand, have taken a more analytical approach by separating each and every element of a particular damage, and assessing whether it should fall into a non-marital or marital asset category. This meticulous approach gives significant weight to fairness of the division of property.

Where does this leave you? 3 Ways You Can Try to Protect Your Personal Injury Award or Settlement from Your Divorce

1. Specifically allocate the damages claimed to distinguish what is “personal” versus “marital;”

2. Advise your personal injury attorney early-on regarding the likelihood of divorce and the need to engage or consult with a family lawyer regarding the rules in your state; and

3. Maintain an individual, separate bank account to deposit any proceeds and do not commingle those assets until issues of equitable distribution are resolved.

Even with this information, we at Brannon & Brannon would encourage you to consult a family law attorney for advice prior to settlement or a verdict.

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