Settlement in a Divorce

Ways To Protect Your Personal Injury Settlement in a Divorce

People who have suffered significant injuries in a personal injury incident rely on their monetary compensation awards to cover things such as property damage, medical expenses, rehabilitation costs, lost wages and earning potential, and more. Financial compensation from personal injury accidents can come in different forms, such as a personal injury settlement.

If you and your marital partner are going through a divorce, you may assume that your personal injury settlement is your property alone. After all, you were the victim, and you endured all the pain, suffering, and trauma from the accident. Most likely, your spouse wasn’t even there when it happened. However, some states in the nation require that all property shared by the couple should be divided.

Marital property vs. non-marital property

Unfortunately, there is no hard and fast rule on how a personal injury settlement or award is treated in a divorce. In the end, it depends on whether or not the funds are considered a marital asset or a non-marital asset.

For the most part, courts see personal injury damages as a means to provide compensation to the spouse who was injured. Some personal damages, such as those of emotional distress, pain and suffering, and loss of consortium, are generally considered the property of the injured victim alone and cannot be divided in a divorce action.

On the other hand, monetary awards for damages such as property damage, medical expenses, and lost wages may be considered joint marital property. This is due to the fact that both spouses were affected by the outlay of funds necessary to cover tangible expenses or the loss of the injured spouse’s income. In this instance, it is only fair for both spouses to be compensated for these financial losses.

Steps to take to protect your injury settlement

Numerous steps can be taken to protect your personal injury settlement or award in the event of a divorce. Some of these include:

►Have a separate bank account. It is critical to keep your award money in a separate (not joint) bank account intermingling monies in your joint account. If you blend your award funds with money you and your spouse can both access, then it may be classified as marital property in your divorce settlement. Thus, it is subject to equitable distribution laws in the divorce proceedings.

►Draft a pre-nuptial or post-nuptial agreement. In this legal document, you can state exemptions from marital property and can declare any personal injury award or settlement funds as a personal asset safe from being considered marital property in case of a divorce.

►Work with an attorney. If you are undergoing a divorce and navigating a personal injury claim at the same time, be sure to work with an experienced and knowledgeable legal professional. Let them know about the injury award so they can help you to protect it. The valuable legal advice your lawyer provides can lead to not having to share your award money with your soon-to-be-ex-spouse.

Monetary personal injury awards are not the only assets at risk in a divorce. To protect your assets, consult with an attorney.