How does My Divorce Impact My Personal Injury Settlement?
Accidents can happen at any time, including when a couple is in the midst of a divorce. This situation could add another layer of conflict to the divorce proceedings, particularly if the injury results in a financial settlement. Some spouses might feel entitled to a portion of that settlement during the divorce, but that might not be an option when it comes to certain damages.
If you’re wondering how your divorce might impact a personal injury settlement, that’s a great question for an attorney. Your legal counsel could review the terms of the settlement and explain what you’re entitled to keep.
The Law Often Protects Injury Settlements During Divorce Proceedings
In many jurisdictions, the law will generally consider personal injury settlements as separate property. This is an important distinction, as it means the court will not distribute some of the settlement to your spouse. Only marital property—not separate property—can be split in most jurisdictions.
Like with most things, there are some exceptions. Not every aspect of a monetary settlement will be treated as separate property. In some cases, a judge could make a distinction between certain types of damages. In Virginia, courts will even consider specific expenses line by line.
- Non-economic damages. The courts will generally treat compensation for non-economic damages (like “pain and suffering” and inconvenience) as separate property.
- Economic damages. Compensation for financial losses like medical expenses and property damage costs are generally treated as marital property.
According to the law, it’s your job to assert that some aspects of your settlement are not marital property. Sometimes, these settlement funds are treated as marital property by default. However, it is possible for a spouse to have qualifying portions of their settlement funds removed from the marital estate.
You Could Protect Your Recovery when Negotiating a Settlement
There are steps you and your personal injury attorney could take to protect your legal interests. These steps take place during the negotiation process.
In most cases, the insurance company will require that you execute a release prior to receiving your settlement. This release will not only waive your claim in exchange for monetary payment, but it will typically include the specific terms of the settlement as well.
Be Sure to Read any Waivers Before Signing Them
An issue can arise based on the language in the settlement agreement or release. While the law is clear on when certain damages could be removed from the marital estate, not every settlement will spell out exactly what type of compensation is included.
Often, a settlement includes little more than the total amount of compensation to be paid. The failure to include an itemized breakdown of specific damages could result in a dispute during the divorce.
An Attorney Can Protect Your Assets
If the settlement agreement does not include language itemizing damages, it is up to the divorce court to determine how this money should be divided. That could result in the court treating money that should be treated as separate property as a part of the marital estate.
Your personal injury attorney could require language in the settlement agreement identifying each type of compensation involved.
Keep Your Injury Settlement Separate From any Shared Accounts
Another way personal injury compensation could become an issue in a divorce case is when settlement funds are co-mingled with marital assets. Once these funds are co-mingled, the divorce court could consider all of it to be marital property. This is especially true in cases where it becomes impossible to trace the path of the settlement money to the source.
To keep your personal injury settlement from being classified as a marital asset, keeping those funds separate is crucial. The simplest way to do that is to set up a dedicated account that is solely used for your settlement funds.
By preventing these funds from ever co-mingling with marital assets, you could improve your chances of keeping your settlement money.
Talk to an Attorney About Your Injury Settlement Right Away
These are only a few ways that your divorce might impact your personal injury settlement. To be on the safe side, you should ensure your divorce attorney understands you are in the process of resolving a personal injury case.
What’s more, you should consider relying on a personal injury attorney when attempting to resolve your own claim. A lawyer can:
- Separate marital property from personal property
- Evaluate what you and your former spouse are entitled to
- Explain whether any of your children are entitled to your settlement proceeds
- Answer your questions
- Address your divorce-related concerns
- Consult with experts on your case
Call the Parrish Law Firm, PLLC to Explore Your Options
The Parrish Law Firm, PLLC is prepared to help you negotiate a fair settlement in your personal injury case. We understand your settlement could impact your divorce, and we can work to ensure the settlement agreement protects your interests.