is personal injury settlement considered marital asset?

Are Personal Injury Settlements Considered Marital Property in a Florida Divorce?

Personal injury and family law are separate legal areas, but there are some situations in which they intersect. One such instance is when a divorcing spouse received a personal injury settlement award, or they expect to receive one in the near future. This lump sum payment could be one of the couple’s largest assets, so naturally both spouses will want to know whether or not this asset will be included in the marital estate.

What Assets are Usually Part of the Marital Estate?

Generally, any assets that were acquired or accumulated while the couple was married are divided equitably during a divorce. Any assets that were owned by one of the spouses prior to the marriage are usually considered nonmarital and therefore would not be part of the equitable property distribution. As with most other legal issues, there are exceptions to these rules, and the question of whether a personal injury settlement could be part of the marital estate does not have a simple answer.

When are Personal Injury Settlements Considered to be Marital Property?

As a very general rule, a personal injury settlement award will not be considered a marital asset during a Florida divorce. This is clearly the case when the injured spouse had already received the settlement award before the couple was married and the asset remained separate throughout the marriage. But as we touched on earlier, there are always exceptions, and this is not always a cut and dry issue.

Here are some cases in which a personal injury settlement (or at least part of one) might be included in the marital estate:

The Settlement Award was Itemized

When someone is injured because of another party’s actions or omissions, they are entitled to various forms of compensation that are intended to make the victim “whole”. This may include damages for direct monetary losses such as medical expenses, lost wages, and loss of future earning capacity, as well as noneconomic losses such as pain-and-suffering, emotional distress, diminished quality of life, permanent injury, and loss of consortium (companionship).

If the settlement award contains an itemized description of what amount is designated for each loss or expense, then the non-injured spouse may have a claim to a portion of the settlement. Specifically, they would be entitled to the amount awarded for loss of consortium, and to a share of the lost earnings. The earnings of the injured spouse are considered marital property, so both spouses have a claim to this income. Pain-and-suffering and other intangible losses that the injured spouse sustained should belong solely to that spouse during a divorce.

It is important to note that a lot of personal injury settlements are not itemized, and if the court cannot determine which specific losses were supposed to be covered by the award, then there is a good chance that the entire asset would be given solely to the injured spouse. There could, however, be a way to track down an itemized list if there is one available that was used during settlement negotiations.

Settlement Funds were Co-Mingled

If the personal injury settlement award has been co-mingled with marital funds to the point where the court is unable to determine what amount is marital and what amount belongs to the settlement, then the funds would become part of the marital estate. For example, you deposit the settlement award into your joint checking account, which is the same account where paychecks and other types of income are deposited. Then these funds are used month after month to pay your mortgage, car payments, credit card bills, and other household expenses. At some point, it will be impossible to distinguish which funds are part of the settlement and which were part of the monthly household income.

Injury Related Bills were Paid with Marital Funds

When someone is seriously injured, they immediately start accumulating medical costs. But it could be several months before the settlement award is received. In the meantime, if the couple used marital funds to pay the medical bills, then that same amount could be taken from the settlement money and placed into the marital estate.

Get Experienced Legal Help from a Pensacola, FL Divorce Lawyer

Dividing marital assets during a divorce can be a complicated process, especially when there is a personal injury settlement involved. Although there are general rules in place for how this type of case is handled, the courts may also use their discretion, which is often determined based on the strength of the arguments presented.

If you are facing a divorce in Florida, you need attorneys who have an in-depth understanding of the different areas of law, how they might become intertwined with these types of cases, and a commitment to advocate forcefully for your best interests.

In the Pensacola area, contact Whibbs, Stone, & Barnett for experienced legal guidance. Message us online or call our office today at 1-888-219-4561 to schedule a free consultation with one of our attorneys.