Are personal injury settlements marital property? Personal injury settlements may be classified as marital or separate property, depending on the nature of the damages recovered.
Determining how settlements are classified and distributed during a divorce can be complex, so it’s important to talk with a Charlottesville personal injury lawyer to understand your obligations and rights to settlement money.
Understanding Marital and Separate Property in Virginia and What That Means for Divorce Proceedings
To determine whether a personal injury settlement is classified as marital or separate property in a divorce, it is important first to understand the legal distinction between the two types of property. These classifications are significant during the divorce process because they determine which assets each spouse is entitled to receive and how much they may claim in their case.
Marital property includes any assets or funds that are acquired over the course of the marriage. During a divorce, marital property is subject to equitable division, meaning that all property in this category is distributed fairly between the spouses. Each spouse’s circumstances are considered in determining what is fair in the division of assets, as a 50/50 split may not be appropriate.
Conversely, separate property is considered any assets or funds that a spouse owned prior to the marriage, were gifted solely during the marriage, or received as an inheritance. Separate property is not subject to division in divorce and remains with the spouse who owns it. Both of these distinctions are important when determining what happens to a personal injury settlement.
For a legal consultation with a personal injury lawyer, call (434) 817-3100
When Personal Injury Settlements are Considered Marital Property During a Divorce in Virginia
If a spouse suffers a personal injury accident in Virginia, the personal injury settlement they receive may be divided into a mix of marital and separate property, depending on the types of damages that were recovered. According to Virginia Code § 20-107.3, a portion of a personal injury settlement may be set aside as marital property, while the rest is considered separate and may be protected during a divorce.
In general, damages recovered for medical expenses and lost wages are considered marital property and subject to division in a divorce. However, general damages in personal injury claims, which compensate for pain and suffering, are often treated as separate property because they provide relief for a person’s personal experience. This portion of a settlement remains with the spouse who received it.
The courts may decide what percentage of a personal injury settlement may be allocated as marital property. This is also generally reserved for any portion that isn’t already covered by health insurance after an accident. A lawyer can help provide counsel on how much may be allotted and what to expect during your divorce. They will also walk you through your options for preserving your injury settlement.
How the Timing of a Separation and Personal Injury Settlement Can Impact the Way Property is Categorized During a Virginia Divorce
The timing of an accident and personal injury settlement may affect the classification of the property for purposes of the settlement. As a result, it affects each spouse’s rights and the amount to which each spouse may be entitled upon division of assets in a divorce. This can also be something to consider if you’ve already filed a personal injury claim and are also considering filing for a divorce in Virginia.
If one spouse is injured and receives a personal injury settlement during the marriage or before a separation is filed, the settlement is more likely to be considered marital property, and both parties would share it. Personal injury settlements received after a couple has separated may be classified as separate property. However, the manner in which settlement funds are used may affect their treatment.
The timing of an accident or when you receive your personal injury settlement may not line up perfectly with your divorce proceedings. This may add confusion to your situation, asset division, and legal proceedings. Lawyers have extensive experience handling these situations and can provide clarity and counsel to help you understand the implications of a personal injury settlement on your divorce.
Commingled Personal Injury Settlements Can Make Divorce Proceedings Complex in Virginia
Commingling of assets can add another layer of complexity to these situations. Commingling occurs when separate property funds are commingled with marital funds. It can also occur when separate and marital property funds are combined for these purposes. When this occurs, it can be difficult to distinguish between the two, and the settlement may be deemed marital property as a result.
If your personal injury settlement is commingled with other marital property, then you may lose a part of your settlement in a divorce since each spouse now shares the funds. This means that this portion of property will be divided in accordance with Virginia’s rules on asset division during a divorce. While it’s not impossible, tracing your settlement’s money trail can be challenging and time-consuming.
It’s important to keep these funds separate to better distinguish and protect them during a divorce. This means avoiding joint purchases or joint accounts for this money. You can also talk to a lawyer about how to protect your settlement, or how to proceed if funds are already commingled. They can also help you determine your options so you can keep as much of your settlement as possible.
Consult MartinWren, P.C. About How Your Personal Injury Settlement May Impact Your Divorce
If you’ve received a personal injury settlement and are unsure how it may impact how your assets are divided during your divorce, contact MartinWren, P.C., to get clarity on how to proceed.
These cases can be complex and confusing, and our team simplifies the process and ensures that your settlement portion is protected during the divorce. Contact us today to schedule a free consultation to get started.
Call (434) 817-3100 or complete a Case Evaluation form
