Who Receives Personal Injury Settlement Funds in Divorce

You and your spouse have mutually decided to separate, looking for a cooperative or uncontested divorce. However, one of you was injured previously and received a personal injury settlement. How does this factor into the divorce proceedings? A personal injury lawyer is here to share some insight on this process:

Who Received The Settlement?

The first factor to examine is who was injured and therefore received the settlement. Although a settlement can benefit both spouses, it generally only belongs to the injured party. Therefore, if you were injured, the settlement stays with you through the divorce process. On the other hand, if it was your spouse who was hurt, generally they get to keep that money.

However, this can be a little more complicated: if the settlement is based on pain and suffering, then it belongs to the injured party. But if the settlement is based on compensation for lost wages and medical expenses, it may then belong to both spouses. This depends on the injuries involved, the type of accident, the type of settlement, and how the settlement money was used. A lawyer can help you better understand in your specific situation who that money belongs to.

When Was the Settlement Received?

If the settlement was received by one party before marriage, then it belongs to that spouse. If it was received during marriage, then the factors listed above apply — it might belong to both spouses and it might not, depending on the specifics of the situation. If you are separated (but still married) and the settlement was received after the separation, the judge may take that into consideration in dividing assets. If the settlement was received after a divorce was final, generally it stays with the party who received it.

Where Is This Located?

Different states have different laws. Some states have what is known as community property laws, which means assets acquired during a marriage are considered joint property and therefore must be divided evenly. Another type of state law that might affect this for you is called equitable distribution — this is where assets are divided but not necessarily equally; the court has the final say in the division and it is considered fair over equal as our friends at Cohen & Cohen can explain. Georgia is an equitable distribution state.

Are There Marital Agreements in Place?

Another factor in this situation is whether a prenuptial agreement or postnuptial agreement is in place prior to receiving the settlement. These agreements can supersede other rules and may dictate how a settlement is allocated. If you have not been injured but are considering getting married or are already married, now might be the time to consider a post or prenup in case you are ever injured in an accident. If you are planning to marry and expect a settlement after you marry for an injury prior to marriage, a prenuptial agreement is a good idea.

If you are divorcing cooperatively, you have leeway to decide how you agree a settlement is divided, or not divided. Generally, you and your spouse can agree as to how you allocate assets, regardless of what a judge would decide if the outcome were determined at trial.

At the end of the day, there are a variety of possible outcomes depending on your situation and the law of your jurisdiction. Talk to attorneys near you who specialize in family and divorce  law for more information.