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Are Personal Injury Settlements Marital Property?

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Posted By DAM Firm | June 8 2021 | Personal Injury

Personal injury settlements are crucial, particularly if a person has been injured due to the careless or negligent actions of another individual or entity. However, what happens if a person receives a personal injury settlement and subsequently gets divorced from their spouse? Will the personal injury settlement be considered marital property for the purposes of divorce? Will it have to be split between the two parties?
Here, we want to discuss whether or not personal injury settlements are considered marital property in the state of California.

How Property Division is Handled in California

When we turn to California law regarding property division, we can see that this is a “community property” state. This means that property acquired during the course of the marriage will be considered marital property, and must be divided equally. Any property that is considered separate property acquired before the marriage (or in a few circumstances during the marriage) will belong to the party who originally acquired the property.

What Will Happen to a Personal Injury Settlement?

When we are considering what happens to a personal injury settlement or jury verdict during a divorce, we have to look at the various types of compensation paid out in these cases. In general, we will see that personal injury victims receive both economic and non-economic compensation.

  • Economic compensation. This is also called special damages and refers to the types of compensation that are relatively easily calculable after an injury occurs. This type of compensation is generally used to cover the following:
    • Medical bills related to the injury
    • Lost wages if the victim cannot work
    • General household out-of-pocket expenses
    • Property damage expenses
  • Non-economic compensation. This is also called general damages and refers to the types of compensation that are more personal to the injury victim. These damages are harder to calculate because they do not come with bills or receipts that can be added up. Some of the most common non-economic compensation types include the following:
    • Pain and suffering damages
    • Emotional distress damages
    • Loss of quality of life damages

Splitting a Personal Injury Settlement

Some of the compensation paid in a personal injury settlement may indeed be considered community property for the purposes of a California divorce. For example, if two people were married, then both individuals likely suffered losses as a result of the injury, particularly if there were medical bills, lost wages, and other out-of-pocket expenses. Because this type of loss affected both parties, the economic compensation awarded in a personal injury case will likely be considered community property and need to be divided equally during the divorce.

However, the non-economic compensation is a different story. This type of compensation is paid to the injured individual to compensate them for the suffering that they alone have been through. It would not be fair for a spouse the benefit from this type of compensation if the pain and suffering and loss of enjoyment of life did not affect them. In general, we will find that the non-economic portion of the personal injury settlement will be considered separate property for the purposes of a divorce in California.

If you are involved in an ongoing personal injury case but are also going through a divorce, you need to speak to an attorney as soon as possible. In fact, we strongly suggest that you work with a personal injury attorney in Orange County to handle your injury case and a divorce attorney to handle the divorce case. Your two attorneys can communicate with one another about the best steps moving forward to ensure that you are protected throughout this process.

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