Personal Injury Settlements: Marital or Nonmarital?

Posted on Friday, April 13th, 2018 by Marc Beyer and is filed under Divorce, Finances, Marriage, Personal Injury.

If you were ever in a serious accident, or suffered a serious injury, you were likely part of a personal injury case. You may have received a sizeable financial settlement. If you were married at the time, and are now getting divorced, what happens to the proceeds? Do you divide them with your spouse? Or is the money awarded just to you?

Like a lot of things in the law, it depends. It depends upon the purpose and nature of the settlement. Case law provides that if the settlement is to compensate you for past lost wages, or medical bills paid by the marital estate, then the settlement is marital property. That means that you share the money with your spouse at divorce.

But, if the purpose of the settlement is to compensate you for non-economic damages like pain and suffering, or injuries personal to your body (like the loss of a limb, for example), then the settlement is your nonmarital property. Compensation for future (i.e. post-divorce) lost wages is also nonmarital. That means that you do not share the proceeds with your spouse.

That is because, according to case law, “[p]ain and suffering, disability, and loss of the ability to lead a normal, healthy life are losses personal to the injured spouse. The physical and mental health of a spouse is not a marital asset which can be distributed upon the dissolution of the parties’ marriage. Compensation for loss of health is not marital property. It would be unfair for the other spouse to benefit from the misfortune of the injured spouse… The law does not require either spouse to contribute his or her bodily health and powers to the assets distributed as marital property.” Ward v. Ward, 453 N.W.2d 729, 732 (Minn.Ct.App. 1990).

This result only makes sense. If you are injured during the marriage and unable to work and produce an income, then your spouse’s income and the assets within your marital estate will necessarily pick up the slack. If you are later compensated for your lost wages, or for out-of- pocket expenses that the marital estate may have paid, it is only fair that both you and your spouse share in these proceeds. The settlement really just replaced what the marital estate would have been but for your injury.

Likewise, your spouse should not receive a windfall for injuries that only you experienced. You are the person who will go through life with a permanent injury, and there is no reason to compensate your spouse for that simply because the injury occurred while you were married.

Every case is fact specific. Make sure you research these issues with your attorney if your assets consist of a personal injury settlement.

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