What Happens to Your Injury Claim When You File for Divorce?

The majority of states are equitable distribution states, except New Mexico, Texas, Idaho, California, Louisiana, Arizona, Washington, and Wisconsin. In an equitable distribution state, everything is split fairly but not necessarily 50/50 in a divorce. The concept of equitable distribution only applies to marital property or property gained during the marriage. Any property or assets acquired before the marriage or obtained during the marriage via written agreement is considered individual or separate property.

If the divorce is uncontested and both parties can agree to a settlement without going to court, then they can decide how they want to divide any assets. Any remaining property that hasn’t been settled may be distributed by the court.

Divorce is complicated at the best of times, but things can become even trickier when it comes to injury claims.

What is an Injury Claim?

Sometimes called an insurance claim, an injury claim is essentially a petition for compensation filed with an insurance company due to a personal injury. This injury may be physical or non-physical, depending on the situation. Common reasons for filing an injury claim include:

  • Physical or emotional pain
  • Lost earning capacity
  • Property damages
  • Medical expenses

Depending on the reason for the injury claim, any settlement received from it could be considered community or separate property. During a contested divorce, any settlement deemed to be community property is split between both spouses. But in an uncontested divorce, it’s up to the individuals how they wish to split it, if at all.

Contested vs. Uncontested Divorce: Injury Claims

Contested and uncontested divorces differ in several major ways.

In a contested divorce, one spouse does not agree with the terms of the divorce, so they fight against it. They can dispute anything from the division of property to custody to whether the divorce should even happen at all. A contested divorce can take months or even years to resolve, especially if both parties cannot reach an agreement and the case goes to trial. It is important to have a Birmingham divorce attorney (or a divorce lawyer wherever you are located) that you can trust since they will be the one fighting on your behalf the entire way.

In an uncontested divorce, however, things are usually much simpler, less expensive and more streamlined. Most uncontested divorces take just six to eight weeks to finalize. This is because, although both spouses may still disagree about certain aspects, they ultimately can resolve matters without having to go to court.

In either case, all property must be categorized into community (or marital) property, separate property or mixed property. This goes for any injury claims that are filed during divorce as well. Whether the divorce is contested or uncontested, both spouses must determine which assets they want to fight for, including any settlement received from an injury claim. Ultimately, a divorce will not be granted until both parties reach an agreement on the division of assets, or the court resolves things.

Regardless of whether it’s contested or not, divorce is often messy and complicated, which is why a divorce attorney is usually recommended to help settle matters and make the process go as smoothly as possible.

Is My Injury Claim Community or Separate Property?

It depends on the case.

If the claim was filed due to something that impacted both spouses or the marriage as a whole, then it will most likely be divided between both people during the divorce. For example, if one spouse files an injury claim because of property damages or their sudden inability to earn wages and contribute financially to the marriage, any settlement is likely to be viewed as community property.

The same goes for things like workers’ compensation or disability programs. In fact, workers’ compensation and personal injury settlements are often considered mixed property. This means that in a contested divorce the court may allocate a portion of the settlement to both spouses. However, the person who filed the claim (plaintiff) typically receives a larger portion.

On the other hand, it’s more likely that a settlement will be viewed as separate property if it primarily impacted one spouse and not the other or the marriage itself. For instance, compensation received due to a personal injury could be separate property because the individual is specifically being compensated for something that happened to them.

Since every case is different, it’s important to get a divorce attorney to represent you and ensure any settlements are divided fairly.

What Happens to My Injury Claim After Divorce?

There are times when an injury claim is filed during a marriage but is still pending even after the divorce is finalized. When this occurs, any settlement that is later awarded could still be split between both ex-spouses. As long as it is considered community property, both individuals have a right to it.

Whether the settlement is awarded during or after the divorce, other factors need to be considered when it comes to who receives what. As an example, if you receive a settlement from an injury claim and set aside a specific amount towards your own recovery, then that amount is yours and yours alone. But if you don’t allocate the settlement like this, then it could become community property in its entirety.

How to Protect Your Injury Settlement

There are a few ways you can protect your settlement from your spouse (or ex-spouse).

  • Keep any money from the settlement in a separate bank account. Money that’s in a joint account is usually considered community property.
  • Consult an attorney so they are aware of the situation and can give you advice on what to do in your specific case to prevent the settlement from being considered marital property. Even if they can’t fully separate it, they may be able to ensure you receive the majority of the award.
  • Speak with a personal injury attorney about your claim. Request that they clearly indicate in any settlement documents what should be viewed as community property and what shouldn’t.

Although there’s no guarantee how the settlement will be divided, taking measures to protect yourself and your settlement can help in the divorce proceedings.