Are Personal Injury Settlements Considered Marital Property in an Alabama Divorce?

Divorce provides more questions than answers. If you or your spouse have received a personal injury settlement during the course of your marriage, you may be wondering if that settlement is divided up in the course of your divorce.

The answer, as it is with many divorce-related questions, is it depends. For more personalized advice regarding this and other family law needs, call Coumanis & York at 251-260-3927.

There is No Cut-and-Dry Answer

Unfortunately, there is no clear answer regarding whether or not personal injury settlements are marital property. This is because personal injury settlements offer compensation for a wide range of losses, including medical bills, lost wages, pain and suffering, and mental anguish.

Some of those are considered shared losses and expenses, and so would be considered part of the marital division of assets. Others are considered to be losses suffered exclusively by the victim, and they would not be divided up in a divorce. How much of a settlement is or is not marital property depends largely on the breakdown of the personal injury settlement.

What is a Marital Asset and What Isn’t?

In a personal injury settlement, several types of compensation are considered marital assets:

• Lost income and wages
• Medical expenses
• Loss of spousal support
• Loss of consortium

These are losses that are widely accepted to be felt by both the victim and their spouse. When a victim has $10,000 of medical bills, that’s something that affects their spouse, as they would also be on the hook for paying those expenses without a settlement. Similarly, lost income is a loss that impacts both parties, as the other spouse would likely to have to ramp up their work to make up for the loss of wages.

Other categories may not be considered marital assets, such as:

• Pain and suffering
• Disfigurement
• Adaptive equipment and prosthetics
• Future medical expenses (although this is not always the case)

Items in this category are usually considered to be solely the victim’s losses. For example, the spouse of a victim cannot feel their pain and suffering, so they should not be compensated for it.

Figuring Out Property Distribution

If your division of assets involves a personal injury settlement, it is important to disclose that to your attorney as early as possible. They will need to dig into the documentation of the settlement to figure out exactly how much is considered a marital asset.

Remember, too, that Alabama uses the principle of equitable distribution. This means that, even if a significant chunk of the settlement is marital property, you are unlikely to see a 50/50 distribution. If one party earns $200,000 per year and had three homes coming into the marriage and the other party earns $30,000 per year and does not own any non-marital assets, the latter is likely to take a much larger portion of the marital assets.

You may also want to discuss other options for fair distribution with your attorney. If some of the settlement is marital property but most is non-marital, your share might not be much. In some cases, it makes more sense to let the other party have the entirety of the settlement and ask for spousal support instead. Depending on your income and assets, you might prefer a monthly payment in lieu of a settlement payout.

Whether you are the one with the personal injury settlement or your spouse is, it is essential to work closely with an aggressive divorce attorney to ensure that you are treated fairly throughout this process. A lot goes into the fair division of assets in a divorce, and if you do not have an attorney who is ready to stand up to your ex-partner’s attorney, you could find yourself losing everything you have worked to build.

Get Assistance with Your Divorce Case

Whether you’re just starting to consider divorce, or you are already in the middle of the planning process, it’s never too early to contact a divorce attorney. The team at Coumanis & York is here to provide the aggressive representation you deserve during this difficult time. To set up a consultation and find out how we can help you, call us at 251-260-3927 or get in touch with us online.