Are Personal Injury Settlements Marital Property?

As you file your personal injury claim in Scottsdale, there are several things you need to keep in mind. For instance, you have to find a reliable personal injury lawyer in Scottsdale to help you file the claim. Your attorney should help you understand what is considered a personal injury in your situation.

Does a personal injury settlement become part of marital property? Whether your personal injury settlement becomes part of your marital property or not depends on several factors, including the laws of the jurisdiction and the context of the settlement.

What Determines the Attachment of Personal Injury Settlements to Marital Property?

You typically won’t need to worry about a personal injury settlement being considered marital property unless you are currently going through a divorce. Here is how the law decides whether or not personal injury settlement funds are marital property:

Laws of Jurisdiction

American states have varying laws that define marital property and how it should be divided. Some states follow community property laws to decide what should be included in marital property, while others use equitable distribution laws.

Community property laws say that any property gained during the marriage becomes community property. This includes any personal injury settlements awarded to you during this period.

In some instances, your personal injury settlement may be considered separate property, meaning that it’s not covered by community property laws. Equitable distribution laws, on the other hand, say that marital property should be split on what is considered fair instead of right down the middle.

Context of the Settlement

Although the law recognizes property gained during the marriage as marital property, sometimes, personal injury settlements aren’t split equally. The court may decide to give the injured party the larger share of the payment, depending on the nature of the settlement.

For instance, if the settlement was for physical and psychological damages caused by an accident or a traumatic event, the court will most likely consider the settlement as separate property. However, if the settlement was for economic damages–like medical expenses or lost wages‒it could be treated as marital property. Compensation for the lost consortium (damages to your spouse who may have suffered a lack of companionship due to your injuries) can also be considered marital property.

Timing

The court will consider the time when you suffered the injuries and when you received the settlement to determine if it’s marital property. If the injuries happened and the compensation was given during your marriage, it’s likely to be treated as marital property.

If you were injured before marriage and were compensated after marriage, the court might consider it separate property.

Use of Reimbursement

How you use the compensation can determine if it’s part of your marital property. For example, if you put your settlement money into a shared account with your spouse or use it for family-related expenses, you might struggle to prove it’s separate property.

Prenuptial and Postnuptial Agreements

Any prenuptial and postnuptial agreements can determine whether or not your settlement money is shared property. These agreements often decide how your marital property–including your personal injury payment–should be split in the event of divorce.

The Bottom Line

Always ask your attorney for advice on what to do and the laws around settlement money and marital property. A good personal injury attorney, like those at Gage Mathers, can answer all questions related to your case, including whether to settle out of court or to go to trial.

Curious about how many personal injury cases go to trial? Be sure to read our latest article!

About the Author

Joseph D'Aguanno

Guided by the belief that being a highly skilled specialist in a narrow field is better than being ordinary in everything, Joseph “JD” D’Aguanno leads Arizona’s best personal injury law firm in Phoenix, AZ. Having extensive cross-training in pre-litigation negotiations and trial lawyer skills, with decades of experience, JD strives to provide clients with the most valuable legal services a personal injury lawyer can provide. Under his direction, Gage Mathers Law Group is an award-winning personal injury law firm providing aggressive representation to victims of a car accident, medical malpractice, dog bite, motorcycle accident, and other injurious events. Gage Mathers is trusted by thousands of lawyers and clients throughout the country because of their reputation for getting clients the maximum compensation they deserve.

Years of experience: Over 23 years
Bar number: 020421
Location: Phoenix, AZ
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