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Practically every married couple owns property and assets. The family home, furniture, cars and cash in the bank are good examples. When it comes to divorce, all these things?usually need to be divided between the spouses through a property division.
Personal injury awards are no exception. You may have to share with your soon-to-be ex the damages you recovered in a personal injury suit, or you may get a share of your ex’s award. It all depends on the divorce and property division laws in your state.
Property Division Basics
Just like the house and cars, a personal injury award is either separate property – owned solely by the injured spouse – or it’s marital or community property, where each spouse in entitled to a share in the award. When it comes to personal injury awards, courts typically use either the mechanical or analytic approach to figure out if spouses must share their awards.
The Mechanical Approach
The mechanical approach is based on the state law’s definition of individual or separate property and marital property. Separate property is property owned by the spouse before marriage and any property acquired by gift or inheritance during the marriage. Marital property is property acquired during marriage.
Many times, awards are treated as marital property. The idea is simple enough: Since a personal injury award is not acquired by gift or inheritance, and it doesn’t fit into an exception to the general rule that property acquired during marriage is marital property, it must be marital property.
States Using the Mechanical Approach
Arkansas, Colorado, the District of Columbia, Hawaii, Illinois, Iowa, Kansas, Massachusetts, Michigan, Missouri, New Hampshire, Pennsylvania, South Carolina, Vermont and Virginia treat personal injury awards received during marriage as marital property.
However, some of these states also use the analytic approach by classifying the entire award as marital property, but then dividing it between the spouses using the rules for the analytic approach.
The Analytic Approach
The analytic approach focuses on what the award was intended to replace: Was it something personal to the injured spouse or something both spouses lost. As a general rule, an award is the injured spouse’s separate property if the award was compensation for that spouse’s personal well-being.
Community Property States
Practically all community property states use the analytic approach and characterize recoveries according to the injuries they are intended to compensate. So, if the couple (the “community”) paid medical expenses and suffered lost wages during marriage, the recovery is community property. An award is the injured spouse’s separate property when it’s compensation for that spouse’s personal well-being, such as pain and suffering or compensation for a lost limb.
California is the only community property state using a different rule. All personal injury awards from lawsuits started during the marriage are treated as community property.
Equitable Distribution States
Many equitable distribution states use the analytic approach, and they characterize portions of the award as either marital or separate. These states include Alaska, Arkansas, Florida, Georgia, Maryland, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, West Virginia and Wisconsin.
Specific Laws for Awards
Some states have enacted laws on the classification of personal injury awards. For example, in New York, personal injury awards are treated as separate property.
Where Awards Come From
Personal injury awards can result from personal injury lawsuits, like car accidents, and other kinds of lawsuits, such as:
- Interspousal personal injury lawsuits, which are personal injury lawsuits between spouses
- Property damage suits
- Wrongful death
- Recovery of life insurance proceeds
Awards may also include money damages for more than medical expenses and pain and suffering. For example, loss of consortium, which is loss of a spouse’s services and companionship, is often included in personal injury awards.
The awards from these kinds of suits are generally classified by using the same mechanical or analytical approach, or by using the state’s specific law for personal injury lawsuits.
It’s important to talk to your attorney about any personal injury award you or your spouse received during the marriage to make sure you get and keep everything you’re entitled to.
Questions for Your Attorney
- If my spouse and I are getting a divorce, will I be awarded a portion of a personal injury award that my spouse acquired during our marriage?
- Do all states classify personal injury awards the same way for divorce purposes?
- How does the analytic approach to classifying a personal injury award work?