Is a Personal Injury Award Considered Marital Property?
Although the laws differ from state to state, the general rule to determine if a personal injury award is considered marital property is “it depends”. More specifically, the answer depends upon what is being compensated in a personal injury award.
Let’s take, for example, a car accident. Some of the “damages” a victim of a car accident may incur include damage to his or her vehicle, lost wages due to time off from work, an interference in his or her relationship with a spouse or children and pain and suffering resulting from the accident. That person’s spouse may also suffer “pain and suffering”; typically in the form of an interference in his or her marital relationship caused by injuries to a spouse.
Generally, pain and suffering damages suffered by either spouse remain the sole and separate property of each spouse. The reasoning behind states that follow this approach is that the injury is to each individual person and each person is not community property.
Lost wages, both past and future, are considered community property while the spouses are married. That approach is adopted in many states because earnings from the labor that was lost from a spouse would have been community or common money and, therefore, the damages awarded for that lost income should be community or common property.
Damages awarded for the repair or replacement of damaged property depends upon whether that asset, such as a car, is community or separate property. If it is community property, the award will be as well. The opposite would be true if the property was a spouse’s sole and separate property.
If you have been injured in a car accident and are in the middle of a divorce or expect a divorce may be filed, you will want to ensure your Scottsdale AZ divorce attorney carefully details what damages are being awarded for and how much is being awarded for each claim. In many community property states, a person claiming an award to be his or her sole and separate property bears the burden of proving that claim. Failing to meet that burden of proof may result in the entire award being considered community or common property.
Thanks to our friend and blog author, Chris Hildebrand of Hildebrand Law, P.C. for his insight into marital property after an accident.