And as usual, the answer is, “It depends.”
It depends on, “When were you injured?”
If the injury happened after you were separated the Family Code 781 says that the award is separate property.
OK. That seems pretty commonsensical.
And it probably really wasn’t your question. But in the interest of being thorough I’ve included it.
More likely your question is closer to this fact pattern.
A spouse is injured while married and they receive a personal injury settlement. And some of the settlement is in the bank or possibly it was spent on everyday family expenses.
Or another possibility,
It took so long to receive the settlement the injured spouse’s injury expenses were paid from the family’s bank account or put on a credit card until the settlement was paid. The settlement arrived and now the formerly injured spouse files for divorce and then leaves with “their” money. After all, it was their injury.
But,
The uninjured spouse says, “Wait a minute, this family paid for everything when you were hurt. You should pay the family back.”
What now?
Who Gets The Injury Settlement in Divorce?
In the second instance the uninjured spouse has a strong argument that the family should be repaid or injury related expenses under California Family Code 781(b) and 2603(b).
But in the first instance, where the personal injury award was deposited into the family checking account and then spent, things are more complex.
There is a presumption in community property that property when it is commingled - mixed together - is presumed to be community property and both spouses can claim it.
But, tracing can be used to overturn this presumption.
For instance, what if the award money was used to buy the family car? Who gets the car in the divorce agreement?
A concept down as tracing is used.
In order to trace an asset, you start with the separate or community asset and trace the money to the item or asset.
There are different methods to accomplish this.
The simplest methods follows the money as it enters and then exits a bank account. You’ll need deposits slips, receipts and cancelled checks to connect the money to the property.
Other methods are more complex, such as when you need to calculate the value of use or asset appreciation. Accountants and time are usually required.
Before you hire the experts,
How much you are willing to spend to find your answer? What is the expert’s hourly rate? Will they estimate how many hours they’ll need? Is this a case of average difficulty?
It might be more sensible to agree on a rough estimate and then divide that. After all, everything not spend on the divorces is yours.
Is It Fair to Divide a Personal Injury Award.
What if a soon to be ex is still hurt and will need to pay for future medical treatment? Or maybe, they’ll never work again. Who will they support themself? Alimony?
If you go to court, these are questions that a judge has wide latitude to consider. They’ll ask if the injured spouse is getting at least 50% of the award. And California Family Code 2603(b) describes several factors a judge can use to split a personal injury award.
I believe that you’ll be hard pressed to find a judge who would not give fairness a lot of weight while making any requested division in these circumstances.
When you ask, “How will an injury settlement be divided in divorce?”
You can see, the only answer is, “it depends.”
A better question might be how chasing the way you want to approach this. Do you need the full expert option? A partial assist from the experts? Or can the two of you agree on a rough split?
It is a lot.
And as always, I believe that you are quite capable of making the decision.
Ted Andrews is a mediator living in Southern California. He practices throughout California.
Disclaimer - The information provided in this post is for general information purposes only and should not be construed as legal advice. You should not act or rely upon this information without seeking formal professional counsel. The information provided in this post is not intended to create an attorney-client relationship.