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Can Personal Injury Awards Become Part of Marital Property?
A personal injury award provides compensation for injuries and damages caused by another party after an accident. A personal injury recovery can include economic and non-economic damages. In rare cases, juries might award non-compensatory damages in the form of punitive damages.
How Does the Property Division Work in a Florida Divorce?
According to Florida law, marital property is subject to equitable division. Equitable division means the court deems the distribution to be fair, but not necessarily equal.
Judges typically divide marital assets 50/50 unless the judge identifies factors that require an unequal division.
The general rule is that marital property includes but is not limited to:
- Assets acquired during the marriage
- Appreciation of non-marital property that resulted from the efforts of either spouse or from the use of marital assets
- Interspousal gifts during the marriage
- All benefits accrued during the marriage to retirement accounts, pension plans, and insurance plans
- The payoff of a mortgage or loan on non-marital property and the passive appreciation if marital funds were used to pay down the lien amount
Separate property is not subject to equitable division. Separate property includes, but is not limited to:
- Assets acquired before the marriage
- Property received as a non-interspousal gift
- Income from non-marital assets
- Assets excluded from the marital property through a prenuptial or postnuptial agreement
Disputes regarding the classification of property for equitable division are common. Each spouse may try to protect their interest in assets by removing them from the marital estate. Personal injury awards can be challenging to classify because only a portion of the recovery might be considered marital property.
Are Personal Injury Awards Subject to the Property Division in Florida?
In most cases, a personal injury settlement or award is not marital property. Therefore, it is considered separate property and not subject to equitable division. However, there are exceptions to the general rule.
Non-Economic Damages for a Personal Injury Case Are Generally Non-Marital Property
Compensation for non-economic damages is considered separate property because the award compensates the injured spouse for pain and suffering. Non-economic damages in a personal injury case include:
- Scarring and disfigurement
- Mental anguish
- Loss of enjoyment of life
- Emotional distress
- Physical pain and discomfort
- A decrease in quality of life
- Permanent disability and impairment
A non-injured spouse who receives compensation for loss of consortium can claim that money as non-marital property. The reason is that loss of consortium compensates the non-injured spouse for the loss of non-economic damages, such as loss of companionship, services, and support.
Economic Damages for a Personal Injury Case Can Be Marital or Nonmarital Property
Compensation for damages that would have been marital property had it not been for the injury can be subject to equitable division. For example, compensation for lost wages, benefits, and other income the spouse would have received during the marriage could be considered marital property.
Likewise, the portion of the personal injury award for reimbursement for medical bills and out-of-pocket expenses paid with marital funds is considered a marital asset.
However, compensation for future economic losses would not be considered marital property. Examples could include future lost wages, decreased earning capacity, future medical bills, and long-term care.
Personal Injury Awards Should Be Itemized to Protect the Injured Spouse
Judges decide property division cases by the evidence presented in court. If a personal injury settlement is not itemized, the judge cannot determine what portion of the personal injury recovery is marital property.
Trying to hide marital assets by failing to negotiate an itemized personal injury settlement could backfire. The judge might order a larger portion of the personal injury recovery to be included in equitable distribution. If there had been an itemized settlement, the judge might have determined most of the settlement is the injured spouse’s separate property.
A good way to protect your personal injury settlement from being divided in a divorce is to work with an experienced personal injury lawyer and also a divorce lawyer. The attorneys communicate about the settlement to determine the best way to handle the claim to prevent your spouse from receiving a large portion of the recovery amount.