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How Are Personal Injury Settlements Divided in a Florida Divorce?
While going through a divorce can be messy and overwhelming on its own, sustaining an injury in an accident, such as a car crash, during the process is likely to complicate matters further. Does your non-injured spouse receive a portion of the award if you get a personal injury settlement? The answer usually depends on the unique situation and circumstances of your case.
What Is a Personal Injury Settlement?
Note that personal injury settlements are often awarded to people after significant injuries or losses. And these injury settlements come during a tough time, helping cover future and past medical bills, and pain and suffering.
They also cover loss in compensation both presently and in the future. Personal injury awards can often bring you and your family some sense of relief and comfort in a tumultuous time.
However, keep in mind that an issue that might arise in Florida divorce proceedings is whether or not an injured spouse’s recovery of an injury award constitutes marital property and is, hence, subject to distribution. As a result, this award may cause a lot of contention and disagreement in your family, especially during a divorce proceeding.
Florida Is an Equitable State
Did you know that the State of Florida is an equitable division state? This means that when parties divorce, all their marital assets are usually divided between them equally or fairly between each party. Note that not all assets may be split down the middle, as is the case for most community property states.
However, keep in mind that where one party-spouse gets a settlement or personal injury award, then the division of marital assets isn’t always clear. This is the reason many couples facing a divorce in Florida are left wondering whether they might have any entitlement to the settlement proceeds of their spouse.
General Rule & Notable Exceptions
A personal injury settlement or award can represent a significant portion of your and your spouse’s total assets. This doesn’t, however, necessarily mean that the amount will be subject to division during the divorce settlement.
In many cases, personal injury settlements aren’t considered marital property. That’s because, typically, when you receive compensation for your medical bills or non-economic losses, you’re considered to be the sole owner of the money. So, the settlement belongs solely to the spouse to which it is awarded. In turn, it’s not up for grabs during divorce negotiations.
There are some exceptions to the above rule, which are as follows:
Itemized Personal Injury Settlements
Note that if a personal injury award is itemized for a particular portion and covers the injured party’s loss of consortium or lost wages, then it’s subject to property or asset division in a Florida divorce. As wages earned during a marriage are considered marital property, any injury adversely affects the couple since the injured spouse cannot earn income.
If you deposit your personal injury settlement in a joint bank account with other money shared with your spouse, this is called commingling. If you have deposited these funds in a joint account and use a portion to pay marital debts, then it is likely the court will determine the injury settlement is marital property and, hence, subject to distribution during the divorce.
You can avoid commingling the funds and turning your separate property in shared property by maintaining a separate bank account to which your spouse doesn’t have access and for which you don’t use to pay marital expenses or debts.
Marital Funds Used to Pay Medical Expenses
If you used your marital funds initially to cover your medical bills, then the court may designate a certain portion of your personal injury settlement as marital property. Then, that portion of the settlement would be subject to division during a divorce.
Division of Assets Is Complicated
You may know that the division of assets in Florida divorce cases is often a complicated and contentious process and can also be very confusing. This is why only an experienced and knowledgeable Orlando family law attorney should advise you regarding what assets might be considered a part of your marital estate, and hence, subject to division in the divorce. Also, keep in mind that your finances can dramatically change after your divorce.