Long before you decided to get a divorce, you were involved in a car accident. Another driver was to blame, so you filed a personal injury lawsuit for damages. After months of negotiations, you agreed to avoid court and settle the matter privately. You accepted a personal injury settlement for $50,000.
Fast forward to today, and you’re in the middle of a contested divorce. You and your spouse can’t agree on any of the terms of your split. Your spouse is demanding a share of your personal injury settlement. You don’t want to divide it in the divorce; you need it to cover the cost of your rehabilitation and temporary loss of income.
How is this dispute resolved? Will you be required to share your personal injury settlement with your spouse when you get divorced? The answer depends on when your accident happened.
Personal Injury Settlements Received Prior to Marriage
The assets you own and acquire before you get married are generally classified as separate property in the state of California. Separate property belongs to you, and you alone. When you get a divorce, you retain all ownership rights in regard to that property. Your spouse has no right to claim your separate property, unless you extended ownership benefits to them at some point in your marriage.
Did your car accident happen before you were married? Did you receive your personal injury settlement before you tied the knot? If so, the settlement should be considered your own separate property. Your spouse should not have any ownership interest in your financial award.
However, your spouse could make an argument that you intended to share the money with them if you transferred the funds to a joint bank or financial account. If you kept your settlement separate, it could be easier to argue that it is your separate property.
Personal Injury Settlements Received During Marriage
The assets acquired by either spouse during a marriage are generally considered to be community property. Spouses own community property together. When you get a divorce, you and your spouse are entitled to an equal share of all community property.
Did your accident happen after you got married? Did you receive all or part of your personal injury settlement after you got married? If so, it’s considered to be community property. California Family Code Section 780 states “ money and other property received or to be received by a married person in satisfaction of a judgment for damages for personal injuries, or pursuant to an agreement for the settlement or compromise of a claim for such damages, is community property if the cause of action for the damages arose during the marriage.”
In other words, if your car accident (the cause of action) happened while you were married, financial awards are considered to be community property.
Personal Injury Settlements Received After You’ve Separated From Your Spouse
Did you get into your car accident while you were married, but after you separated from your spouse? If you were living apart at the time of the accident you might not have to share your personal injury settlement. You’ve made it clear that you intend to divorce, so the assets you acquire from this point forward can be considered separate property.
However, it’s important to keep in mind that the settlement will only be classified as separate property if your accident happened after you were legally separated and/or living apart from your spouse.