Puja Sachdev | February 7, 2022 | Divorce
Accidents and personal injuries occur at any time, including during a divorce. If another party caused a car accident or other incident that led to an injury, the injured party might be entitled to compensation for damages. However, how are the proceeds from a personal injury lawsuit divided when accidents occur during a divorce?
California Is a Community Property State
However, spouses can own property separately in California. Separate property is not subject to community property division rules during a divorce.
Separate property is property you owned:
- Before you were married
- Received as an inheritance
- Received as gifts
- Acquired after your separation date from your spouse
When an accident occurs during a divorce, the settlement proceeds could be subject to property division. It does not matter that the non-injured spouse did not sustain damages because of the accident or injury. Instead, the division of a personal injury settlement depends on several factors.
What Happens if an Accident Occurs During a Divorce in California?
However, a personal injury settlement could be subject to division under community property rules under California Family Code §780. On the other hand, California Family Code §2603(b) states that community estate personal injury damages should be assigned to the injured spouse.
When you analyze the three statutes individually, it appears as if the law is contradictory. However, if you consider the statutes together, personal injury settlements are separate property when:
- The spouse caused the injury
- The injury occurred before the marriage
- The parties were living separately and apart when the injury occurred
- The injured occurred after the date of judgment for a Legal Separation or Divorce
The non-injured spouse may be entitled to reimbursement for some costs. That is the case even if the settlement is considered separate property.
For example, suppose the non-injured spouse paid medical bills or other expenses from marital or separate assets. Then, the non-injured spouse would be entitled to reimbursement for those payments.
The court assigns personal injury damages to a non-injured spouse after considering each spouse’s needs and economic condition. In addition, the court may consider other factors to determine how the proceeds should be divided in the interest of justice.
A judge might determine that the non-injured spouse should receive a small portion of the settlement proceeds. Because it is within the judge’s discretion, the judge does not have to split the personal injury settlement evenly. However, the most a non-injured spouse can receive is 50% of the personal injury proceeds.
Can a Spouse Receive a Portion of Personal Injury Settlements After a Divorce is Final?
In some cases, your ex-spouse could be entitled to some of your personal injury settlement received after your divorce is final. The court considers whether the personal injury damages are community property. If so, it can order that your spouse has an interest in the payment of a future judgment for a personal injury claim.
However, the underlying accident must have occurred while the parties were married. Otherwise, the non-injured spouse would not be entitled to a portion of a personal injury judgment payment after a final divorce decree has been filed.
Steps You Should Take to Protect a Personal Injury Settlement During a Divorce
If you receive a personal injury settlement before marriage, you must keep the proceeds separate from marital assets. Likewise, keep personal injury settlements received during a divorce in a separate account. When you commingle separate and marital property, the separate property is subject to community property rules.
You and your spouse can enter an agreement stating that the personal property proceeds belong to you.
However, you want to consult a divorce lawyer when drafting the agreement to ensure it is legally binding and can be upheld in court.
Before you settle your personal injury case, ask your injury lawyer to consult with your divorce lawyer. In some situations, how a personal injury settlement is structured can impact the rights of a non-injured spouse.
Having sound legal advice can help you avoid situations that could lead to your spouse receiving one-half of your personal injury settlement.
Contact Our Divorce Law Firm in San Diego, CA
San Diego Divorce Lawyers, APC
2851 Camino del Rio S #430
San Diego, CA 92108