Are Personal Injury Settlements Separate From Divorce?

You will see it a thousand times on our website and as advice from any other divorce attorney: Marital property is subject to division in a divorce, and just about all property acquired during marriage constitutes marital property. There are, however, limited exceptions. Certain types of property remain separate property even if acquired during the marriage. Where do personal injury settlements or verdicts fall? Are they separate or marital property? Continue reading to learn how New Jersey treats personal injury awards in divorce. If you are facing the prospect of divorce, call an experienced New Jersey divorce and family law attorney for advice and assistance.

General Rule for Property Division

All marital assets are subject to equitable division in a New Jersey divorce. Assets acquired before the marriage or after a divorce is filed are separate, while most assets acquired during the marriage are considered marital property. There are exceptions, including inheritance and gifts intended for one spouse only.

What About Personal Injury Awards? It Depends.

Personal injury awards straddle the line between marital and separate property. When acquired during the marriage they may seem like income, but they also feel like windfalls meant for just one party (the injured person), much like a gift or inheritance. Under New Jersey law, part of a personal injury award may be separate property, while part of the award may be marital. It depends on the purposes of the funds in the settlement.

According to New Jersey’s “analytical approach” to personal injury awards, certain types of damages awards are considered marital property. The types of damages that are treated as marital property include:

• Compensation for medical expenses (provided that the expenses were paid with joint assets)
• Lost income
• Property loss

Other types of damages will be considered separate property. These include:

• Loss of future earning capacity
• Pain and suffering
• Emotional distress
• Loss of consortium (may be awarded to each spouse in the settlement)

These latter sorts of damages are considered to be the personal property of the injured party, not subject to equitable division in a New Jersey divorce. Thus, the portion of a settlement that is subject to division upon divorce depends on the purpose of the funds. Make sure your personal injury settlement is clear on which funds are meant to compensate which types of damages in order to protect the maximum amount of your award from division upon divorce.

Advice and Representation from a Dedicated New Jersey Divorce Lawyer

If you need excellent legal help with property division, child custody, divorce, child support, alimony, or other family law matters in New Jersey, contact the Union offices of family law attorney John B. D’Alessandro at 908-964-0102.