Is your personal injury settlement subject to distribution by the court upon your divorce? That depends on whether the court deems the personal injury settlement as marital property or separate property, and whether it is determined to be an asset or income.
Personal injury settlements considered separate property are most often those in which the injury occurred prior to the marriage, or after final order in your divorce or legal separation. For example, if you were in a car accident prior to your marriage, collected a personal injury settlement and during your marriage kept those funds separate, the court would most likely determine this as separate property, and not give the other spouse any portion of the base settlement, but any increase in value would be marital.
Personal injury settlements, or offers of settlement, in which the injury occurred during the marriage and the money reimburses lost wages or pays specific costs are generally considered marital property. If the court found the personal injury settlement to be marital property, the settlement would be subject to division. Some funds may be considered sole property such as funds for future pain and suffering, or future lost wages. The recipient must take specific actions to maintain the separate property status, commingling these funds would change their character to joint assets.
If your divorce or legal separation is final, and then you suffer a personal injury case with a settlement, your settlement is your sole personal property. However, in this case and in the case of damages for future lost wages but which are paid out during the marriage, the court consider this when determining maintenance or child support.
Colorado divides property upon divorce based on what is equitable, not necessarily equal. This means the court will take into consideration a multitude of factors when dividing property, including the individual parties’ income, retirement accounts, stocks, financial needs and so on. It will be up to the court to determine the division of your personal injury suit and whether it would be split 50/50 or in some other proportion.
The answer to whether or not your personal injury settlement is marital property is up to the court. How you fashion the arguments for the court, and what evidence you put before the court will affect the court’s decision. Our family law attorneys can help you figure this out and work to best protect your assets.