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Are Personal Injury Settlements Considered Marital Property in a Divorce?

Couples going through a divorce can sometimes be involved in accidents or other events that cause injury. What happens when a spouse sustains injuries due to a third-party’s negligence, files a personal injury claim, and collects a substantial settlement? Will the other spouse be entitled to at least a part of the settlement amount if they are getting divorced?

Consider a scenario where you have collected or expect to collect a settlement for your personal injuries. In that case, you may want to understand whether these proceeds are considered marital property (which will be divided equitably between the spouses during a divorce).

The answer will depend on when the accident occurred and what the rest of the assets are. Judges must evaluate various factors to determine the property. The amount received in a personal injury settlement award could be deemed marital property, which is eligible for division between the two parties.

Marital property generally refers to all jointly owned assets obtained from the date of the marriage to the date of the separation, including income earned following the marriage. On the other hand, an inheritance or gift from anyone besides your spouse is categorized as separate property.

In a Virginia divorce case, property division can be a very tricky issue, and the arguments should be strategically crafted in your best interest. To understand whether your personal injury settlement award is marital property, consult an experienced Virginia divorce lawyer today.

General Principles

Under Virginia law, a personal injury settlement award may be categorized as marital property, irrespective of whether or not the spouse involved in the accident sustained an injury. In general, a judge will review the reason for your personal injury settlement award, which will establish whether or not your spouse is entitled to the funds you will collect.

  • If the personal injury settlement is paid to compensate for pain and suffering, this part of the award will not be deemed marital property. This rule is applicable to payments collected for any disfigurement, disability, or debilitation.
  • If the personal injury settlement is paid to compensate for out-of-pocket expenses and other damages, such as lost income or medical bills, the funds will be deemed marital property.
  • If the personal settlement award is paid to compensate a claim of loss of consortium from an uninjured spouse, this amount will not be included in marital property.

The above are general principles followed by Virginia courts. Notably, the party that claims that the funds should be considered non-marital property is responsible for providing evidence that the funds are separate.

Financial compensation represents vital support for victims of serious injuries due to another’s negligence. This type of compensation includes personal injury settlement awards, workers’ comp benefits, and disability benefits. Individuals who are unable to work can collect a more substantial share of the injury compensation and marital assets.

Co-Mingling Personal-Injury Settlement Awards

Lawyers must consider whether their clients have co-mingled money from personal injury settlements with marital assets. If the funds are co-mingled with other marital assets, a personal injury settlement award for pain and suffering may be seen as marital property during divorce proceedings.

In case a client wants to ensure that the proceeds from their personal injury settlement award are not considered marital property, they should use a separate account to deposit the funds. The court will determine whether the funds are to be co-mingled with the marital property during the final dissolution. Therefore, lawyers should educate their clients on the repercussions of co-mingling funds from personal injury settlements.

What should my Divorce Lawyer communicate with my Personal Injury Lawyer?

In cases where you arrive at a pre-suit settlement agreement with an insurer, they will usually require you to sign a document known as a release form. The precise wording and matter contained in a release form will depend on the settlement’s specific circumstances and who is drafting the release. This form will contain a specific dollar amount, representing the full and final amount that the insurer will pay you in exchange for signing the release form.

The release form will often not contain an itemized breakdown of the total amount detailing which portion is assigned to which damages. For instance, in the release form, it might be stated that the insurer will pay you $70,000 in exchange for the execution of a general release. They will not specify how much of the $70,000 is compensation for medical bills, pain, and suffering, income loss, loss of earning capacity, etc.

When the court attempts to determine which portion of that $70,000 is marital property subject to division between the spouses, the lack of the settlement amount breakdown can prove problematic. For this reason, if you are injured due to a third-party’s fault during divorce, it is best to inform your personal injury lawyer of your ongoing or intended divorce case.

Speak to the Qualified Attorneys at Olmstead & Olmstead Today

Dealing with an injury accident can be challenging for both spouses. In fact, it may even be a factor exacerbating the divorce. If you sustained injuries in an unfortunate accident and your ex-partner or spouse wants a part of your settlement, the skilled and compassionate attorneys at the law offices of Olmstead & Olmstead, P.C., can help.

Our experienced lawyers will answer any questions you may have on the various aspect of a personal injury claim and how it may relate to an upcoming divorce. We will be happy to arrange a no-obligation initial consultation to establish whether you or your loved one is entitled to a portion of compensation for your injuries. For a free initial consultation with an experienced attorney, call today at (703) 361-1555

Making Healthcare Decisions for Children of Divorce

When there is a divorce involving children, the parents often have vehement disagreements about various parenting issues. One of the most common areas in which parents may not see eye to eye is with the health care decisions that must be made. Before the divorce is finalized, they might be able to agree on whose health insurance policy the children will be under, but when a specific issue arises, they often have different ideas about how it should be addressed.

Sole vs. Joint Custody in Virginia

The first consideration when there is a disagreement about a health care decision on behalf of the child is which parent has custody. There are two different types of child custody; physical custody and legal custody. Physical custody addresses which parent the child lives with primarily, and how often the non-custodial parent is able to visit the child. Legal custody deals with the ability of parents to make major decisions that affect the child. Healthcare decisions would fall into the area of legal custody, because it would be in the “major decision” category.

When One of the Parents Has Sole Legal Custody

If one of the parents has sole legal custody, then they are able to make decisions about routine medical care (e.g., physicals, dental checkups, eye tests, etc.) without consulting the other parent. In addition, either parent can make a decision about emergency medical care while the child is with them. However, if this is the parent who does not have sole legal custody, he or she must inform the other parent about the medical treatment the child received as soon as it is reasonably possible.

When Parents have Joint Legal Custody

It is becoming increasingly common in Virginia and throughout the country for parents to share legal custody of their children. The default position of the family courts is that it is generally in the best interests of the children for both parents to be involved in their lives. So, even in situations where one parent has primary physical custody of the child, they often have joint legal custody; giving them equal decision-making authority over areas such as education, religious upbringing, extra-curricular activities, and health care. 

In some cases, one parent may be given final decision-making authority over certain areas, with other areas going to the other parent. For example, if religious upbringing and education are more important to the mother and the child is on the father’s health insurance policy, the mother may decide which religion the children will be brought up and which school they will go to, while the father may to have decision-making authority for medical treatment.

In many joint custody arrangements, however, the areas of decision-making are not as well-defined, and it is expected that the parents will consult each other and work cooperatively and in keeping with the child’s best interest. And while they might start out with this intention, specific situations may come up in which a major disagreement may arise.

When the Parents Can’t Agree on Medical Treatment

Disagreements over healthcare decisions can lead to a standoff between two parents with the equal decision-making authority, putting professionals who are just trying to do their jobs in the middle of a parenting dispute. For example, the child injures his arm playing football. The mother wants the child to have surgery, but the father wants to pursue other treatments. Both have consulted equally-competent medical professionals who support their point of view.

How does this situation get resolved? Most likely, in one of two ways; the parents either work together to reach a solution both of them can live with, or one of the parents (probably the mother in this case) petitions the court to obtain full legal custody so she can go forward with the surgery. When the court gets involved, the results are unpredictable, and they depend largely on the viewpoint of the judge presiding over the case and the strength of the arguments presented by both sides.

Involved in a Child Custody Dispute in Virginia? Contact an Experienced Family Law Attorney

Parents with joint legal custody should be committed to working together to decide important parenting matters (based on their children’s best interests). And before going back to court, they should exhaust all other avenues and try to work out any disputes on their own. That said, there are times when there is little choice but to petition the court for a modification of the current custody arrangement. When that situation arises, you need strong legal counsel in your corner advocating forcefully for your rights and interests, and for the best interests of your child.  To schedule an initial consultation with the seasoned family law attorneys at Olmstead & Olmstead, call us today at 703-361-1555. You may also message us through our web contact form or visit our Manassas, VA office in person at your convenience.