Are Personal Injury Settlements Subject to Property Division in a CA Divorce?

While going through a divorce can be difficult in itself, suffering a personal injury during the process can result in further complications. Nevertheless, it is important to obtain your entitled financial compensation to cover medical bills, lost wages, as well as pain and suffering.

However, in most states, personal injury settlements can be part of propertydivision in a divorce. For instance, the court could award your spouse a portion of your monetary damages from the accident for lost earnings because income is considered marital property and subject to property division. Additionally, if any of the marital income was spent on ongoing medical treatment before the personal injury case is resolved, then the award for medical expenses may be viewed as marital property.

On the other hand, noneconomic damages such as pain and suffering, emotional distress, or loss of limb are only specific to the individual person, therefore not divisible through a divorce. These types of damages are typically viewed as separate property and treated like inheritance or a gift.

Keep in mind, California adheres to the community property approach in regards to property division in a divorce. This means all marital assets will be divided evenly in order for each spouse to receive 50 percent (or close to that percentage) of the assets. According to California Family Code Section 780, all personal injury damages that may be awarded in the future are still considered marital property since the injury occurred during the marriage.

The following are the exceptions for community property in California personal injury settlements:

  1. If the injury occurred when the couple has been already living separately, then the non-injured spouse would not receive any portion of the injured spouse’s personal injury settlement.
  2. According to California Family Code Section 2603 subsection (b), personal injury settlements that are part of community property should be given to the injured spouse. While this counteracts Section 780, Section 2603 means that the non-injured spouse should receive another asset from the community property estate while the injured spouse keeps the settlement. But if the personal injury settlement is the only community property, then the non-injured spouse will not receive anything in return.

Due to the complexities of the law regarding personal injury settlements and divorce, our Newport Beach divorce attorneys at Burch Shepard Family Law Group can assess your case, determine whether or not your personal injury settlement is subject to property division, and protect your rights and best interests throughout the divorce process.

For more information, contact us and schedule a consultation today.