Are Damages from a Personal Injury Settlement Marital Property?

Suppose that you are injured in a car accident and you receive a settlement representing damages for pain and suffering, lost wages, medical costs and attorney fees. Is the money you receive from that settlement marital property such that it can be divided by the Court in a divorce?

The answer, as is the case with most things, is it depends.

A recent case out of the Utah Court of Appeals provides a good statement of the law surrounding this point:

This court has explained that compensation for a personal injury can be either separate property or marital property, depending on the nature of the damages. Naranjo v. Naranjo, 751 P.2d 1144, 1148 (Utah Ct. App. 1988). Specifically, “amounts received as compensation for pain, suffering, disfigurement, disability, or other personal debilitation are generally found to be the personal property of the injured spouse in divorce actions.” Id.; see also Izatt v. Izatt, 627 P.2d 49, 51 (Utah 1981) (determining that a wife’s personal injury compensation related to a medical malpractice suit that caused her to have two cardiac arrests was her personal property). But “money realized as compensation for lost wages and medical expenses, which diminish the marital estate, are considered to be marital property.” Naranjo, 751 P.2d at 1148; see also Bugh v. Bugh, 608 P.2d 329, 331–32 (Ariz. Ct. App. 1980) (concluding that compensation awarded to an injured employee for lost wages and medical expenses, and not pain and suffering, was marital property).

Andersen v. Andersen, 2016 UT App 182, ¶ 20.

Returning to our hypothetical, the portion of the settlement attributed to pain and suffering could be deemed separate property, and the remainder would be deemed as marital property.

However, you must be able to articulate how much of the settlement is attributed to pain and suffering in order to carve out that amount as your separate property. If you can’t, then the whole amount will most likely be deemed marital property and therefore, is subject to division in a divorce. See Andersen, 2016 UT App 182, ¶ 22 (“The defendant further explained that he was unable to articulate how much of the compensation was for pain and suffering “because the judgment was awarded in Colorado, and, according to Colorado procedure, the jury verdict was not broken into general or special damages.”(quoting Naranjo, 751 P.2d at 1148.))

If you have a personal injury settlement and are facing divorce, call Sorensen Law Group, P.C. to go over your options.