Are Personal Injury Settlements Marital Property?

Personal Injury - May 17, 2021

If you or your spouse sustains an injury caused by the careless or negligent actions of another individual or entity in the state of Illinois, do you know what would happen that settlement money in the event you get divorced? In the state of Illinois, the courts will divide marital assets and debts based on an equitable distribution method. Unlike other states that divide marital property precisely 50/50, Illinois instead considers a variety of factors when determining a fair split of the assets and debt. Here, we want to discuss whether or not personal injury settlements are considered marital property and how they may be split in the event a couple gets a divorce.

Looking at Marital and Separate Property

Before we get to the answer about whether or not personal injury settlements will need to be split with a spouse during a divorce, we need to look at what marital and separate property is. In the state of Illinois, only marital property will be divided during a divorce. Marital property will generally include any property obtained by either spouse during the course of the marriage. Separate property will include any assets or debts that the spouses acquired before the marriage occurred as well as any gifts or inheritances acquired by a spouse during the union.

It can be difficult to differentiate between marital and separate property at the time of a divorce. For example, if any of the separate property becomes commingled with the marital property during the course of the marriage, this means that the separate property loses its identity as “separate” and becomes marital property. For example, if a spouse receives an inheritance and then proceeds to use that money to buy a house for the couple, this now is marital property that will need to be divided equitably if a divorce occurs.

So, How Does This Affect Personal Injury Settlements?

Throughout the United States, the courts have generally held that portions of personal injury settlements are just that – personal to the person who suffered a physical loss. In the event a couple divorces, there are parts of a personal injury settlement that the injury victim will likely be able to keep.

In most personal injury cases, there are a few types of compensation paid out to a victim:

• Economic damages. This type of compensation generally is meant to cover the losses that are relatively calculable, including medical bills, lost income, daily out-of-pocket expenses, etc.
• Non-economic damages. This type of compensation is meant to cover the more immeasurable aspects of a personal injury, including emotional distress, physical pain and suffering, loss of quality of life, and more.

When a divorce occurs, personal injury settlements will need to be closely examined. Any compensation related to the personal loss that a person has suffered from will generally remain with the injury victim. In these cases, this would include the non-economic pain and suffering types of damages. However, to the extent that a personal injury settlement amount represents compensation for medical bills or lost income that occurred during the marriage, the settlement may very well be considered marital property.

Seek Legal Counsel

If you expect to receive a personal injury settlement and are also going through the divorce process, you need to work with a personal injury attorney in Chicago as soon as possible. Preferably, you need to have an attorney handling a personal injury case and an attorney handling the divorce case. This should not be the same attorney. Your divorce attorney will be able to further guide you when it comes to determining the process of splitting marital assets. Let your personal injury lawyer do their job and help you obtain maximum compensation for your injury losses.