In the event that you receive a personal injury settlement either before or during a Virginia divorce, you may have questions about how this award will be divided.
Put simply, the answer is that courts will divide the marital share of any personal injury settlements that are awarded either (1) within a reasonable time before a party files for divorce, or (2) during the divorce process itself.
Calculating this share, however, can be complicated, and is something that you must speak with an attorney about.
In this article, we’ll provide a brief overview of what Virginia law has to say about this process.
Remember, however, that you should only take action in your case after consulting with an experienced attorney who has reviewed your entire legal matter.
Equitable Distribution in Virginia: The Basics
If you and your spouse own property together and one of you files for divorce, you’ll likely have to go through the process of splitting up your property, assets, and debts in an “equitable” (“fair”) manner.
Note, however, that an equitable distribution is not necessarily an equal distribution.
In Virginia, equitable distribution occurs in three basic steps:
- Categorize your property as separate, marital, or mixed.
- Value any relevant contested marital property.
- Divide your property in an equitable manner.
Importantly for this discussion, the first step (“categorize”) requires that all relevant property (including personal injury settlements) be categorized as separate, marital or a mix of the two:
- Separate Property — All property acquired by either spouse before the marriage, as well as any inheritances, heirlooms, and other distinctly “separate” forms of property.
- Marital Property — All jointly-owned property, as well as all other property that is not defined as “separate” in nature.
- Hybrid (“Mixed”) Property — Any property that is part separate and part marital in nature. This is a complex area of law, but basically covers the “marital share” of any otherwise separate property.
Division of Personal Injury Settlements in Virginia Divorces
With these three definitions in mind, we can begin to look at exactly how personal injury settlements are treated during Virginia divorces.
The best place to start, as always, is the Virginia Code section which governs the issue:
“The court shall classify property as part marital property and part separate property as follows…in the case of any personal injury or workers’ compensation recovery of either party, the marital share as defined in subsection H shall be marital property.”Va. Code § 20-107.3(A)(3)(c)
Looking for a moment at subsection H (as noted above):
“The court may direct payment of a percentage of the marital share of any personal injury or workers’ compensation recovery of either party, whether such recovery is payable in a lump sum or over a period of time. However, the court shall only direct that payment be made as such recovery is payable, whether by settlement, jury award, court award, or otherwise. “Marital share” means that part of the total personal injury or workers’ compensation recovery attributable to lost wages or medical expenses to the extent not covered by health insurance accruing during the marriage and before the last separation of the parties, if at such time or thereafter at least one of the parties intended that the separation be permanent.”Va. Code § 20-107.3(H)
As you can see in these two sections, personal injury awards count as “mixed” property.
For this reason, the court may count the marital share of your personal injury settlement as marital property (which is subject to division) in the event that the amount is attributable to lost wages or medical expenses (1) that were not covered by health insurance, and (2) that occurred during the marriage but before you and your spouse separated.
A Quick Example of Equitable Distribution in Practice
The previous section is a bit complex and full of legalese, so let’s break the whole thing down into one easily digestible example.
Let’s say that you were involved in an auto accident that resulted in a personal injury award of $100,000, divided up in the following manner:
- Medical Expenses: $50,000
- Lost Wages: $20,000
- Car Repairs: $20,000
- General Pain and Suffering: $10,000
In this situation, the medical expenses and lost wages would qualify as marital property.
This is because they directly correlate to marital funds, and would thus be subject to equitable distribution.
The car repairs, on the other hand, would depend on the facts of the case, as repairs for a car bought before the marriage (i.e. repairs for a car that counts as separate property) may mean that this award may count as separate during a Virginia divorce.
Finally, the general pain and suffering award would almost certainly qualify as separate property.
This is because both the law and prior cases have confirmed that pain and suffering, inconvenience, and mental anguish awards are usually classified as separate in Virginia divorces.
Taking these three facts together, we arrive at the following ballpark estimate of how this award would be divided:
|Pain and Suffering
Note that this example assumes the default 50/50 split that is common in Virginia.
However, other divisions (such as a 65/35 split) may be applied based upon your specific facts and arguments of the parties.
How Can I Protect My Share of a Personal Injury Settlement?
As you can see in the example above, there’s not a lot you can do to protect your share of a personal injury settlement from your spouse if the court defines it as a marital asset.
For this reason, there are only four general strategies worth considering if you want to challenge your spouse’s claim to a personal injury settlement in your name.
Hold on to Your Settlement Agreement and Go Over the Language with Your Attorney
As noted above, Virginia courts will only award the marital share of any personal injury settlement to your spouse.
For this reason, it’s a common strategy for divorcing individuals to argue that the marital share is lower than what their spouse is arguing.
For example, if your spouse is claiming they deserve a full half of your settlement agreement, you could produce documentation stating that $10,000 of the settlement was for pain and suffering, and thus not subject to division (as seen in the example from above).
In any event, you must bring your original settlement agreement to your attorney so they can read the documentation in full.
Only after reading the paperwork for your personal injury award can your attorney give you an accurate representation of what’s worth arguing in your case.
Reference Your Prenuptial Agreement (if You Have One)
Another common method for protecting your share of a personal injury award is to produce a prenuptial agreement that references these awards (or other similar matters) specifically.
Often, these agreements are created when an individual receives a personal injury award before they are married, such as if you are receiving monthly payments for a traffic accident from a few years ago.
A prenup could state that this form of income is separate, and is thus a powerful tool for protecting your personal injury settlement in the event of a potential future divorce.
Review Your Divorce or Property Settlement Agreements
Throughout the divorce process, whether you have filed with the court or not, the parties are able to agree to the terms of divorce in a contract.
For example, if you and your spouse agree on how your property, such as the house or other assets including a settlement from a lawsuit, is to be split, then put it in an agreement and submit it with the filing.
If both parties agree that the settlement should remain with the injured party, then the court will not split it (unless the court finds an extraordinary reason as to why it should).
Do not forget, even during a contested divorce in court, you can agree to how you would like property or other aspects of your divorce to be handled.
This makes your divorce easier to process for the judge, and it reduces the costs associated with litigating.
Speak with an Experienced Attorney
While this isn’t a separate strategy, per se, you can and should always consult with an attorney about your property and division during divorce.
As with all cases involving mixed property in Virginia, the results will depend upon the facts of your case and the arguments of both parties.
According to Virginia Code Section 20-107.3(A)(3)(c) and (H), personal injury awards count as mixed property during Virginia divorces.
This means that, in most cases, these awards can be divided by the court as part of equitable distribution process.
Generally speaking, only the shares of the award attributable to lost wages and medical expenses (as well as the replacement/repair of any marital property, such as a car) will be divided, as other forms of awards (such as pain and suffering) are considered to be separate property by Virginia courts.
If you’re planning on a divorce and you’re worried about a personal injury settlement, you should speak with an attorney as soon as possible.