Personal Injury and Workers’ Compensation Awards are sometimes at issue when dividing property during divorce proceedings.
Personal Injury and Workers’ Compensation Awards are generally divided into three components: (1) compensation to the injured spouse for pain and suffering, disability, and disfigurement; (2) compensation to the uninjured spouse for loss of consortium; and (3) compensation to the injured spouse for strictly economic damages, such as lost wages, lost earning capacity, and medical and hospital expenses.
Compensation to the injured spouse for personal and noneconomic loss (such as pain and suffering, disability, and disfigurement) is that spouse’s separate property and is not subject to equitable division. Compensation to the injured spouse for economic loss is subject to equitable division. Compensation to the uninjured spouse for loss of consortium is the uninjured spouse’s separate property.
The manner in which a Personal Injury or Workers’ Compensation award is classified and broken down in regard to how much of the award is for noneconomic damages and how much of the award is for economic damages can be critical to the determination of whether and how much of the award the uninjured spouse might have a claim against in equitable division of the parties’ marital property in a divorce case. The divorce attorney and the PI/WC attorney should work together in structuring the award to help ensure that their client is able to retain the maximum amount of the award possible in a divorce case as their separate property which is not subject to equitable distribution of marital property.
It is possible for a spouse’s separate property to be awarded to the other spouse as alimony or spousal support rather than equitable distribution in a divorce case.
If a divorcing spouse is expecting a Personal Injury or Workers’ Compensation award, they should consult closely with both their divorce attorney and the attorney that is handling their Personal Injury/Workers’ Compensation claim, and those two attorneys should work closely together for the benefit of their mutual client.