Personal injury attorney in Alabama

Are Personal Injury Settlements Considered Marital Property in an Auburn, AL Divorce?

If you expect a personal injury settlement award but you are also entangled in a divorce, you may understandably be concerned about your ex-partner’s entitlement to your settlement amount. You may be wondering, to what extent is a spouse entitled to claim personal injury settlement proceeds in a divorce in Auburn, AL? Unfortunately, there is no straightforward answer.

It is best to consult a skilled Auburn, AL divorce attorney if you are going through a divorce and you are simultaneously involved in a personal injury claim. An experienced attorney can work with you to ensure that your rights are protected during your divorce and help you avoid parting with too much of your money.

Is a Personal Injury Settlement Award Marital Property in Auburn, AL?

If the award collected is considered compensation for pain and suffering in a personal injury settlement, it may not be classified as marital property. Only the recipient is entitled to this money as they alone experienced the discomfort after the incident.

If a part of the settlement is deemed compensation for lost wages or physical damage to property, it could be categorized as marital property since income and cars would be classified in this manner.

However, even a settlement for pain and suffering may be deemed marital property during divorce proceedings if the funds are co-mingled with other marital assets. The settlement may be considered a community asset if the funds collected from a personal injury damage award is used to purchase a vehicle or pay off a mortgage.

When the funds are paid out, seek legal counsel from an Auburn, AL divorce attorney. They will offer you options to prevent these funds from being classified as marital property.

Retaining the Personal Injury Settlement Award as Separate Property

The settlement awards may be considered marital property, but it is often possible to keep these funds as separate property. Suppose the recipient of the award believes that the marriage will potentially end in divorce. In that case, they can create a special trust or account outside the relationship to ensure that the award is seen as separate property.

Importantly, you must pursue this option before the divorce proceedings begin in court. During the divorce process, attempts to place the funds in a special trust or account may be seen by the court as hiding assets.

It is vital to consult an Auburn, AL divorce attorney to make sure that no laws are violated or that the divorce proceedings may continue problem-free when using this option as a means to save a settlement award from a successful personal injury case. Consulting an attorney can help you understand how to keep the compensation separate from marital property.

Marital Property in Auburn, AL

The law of “equitable distribution” applies in Alabama, which means that courts do not automatically split marital assets and liabilities in half. Rather, courts have the discretionary powers to award assets and debts based on what makes sense and what would be appropriate under specific circumstances. “Equitable” and “fair” are not to be confused. These are similar yet different concepts. The court will only subject to division the assets that belong to the marital estate.

Personal Injury Awards Classification in Auburn, AL

Compensation for various things, such as medical bills, lost wages, damages for disfigurement, or pain and suffering, is included in personal injury settlements in Auburn, AL. Therefore, how it is categorized will mainly depend on the reason for which the compensatory damages were awarded. The general guidelines for classifying personal injury awards are as follows:

Marital Assets:

  • Funds for lost income or wages
  • Funds for compensating medical costs
  • Loss of spousal support
  • Money for loss of consortium, affection, society, etc.

Non-Marital (Separate) Assets:

  • Compensatory award for pain and suffering
  • Compensatory damages for disfigurement or disability
  • Compensation for vocation retraining
  • Compensation for prosthetics or adaptive devices
  • Future medical bills, with possible exceptions

Legal Help with Your Property Division in an Auburn, AL Divorce Case

If you are involved in a divorce in Auburn, AL and believe that your ex-spouse will try to take a portion or all of your personal injury settlement money, you should promptly contact a family law attorney. On the other hand, if you feel that your ex-spouse is trying to conceal money, you should call a lawyer to understand your rights in these circumstances as well.

At Alsobrook Law Group, we have several years of experience representing individuals for divorce and all other types of family law matters in Auburn. For more information or to schedule a free consultation, call today at (334) 737-3718.