Are Personal Injury Settlements Divided in Divorce?

California Community Property Law Explained

California is a community property state, which means that marital assets (or community property) will be divided equally between the divorcing parties. Whether a couple sells community assets and equally divides the profits or divides community assets equally based on their value, divorcing couples must split community property equally between themselves.

Community property includes any assets acquired during the marriage. Separate assets, which are any assets acquired before the marriage, are not subject to division.

Sometimes property can be both a marital and separate asset; these types of assets are referred to as commingled assets and are the result of separate property and community property mixing together.

For example, Spouse X used the money they earned before their marriage to cover the down payment on a condo. Spouse X and Spouse Y use the money they are both earning during their marriage to pay their mortgage. While the money made for the down payment is Spouse X’s separate property, the money used for the mortgage payments is community property. If Spouse X and Spouse Y decide to divorce, the equity in the home is commingled property.

Is My Spouse Entitled to My Personal Injury Settlement in CA?

After being injured in a negligence-based accident, a person can pursue civil action and fight for fair compensation for their economic and noneconomic damages. While economic damages include medical expenses, lost wages, lost earning capacity, and other financial losses with a clear value, noneconomic damages include losses without a clear value (i.e. mental anguish, pain and suffering, and loss of consortium).

If either party in a divorce has received a personal injury settlement, both parties may wonder whether the settlement award is subject to division. A divorcing party who was the sole person injured may feel like they are entitled to the entire settlement. However, whether the settlement is divided depends on whether the asset is separate or community property.

California Family Code § 781 states that a personal injury settlement is separate property if the negligence-related accident occurred when the couple was living separately or after the divorce was finalized. However, the injured spouse may still have to reimburse the other party if they used separate or community assets to cover the costs of accident-related expenses before you received your settlement. It is important to note that living separately does not necessarily mean that you are living in a separate home but refers to your date of separation.

If your accident occurred during your marriage, the settlement award is community property and is subject to equal division (see California Family Code § 780). However, under California Family Code § 2603, an exception can be made for the equal division of a personal injury settlement.

Under this statute, the non-injured party cannot receive more than 50% of your damages, and the court can only award the non-injured party with a portion of the settlement if they determine “the interests of justice require another disposition.”

Get Help with Your Property Division & Divorce Case

Backed by over two decades of collective experience, our attorneys can be trusted to provide you (or a loved one) with high-quality, compassionate legal counsel. If you are worried about your personal injury settlement or another asset concerning property division, we can advise you on how you might protect your assets and interests and possible case outcomes.

Need help with your property division case? Contact The Neshanian Law Firm, Inc online or via phone (949) 577-7935 to schedule a free 15-minute consultation today.