How Are Damages for Personal Injuries Divided at Divorce?
When a marriage dissolves, the couple’s assets are divided in the Final Decree of Divorce according to community property principles. Courts presiding over divorces and other family law matters will divide any property in which the marital community has an interest in a manner that is just and right. Assets that a married couple acquires during their marriage which are subject to division in a divorce including real estate, personal property, intangible property interests (e.g., retirement and pension benefits), and money recovered as compensation from someone who was liable to you for personal injuries.
However, what are the rules governing how personal injury awards are distributed at divorce? In this blog post, we discuss the basic rules governing how personal injury damages are allocated for divorce purposes.
The Community Property Presumption
Under Texas law, all property acquired during a couple’s marriage is deemed to be community property, unless it qualifies as a spouse’s separate property. The Texas Family Code defines separate property as property owned by a spouse before marriage, property acquired by a spouse during the marriage by gift, or inheritance, or the recover for personal injuries sustained by the spouse during the marriage, except any recovery for loss of earning capacity during marriage. Texas courts have held that all property over which the parties have an interest is presumed to be community property. As a result, those who wish to claim an item as their separate property must present clear and convincing evidence that the property in question qualifies as separate property.
Texas Family Code Section 3.001
Section 3.001 of the Texas Family Code lists three categories of property that are considered to be the spouse’s separate property. The third category specifies that “the recovery for personal injuries sustained by the spouse during marriage, except any recovery for loss of earning capacity during marriage” is considered to be the separate property of one spouse.
The operative language for determining whether a personal injury award is characterized as community or separate property focuses on when the injury occurred, rather than when they were compensated. A person’s right to recover compensation arises from the date the injury occurred. Therefore, for purposes of characterizing personal injuries as either community property or separate property, courts determine whether a spouse’s right to file their lawsuit arose before marriage or after divorce.
Characterizing Specific Personal Injury Damages
Under Section 3.001, damages compensating the plaintiff for the consequential loss in their earning capacity is excepted from separate property treatment. One of the basic principles underscoring the community property system is that spouses agree to share the wealth they acquired with each other. For example, any wages earned during marriage are generally considered to be the community property of both spouses.
However, when it comes to compensatory damages for personal injury cases, the losses for which plaintiffs are entitled to receive compensation are inherently personal. For example, compensation for the physical pain and suffering brought on by an injury are limited to the injured victim. As a result, the damages for pain and suffering are considered the injured party’s separate property.
Economic damages that result from a spouse’s injury are generally considered to be the property of the community estate. Medical expenses and lost earnings are usually treated as community property because community funds were probably used to pay for those expenses. To claim personal injury economic damages as separate property, the spouse must show and trace their expenses for the payments made from their separate property funds. Ideally, your personal injury settlement will detail what damages were attributable to medical expenses, loss of earnings, pain, and suffering, etc.
Call Coker, Robb & Cannon, Family Lawyers at (940) 293-2313
If you are facing a challenging divorce that involves complex property division matters, such as tracing issues that may require the expertise of a forensic accountant, you will benefit from sound legal advice from a professional family lawyer. At Coker, Robb & Cannon, Family Lawyers, we are dedicated to providing Texas residents with effective legal representation in various legal matters, from alimony to property division.
For more information about how Coker, Robb & Cannon, Family Lawyers can help you, call us at (940) 293-2313 or visit us online today.