If you receive a settlement or judgement award stemming from a personal injury lawsuit, you may not have realized that money could get tied up in your divorce. After all, you are the one that suffered the injury, not your spouse. However, one-time or structured settlements are commonly (but not always) considered marital property and are divided according to the divorce laws in your state. How divorce and personal injury settlements are handled will depend on several factors, including the discretion of the judge presiding over your divorce case.
Marital Property in South Carolina
South Carolina, like most other states, is an equitable division state. When a couple divorces, all assets acquired during the marriage will be split equitably between the two spouses. In this sense, “equitably” means fairly, not equally. (California and a handful of other states are known as community property states, meaning all marital assets must be split 50-50. While this ensures a couple’s property is divided equally, the distribution is not always equitable.)
Only marital property can be divided in a divorce case. There are only a few types of assets that can be excluded. Separate property (also called non-marital property) includes:
- Any assets acquired before the marriage
- Gifts given to only one spouse
- Property specifically protected by a prenuptial or post-marital agreement
Personal injury settlements are usually considered separate property if the injury occurred before the marriage. However, the court may make an exception in cases of “commingling.” To be protected from a divorce settlement, non-marital property must be kept separate from marital funds. If settlement funds are placed in a joint bank account or otherwise used for the benefit of the marriage, it may be “transmuted” into marital property.
Personal Injury Awards May Be Considered Marital Property
If your personal injury settlement is determined to be marital property because the injury and lawsuit occurred after you were married, the judge may still decide to let you keep the entire award after divorce. The court will consider many factors before determining the most equitable solution in your case. These factors may include:
- The value of the PI award
- The total value of all marital assets
- Income and earning potential for each spouse
- Marital and individual debts
- Non-marital property of each spouse
- Physical, mental, and emotional health of each spouse
- Length of the marriage
- Tax implications
- Retirement consideration
Depending on your circumstances, the judge may decide to divide a personal injury settlement between the spouses or leave it entirely to the injured spouse.
Get Help Today
Divorce is a difficult and stressful process for even the most amicable of couples, but most divorcing couples are able to reach an agreeable settlement without the need for a lengthy divorce trial. With skilled representation, you can start a new life without giving up your livelihood and financial security. The experienced family law attorneys at McCoy & Stokes, LLC will fight for equitable treatment in your divorce case. For legal advice about your personal injury award or divorce settlement, contact us today.