Divorce & Annulment Article


What Happens to Personal Injury Proceeds During Divorce?

The period of time between filing for divorce and actually getting divorced is a land field of potential issues when it comes to property issues in divorce. The general rule is that money earned after the service of the petition for dissolution is separate property not subject to division upon divorce. But, if money isn’t earned but is instead awarded pursuant to an insurance policy, it may be community property subject to division upon divorce. The type of award, and purpose of the insurance will determine whether the insurance payout is community or separate property.

Disability insurance.
Disability insurance is usually paid out to cover medical expenses, general expenses or lost wages. If the policy was purchased during the marriage and the injury happened during the marriage, Arizona courts have held the proceeds are community property.

Unemployment Insurance/ Workers Compensation
The same logic can be applied to unemployment insurance or workers compensation claims. Insurance for losses to the community, like wages, are community property.

Car or Fire Insurance

Was the underlying car or structure community or separate? If your separate car was in an accident and you receive money to replace the vehicle, the funds are arguably separate funds. If the marital home is burned down and a check is issued to replace the home, the funds are likely community and subject to division.

Personal Injury Funds
If a personal injury to one spouse results in medical expenses and lost wages to the community, the recovery of these expenses are community property. However, if a spouse is being compensated for their personal pain and suffering or the loss of a limb or other personal loss, this recovery will be treated as separate property, and not divisible upon divorce.

This is true even if an injury happens after the service of a petition for dissolution. The community continues to exist until an actual divorce.

In general, all property acquired by either husband or wife during a marriage is community property. The exceptions are for gifts and inheritance. Insurance proceeds are not gift or inheritance, so the basic question begins with what are the insurance proceeds compensating?
 
If the funds are compensating you for a loss to your body, you brought your body into the marriage and are entitled to it upon divorce. Your spouse has no claims to your award for pain and suffering.

This means an attorney must make a very careful analysis of the complaint, the judgment and the terms of any personal injury settlement or the terms and purpose of the insurance policy. Additionally, you may want to make a careful accounting of the medical expenses and lost wages to the community and argue anything above and beyond the loss to the community is a personal loss for the individual who suffered the loss.

This can be a very tricky area and the arguments should be carefully crafted in your favor. Consider consulting with an experienced attorney on issues related to insurance or personal injury proceeds.

Contributing Attorney:
Billie Tarascio litigates family law and domestic violence cases at Modern Law.

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QUESTIONS

  • I'm a Disabled Veteran, my husband is active army - we met on active duty 2008 & married 2012. Due to him physically and mentally abusing me, we seperated end 2014, had a separation agreement in place since we lived in NC. We toyed with reconciling during 2015 and 2016. Feb 2017, despite being in contact with each other, he filed for divorce in TX, filed a false affidavit that he couldn't find me, and had a default judgement granting divorce. He cleared out our 3600 sqft home in NC of all our joint & personal property and dropped my daughter from ins. How to make his wrongs, right?
  • I am finalizing my divorce decree, and my previous lawyer added his fees to my decree with a date when payments needs to start. I am completely broke, lost my job and all my money. I won’t be able to pay his payments set up on the decree. Can file bankruptcy and get ridge of this debt?
  • I have a spousal maintenance order that stops when I have attained federal eligibility age of retirement. What does this mean?
  • My husband was deported to the UK after a conviction for domestic violence. He cannot return to the US. Our marriage is not legal there. Therefore he is not married. Do I have to get a divorce? And if so, how can I serve him when I don't know where he is?
  • I filed for divorce 6yrs ago paid all that money and they say i am still married. My Husband has moved back to morrocco and i dont know how to find him. havent seen him in 6yrs how do i get a divorce from him if i cant find him?
  • My husband was Active Duty Army when we married and had a son together. He got a divorce without my knowledge after 8 years and went on to Retire as a Sgt. Major. Am I entitled to part of his retirement ? I now live in AL and he lives in VA.
  • My son was married for 10 years. She always wanted to be the one bringing in all the money. My son was given an allowance. She makes close to 60,000 a year and basically told my son to get a job the last year. He couldn't find one and she decided to ask him to leave. He left with just some stuff and nothing else. Do you think he would be able to get alimony at least for awhile? No children. He is 29 and will be looking for a job now obviously, but he was left with nothing. Ty for any advice in advance
  • My question is: Sept 2003 I got married in San Jose, CA. I moved to Phoenix, AZ the same year in July, We had a daughter May 2004, So what Law would my divorce be under? My husband had a house several year before we got married, and till this day Im not on the title of the house or the Cars we purchased during our marriage, Am I intitled to half of anything if I divorce?? I never changed my last name to my married name can that be an issue??
  • Feb. 14,2014 Husband and I had a resolution meeting where he was suppose to rollover the per deim of his 401k plus 6k. it is on the paperwork to do so. It is now almost a year over and no surprise, he hasn't done a damn thing or how do I get him to or even know it is the correct amount? what if he has taken it all out by now? please help. I didn't say anything for I hoped he had done it and I just never got the paperwork, but I am pretty sure he didn't even attempt to. what can I do? sue him? hire my lawyer again? can I make him pay for my lawyer if I do have to get her involved again?
  • My husband and I are going through a very civil divorce. We have no kids and want to be officially divorced as soon as possible so he is able to purchase a house without my liabilities. Once we turn in the paperwork, how long will it take for it to be processed?

STORIES

  • He told me that I could actually get all the money I needed by using my home as collateral. . .
  • If you get a divorce, make sure your date of birth is on the Decree if your name is changing!. . .
  • He told me that I could actually get all the money I needed by using my home as collateral. . .

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