Is Personal Injury Award Considered Community Property?
When a couple is going through a divorce, dividing assets is a challenge. Some states are “community property” states, meaning everything owned and acquired during the marriage is equally owned (by both spouses) and must be equally divided upon dissolution of marriage. However, even in community property states, there are exceptions. Your attorney is the best person to figure out what you are entitled to according to the law, but let’s look at some of the most common situations.
Community Property States
If you live in one of the following states, you live in a community property state. If you do not live in one of these states, you are still entitled to your fair share of the assets, but the rules for what belongs to each of you are a bit different.
Arizona, California, Idaho, Louisiana, New Mexico
Nevada, Texas, Washington, Wisconsin
What is not included?
Money and property acquired before the marriage.
An item gifted to one of the spouses.
Money or property received as an inheritance that has not been co-mingled.
It must be noted that funds (even received as gifts or inheritance) deposited into joint accounts is considered community property in most cases.
Money Received In A Personal Injury Suit
While every case must be analyzed on its own facts, as a general rule, if the money received due to a personal injury lawsuit is to repair or replace items belonging to the marriage, it is considered community property. However, if the money is for pain and suffering, the money belongs to the person who suffered. The money is to compensate them for their discomfort.
Before you go to court, consider divorce mediation to calmly and fairly determine how assets are divided. A divorce mediator is a skilled professional who knows how to make the process work. Two adults entered into the marriage. Each of you contributed to the union. When the union dissolves, each should walk away with a fair settlement. Divorce court is not the place to “get even” or to punish each other. The law is not concerned with your feelings. It is concerned with legally dividing your assets and allowing each of you to begin again.
Every state has laws in place that must be obeyed, and each state is different. The above information is a broad and general assessment that applies in most cases. Only a skilled and experienced attorney licensed in your state, can give you all of the information you need. Do not go through a divorce alone. Recognize that you are in a vulnerable and emotional state. Even if you are angry and hurt, those feelings will fade. By then it is too late to change things. You need legal representation that will look out for your best interest.
If you are not going through a divorce, and even if you think you never will, be smart. Keep assets and money that you brought to the marriage separate. If you inherit money or property, do not co-mingle those assets with the assets of the family. You maintain the control. If during a divorce you choose to share gifts or inheritances, you can. As long as you have kept it separate, it belongs to you to do with as you see fit.
Wendy Dessler is the author of this article.