Personal Injury Settlements and Sarasota Divorce

As a Sarasota Divorce Attorneys, we know that when one spouse receives a payment from a personal injury settlement or lawsuit, part, or all of that payment may be marital property.

From the discussions on equitable distribution, we know that in a Florida Divorce, assets that are defined as marital in nature are divided equally between the parties at the time of the final judgment of a divorce.

At the Divorce Trial, the Court's first job is to determine  what portion, if any, of a personal injury award is marital. This depends on the basis for the award in the first place. For example:

During the marriage (this is an important factor so keep this in mind) The Husband is injured in an auto accident, and receives an award of $100,000.00. Due to his injuries, the Husband had to take time off work, and as a result, lost the income that he could have earned during that time.

For the sake of this example, we’re going to say that the Husband lost $25,000.00 in wages due to his injuries, and was completely compensated for that loss through the judgment.

Out of the $100,000.00, that leaves $75,000.00 left over for future loss of earnings, loss of earning capacity, and future medical expenses, or general pain and suffering.

The difference in the two amounts is that the $75,000.00 settlement was designed to offset the Husband’s now limited earning capacity due to his injuries, and to help with future medical bills, or additional time off that he may need.

If the parties then get divorced, the $25,000.00, which was designed to replacepast earnings that were missed during the marriage, is marital, and will be divided between the parties equally. This is because the income that the award is replacing would have also been divided equally had it been earned.

The remaining $75,000.00 belongs to the Husband alone, as it is designed to compensate him for his reduced ability to earn money in the future.

It becomes easy to see why timing of a settlement, as well as the specific terms of the settlement can have a huge impact on equitable distribution.

Keep in mind that any co-mingling complicates this issue, and may change the entire settlement to marital, regardless of the terms of the personal injury settlement agreement.