Personal Injury Settlements in Divorce

Personal Injury Settlements in Divorce

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A client going through divorce who has sustained serious injuries may not consider their personal injury settlement as a possible asset subject to division in a divorce. As the victim of an accident, you may feel that it is not fair as you endured all the pain and suffering.

Personal Injury Settlements or Awards and Divorce in Colorado

In Colorado, there is not a simple rule on how personal injury settlements or awards are treated in divorce.  It depends on whether the settlement or award is considered a marital property asset or separate property.

In general, the courts view personal injury damages as a means to compensate the spouse receiving it.  For example, damages such as emotional distress and loss of consortium are more likely to be considered the sole and separate property of the injured spouse – not subject to equitable division by the court.

The court may consider monetary damages such as loss of wages, medical expenses, or property damages as marital property. The reasoning is that both spouses may be affected by the additional expenses or the loss of income. The court may find it equitable for both spouses to be compensated for such losses.

How do I protect my personal injury settlement?

If you expect to receive a personal injury settlement or award, there are ways to protect it in the event of a divorce. The following are a few options:

A. Premarital or marital agreements. If you are thinking of getting married, you may opt to enter a premarital agreement with your soon-to-be spouse and outline that your personal injury award or settlement shall remain your separate property including any increases in value in such award or settlement upon divorce.  If you are already married, you may opt to enter a marital agreement with your spouse outlining that your personal injury award or settlement will remain your separate property including any increases in value upon divorce.

B. Separate account. You should consider placing your personal injury award or settlement in a separate bank account to avoid commingling of assets with your spouse. You want to avoid the court viewing you gifting your personal injury award or settlement to the marriage by placing the funds in a joint bank account you and your spouse have access to.  Hence, possibly making it subject to equitable division by the court. Note that placing such funds in a separate bank account does not insulate you from increases in value in that money as being characterized as marital property subject to equitable division.

There are many assets that need to be protected during divorce. For more information regarding Colorado divorces in the Vail and Roaring Fork Valleys contact Vail attorney, Amy Goscha  and Aspen attorney, Ryan Kalamaya at 970-315-2365.

Kalamaya | Goscha is a Colorado law firm founded by Ryan Kalamaya and Amy Goscha. The boutique mountain law practice specializes in personal injury, criminal defense, DUI defense, divorce and family law. Kalamaya | Goscha has law offices in Edwards, Aspen, and Glenwood Springs. To speak to an attorney call (970) 315-2365.

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