Individuals who have sustained serious injuries in a personal injury accident rely greatly on their monetary compensation to cover damages such as medical expenses, rehabilitation costs, property damage, lost wages and the like. Compensation in such accidents can come in various forms—one of which is a personal injury settlement.
If you and your spouse are going through a divorce, you may automatically assume that your personal injury award or settlement is solely your property. After all, you were the victim in the accident who endured all the pain and suffering. However, some states require that all property shared previously by the couple be divided.
Marital property vs. non-marital property
In Colorado, there is no hard and fast rule on how a personal injury award or settlement is treated in a divorce. Ultimately, it depends on whether the money is considered a marital asset or a non-marital asset.
Courts, for the most part, see personal injury damages as a means to compensate the injured spouse. Damages such as emotional distress, pain and suffering, and loss of consortium, for instance, are more considered the sole property of the injured victim and may not be deemed as divisible.
On the other hand, monetary damages such as medical expenses, property damage, and lost wages may be classified as joint marital property. This is because both spouses were affected by the increase in expenses or the loss of income, and so it would only be right for both spouses to be compensated for these losses.
Steps to protecting your injury award or settlement
There are numerous steps you can take to protect your personal injury award in the event of a divorce. Here are some of them:
- Have a separate account.It is crucial to keep your award money in a separate bank account to avoid mixing it with funds in your joint account. If you commingle your award money with money that both you and your spouse have access to, then it may be classified as marital property and therefore be subject to Colorado equitable distribution laws during your divorce.
- Opt for a pre-nuptial or post-nuptial agreement.You may also want to consider drafting a pre- or post-nuptial agreement with your spouse. In this legal document, you may declare any personal injury award or settlement as a personal asset to keep it from being designated as marital property in case of a divorce.
- Work with an attorney.If you are undergoing a divorce at the same time as a personal injury settlement, be sure to work with an attorney and let them know about the injury award. An experienced attorney can provide valuable legal advice to avoid having to share your award money with your spouse.
Personal injury awards and settlements are not the only assets at risk in a Colorado divorce. Other assets that may need legal protection during a divorce are real estate holdings, jewelry, retirement benefits, and even expensive pieces of art. To protect your assets in the event of a divorce, consult with a knowledgeable family law attorney as soon as possible.