Do I Have to Divide My Personal Injury Settlement in My Texas Divorce?

 Posted on August 30, 2021 in Complex Property Litigation

If you have been seriously injured in an accident, you may rely on compensation from a personal injury claim to provide relief for your ongoing medical expenses, lost wages, and pain and suffering. Going through a divorce while you are still suffering from the effects of an injury can be especially difficult, and you may be concerned that you are at risk of losing a large portion of this compensation to your spouse in the division of assets. If you find yourself in this situation, it is important to work with an attorney who can help you manage the legal complications of your divorce case and protect your financial resources.

Is Injury Compensation Considered Community Property?

In a Texas divorce, the couple’s community property must be divided, while each spouse is able to keep their own separate property. Community property usually includes any assets acquired by a spouse during the marriage, while separate property includes assets acquired before the marriage. As such, if you suffered an injury and resolved your claim before getting married, you are likely entitled to keep the full amount of the compensation you have been granted.

If you were injured during your marriage, however, it can be more complicated to determine whether your compensation belongs to you alone or to the marital estate. In this case, it is important to understand the types of damages that your settlement or verdict included. According to the Texas family code, injury compensation for your medical bills and pain and suffering is likely your separate property, but compensation for your loss of earning capacity is likely community property. An attorney can help you review the terms of your settlement or verdict to determine the specific amounts awarded for each type of damages.

Commingling and Reimbursement

Unfortunately, there are situations in which injury compensation that was once your separate property could become community property. For example, if you deposit the funds from your settlement into a joint account held by you and your spouse, the funds may become commingled and lose their separate identity. In this case, it can be very difficult to extricate the funds that you were once entitled to. With this in mind, it may be a good idea to establish a separate account or trust to hold the assets from your injury settlement or verdict.

Another complicated situation may arise if you used marital assets or your spouse contributed separate assets to cover upfront, out-of-pocket medical expenses related to your injuries. During the divorce process, you could be obligated to reimburse your spouse or the marital estate for these contributions.

Contact an Austin Divorce Lawyer

At Powers Kerr & Rashidi, PLLC, we help our clients handle complex property litigation issues as they attempt to reach a fair divorce resolution. We can help you protect as much of your injury settlement as possible so that you continue to have access to the resources you need. Call us today at 512-610-6199 to speak with an experienced Austin, TX divorce attorney.

Sources:

https://statutes.capitol.texas.gov/Docs/FA/htm/FA.3.htm

https://statutes.capitol.texas.gov/Docs/CP/htm/CP.41.htm