Personal Injury Awards and Divorce: How Will it Be Affected?
Each year, thousands of people in South Carolina are injured in accidents. Regardless of how victims are hurt, South Carolina law gives them the right to sue for compensation. Many personal injury cases will then settle or else the case goes to trial and the victim receives a judgment in their favor.
What happens to these personal injury awards in a divorce? It’s black letter law in South Carolina that assets a couple acquires while married are usually marital property, subject to division upon divorce. This is true of wages or even a car that is titled in one spouse’s name. Are personal injury awards treated the same with divorce? If you are worried and want to talk to an attorney contact Surasky Law today.
How Other States Classify Personal Injury Awards
Divorce law is state law, so there are 50 different types of divorce law in the U.S. In some states, like Maryland and Utah, a personal injury settlement is considered separate property. So if a husband is hit in a rear-end collision and receives a settlement, he gets to keep the entire settlement even when he divorces. South Carolina considered this approach but rejected it.
Other states consider the purpose of the compensation and other factors to decide whether to classify a personal injury award as separate property. For example, settlements or court judgments typically include compensation for various losses, such as:
Past medical care
Future medical care for permanent injuries
Past lost income if the victim couldn’t work
Future loss of income if injuries require changing jobs or prevent any work
Pain and suffering
In some states, damages for future losses or for pain and suffering are considered separate property. By contrast, compensation for past medical expenses and lost wages incurred during the marriage would be marital property. This approach is very popular across the country and is followed in states from Alaska to Florida.
South Carolina’s Approach to Personal Injury Awards and Divorce
Our state Supreme Court considered what to do in a 1993 case called Marsh v. Marsh. A husband had been hurt in a work-related car accident. He received a $325,000 settlement six years before the couple filed for divorce. The family law judge gave the wife 20% of her husband’s settlement, and the husband appealed. The case worked its way up to the South Carolina Supreme Court, which fully confronted the issue of whether personal injury awards were marital property.
South Carolina’s Supreme Court considered the two approaches outlined above. But the court adopted a third approach to personal injury awards. The court said that an award is classified as marital property if it was acquired during marriage. This is a very simple rule. The Court said that it didn’t matter for purposes of classification what losses the award was trying to compensate. If the victim received the award while married, then it was marital property.
Our Supreme Court reached this decision by closely reading our divorce law, which clearly says property acquired during marriage is marital unless it falls into certain exceptions. None of the exceptions covered personal injury settlements.
Of course, classifying an injury award as “marital” is only the first step in the analysis. Under our equitable distribution rules, all marital property is divided “fairly” between the spouses in divorce. There is no automatic 50/50 split. Instead, a judge will look at many factors to decide the best way to divide marital assets, like personal injury awards, and judges have discretion to look at many factors.
Consequently, a judge might decide to divide other marital assets 50/50 but then award the entire personal injury settlement to the injured spouse. It really depends on the facts of the case. You should hire a lawyer who understands how local judges tend to divide personal injury awards.
Will You Have to Share a Personal Injury Award in Divorce?
So where does South Carolina’s law leave people going through divorce? As mentioned above, the award will be considered marital property subject to equitable division. You have a few options:
1. Draft your own settlement agreement with your spouse and decide between yourselves who will get what. You might decide to split the personal injury award or let the injured spouse have it all.
2. Argue in court that you should keep all the personal injury awards if you were injured. You probably have a strong argument, at least with respect to pain and suffering compensation, future medical expenses, and future lost income.
3. Argue in court that you deserve some or all of the settlement as the uninjured spouse. You might also have some valid arguments. For example, you probably used marital assets to pay for your injured spouse’s medical care while married. Any wages he or she could have earned also would have been marital property.
At Surasky Law, we are fully qualified to craft an argument that represents your best interests. How will a judge decide this issue? It all depends on the facts of your case and the judge we appear in front of.
Personal Injury Awards Could Impact Alimony
Under South Carolina Code § 20-3-130, judges consider many factors when deciding whether to award alimony and, if so, how much. Some factors include:
Each spouse’s marital and nonmarital assets
Each spouse’s employment history
The marital standard of living
A personal injury award could affect some of these factors, especially if the personal injury settlement was very large. For example, the injured spouse might have received punitive damages because the defendant acted intentionally or with gross negligence. Punitive damages could represent a considerable pot of money—over $1 million in some cases. A judge might give the uninjured spouse more alimony to make up for the injured spouse’s large settlement or court judgment.