How does a divorce affect a personal injury settlement?

Client Question: “My husband was injured in a car wreck in Biloxi, and he is going to receive money for his injuries…He and I are getting a divorce… Is that award  for compensation for personal injury going to be divided up to help me and our kids as part of our divorce?”

We get this question regularly. People often want to know as they are dealing with a potential divorce whether or not money received from a personal injury claim will be divided or split between the parties as part of a divorce. At Haug, Farrar, & Franco, PLLC we have experience dealing with multiple areas of the law, including both personal injury law (think recovery for injuries from car collisions, slip and falls, medical malpractice, pharmacy malpractice, and workers comp claims) and also family law, including divorce. This experience in multiple types of cases gives us the ability to maneuver in different court systems and answer these types of cross over questions.

Generally, the result of these types of legal matters is either (a) an agreed-upon financial settlement between the injured parties and the person that was at fault (or his or her insurance company) or (b) money damages awarded by a court of law following a trial.  Sometimes these damages are paid all at once, and sometimes they are paid out over time. Either way, the Courts in Mississippi apply the same analysis when determining how or whether to divide up those damages.

Mississippi is an equitable distribution state whereby chancery courts are charged with equitably (think “fairly”) divide property acquired or accumulated during the marriage or for the benefit of the marriage, which is referred to as “marital property.”  Property that is not deemed marital property is “separate property”—that is, property owned by one party or the other that will not be divided during a divorce. See Hemsley v. Hemsley, 639 So. 2d 909, 915 (Miss. 1994). The question then becomes whether a particular spouse’s personal injury award constitutes marital property subject to equitable distribution or separate property that is not subject to equitable distribution.

The Mississippi Supreme Court answered this question in the 1999 case of Tramel v. Tramel, 740 So. 2d 286, 290 (Miss. 1999). when it adopted a specific approach–called the “analytic approach”–in determining whether a personal injury award is separate or marital property. Under this approach, Mississippi courts must determine what the damages are designed to compensate for, or what the basis of the damages was in the first place. There are three general classifications for damages:

  • (1) that portion of the proceeds award allocable to compensation to the initially injured spouse for pain, suffering, and disfigurement (these damages are generally awarded to the injured spouse;
  • (2) that portion of the proceeds allocable to lost wages, lost earnings capacity, and medical and hospital expenses, to the extent those apply to the time period of the marriage (these damages are generally marital assets and are to be divided equitably); and
  • (3) that portion of the proceeds allocable to loss of consortium and companionship suffered by the non-injured spouse (these are generally awarded to the spouse who suffered that loss).

The Court explained its rationale as follows: “A personal injury claim settlement, to the extent that it represents compensation for pain and suffering and loss of capacity is peculiarly personal to the party who receives it. For the other party to benefit from the misfortune of the injured party would be unfair. However, to the extent that the settlement amount represents compensation for medical expenses or lost wages during the marriage, the settlement may be considered an asset of the marriage.”

Importantly, the Court of Appeals subsequently expanded upon this holding that “the Tramel principles should be followed if [an injured party were to] receive a settlement in the future.”  Wesson v. Wesson, 818 So. 2d 1272, 1278 (Miss. Ct. App. 2002).  Accordingly, even if a personal injury claim has not been fully resolved or settled at the time of a divorce, a Court could enter a decree taking any future damages into account to be sure that each party’s rights were protected and preserved—even if that meant future litigation on the issue of how damages should be allocated might follow.

When issues of division of settlements or judgments arise in the context of a divorce, it quickly becomes clear how important it is to understand both of these areas of the law, because how a personal injury claim and damages are classified can be significant and dispositive of the question of how they may be divided by a chancery court in a divorce.  If you or your spouse have been injured, please contact our firm so that we can assess and help you pursue a claim for damages. Similarly, if you and your spouse are considering a divorce and one or both of you have been injured or are receiving or will likely receive damages for your injuries, please contact us so that we can help you maximize the amount of potential available recovery for you in that divorce.