Is an accident settlement considered community property in the event of a divorce?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jul 16, 2021

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Whether an accident settlement is considered community property is going to depend on what the settlement is for. Community property is subject to division by the courts in the event of a divorce. When the settlement is for pain and suffering, you will not be entitled to any portion of the settlement since the pain and suffering was a personal injury suffered by your spouse. However, if the settlement is for the property damage to a car or for lost wages, the money will likely be considered community property.

Community Property and Accident Settlements

There are nine “community property” states within the United States; the others use “equitable distribution.” When you live in a community property state, all assets that were acquired during the marriage are split 50-50, no matter who bought them or what financial contribution each party made. However, there are some limited exceptions to this 50-50 split, and one of these exceptions is damages for pain and suffering.

Damages for pain and suffering belong solely to the person who actually endured the pain. If the damages are for lost wages, however, then the damages are split. This is because it is assumed that any lost wages would have been considered marital property, had they been earned. The same is true of damages for a vehicle: since the vehicle would have belonged to the marital unit, the compensation for the vehicle does as well.

There may be exceptions, however, if your spouse “co-mingled” his injury settlement money with marital assets. For example, if he received money for community property and added it to accounts you shared or used it to pay off the mortgage on a family home the two of you already owned, then he may be viewed as having turned that property into a community asset. This will depend on the discretion of the judge arranging your property settlement.

Getting Help – Accident Settlements & Community Property

For help understanding what you can expect in a divorce, and to ensure you get your fair share of marital assets, you should speak with a divorce lawyer.

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