Are Personal Injury Damages Marital Property?

Property Division in General

When a couple gets divorced, courts are tasked with determining how the property, assets, and liabilities they acquired together should be divided. Most states determine the division of marital assets according to principles of “equitable distribution.” Other states divide assets under the “community property” system of dividing property upon divorce.

In an equitable distribution state, such as Maryland and Virginia, all property that the couple acquired during the marriage qualifies as marital property that is subject to equitable distribution upon divorce. In contrast, all property that a spouse obtains in their sole name before getting married and after divorce is considered to be their separate property and is not divided upon divorce.

The equitable distribution of marital assets requires courts to consider certain factors when determining exactly how to divide marital property between the parties. “Equitable” division does not necessarily mean an “equal” division of assets. Instead, equitable entails that the division of marital assets should be “fair” and “just” under the circumstances.

As a result, property division issues are determined based on the date of acquisition of the property in question, considering the circumstances relevant to the parties’ marriage and separation.

The Purpose of Personal Injury Damages

Lawsuits seeking damages for personal injuries requires the plaintiff to prove that their injuries resulted from the defendant’s wrongful or negligent conduct. The defendant is liable for compensating the plaintiff for the losses they sustained as a consequence of their injuries.

Personal injury damages compensate the plaintiff for different purposes, which can be categorized as “economic” and “noneconomic damages.”

Economic damages refer to losses that are evidenced by direct financial losses. For example, medical bills and lost wages are considered economic damages because they have a specific “price tag” that is evidenced by invoices and bill statements.

Conversely, noneconomic damages include losses that the plaintiff suffers as a natural consequence of their injuries. For example, damages for pain and suffering, mental anguish, and loss of companionship compensate the plaintiff for the personal agony that resulted from the defendant’s fault.

Characterization of Personal Injury Damages

The division of marital property is not restricted to traditional definitions of “property.” Courts have consistently held that any income the parties received while married qualifies as shared marital property subject to division upon divorce. Thus, paychecks and other money acquired during the parties’ marriage qualifies as marital property subject to equitable distribution upon divorce.

Personal injury damages also qualify as property that is divisible upon divorce because they are fundamentally payments of money. But when is the date of acquisition for personal injury damages? Courts have held that the acquisition date for personal injury damages is the date to which the plaintiff’s right to recover damages vests.

As a result, many courts have held that injured plaintiffs “acquire” an award of personal injury damages on the date they were injured, or on the date they discovered—or should have discovered—that the defendant was responsible for their injury.

Thus, if the plaintiff was injured before getting divorced but received damages from the defendant after, some courts consider the damages to be marital property subject to division between the former spouses. This is referred to as the “mechanical approach” to characterizing personal injury damages for divorce purposes.

Alternatively, other states consider the purpose for which the damages compensated the plaintiff. This is known as the “analytic approach.” Courts that adopt the analytic approach characterize personal injury damages based on whether the damages are economic or noneconomic. Under this approach, economic damages take on the character of the funds that were lost.

For example, if the plaintiff’s medical bills were originally covered by either of the couple’s earnings, damages compensating the plaintiff for those bills would be considered marital property divided upon divorce. However, if medical bills were paid for by the plaintiff’s spouse’s separate property, the injured spouse may be ordered to reimburse their spouse from their damages award.

Under the analytic approach, courts would characterize noneconomic damages like pain & suffering as the injured spouse’s separate property, because such a loss was personally experienced by the plaintiff. Conversely, courts following the analytic approach would characterize noneconomic damages such as loss of companionship as the noninjured spouse’s separate property.

The Mixed Approach

Some equitable distribution jurisdictions have taken a mixed approach to dividing personal injury damages. Under the mixed approach, a court will use the mechanical approach to determine that the entire personal injury award is divisible marital property. From there, the court will use the analytic approach to determine each spouse’s share of the damages award.

Ask DiPietro Law Group, PLLC for Legal Advice

If you have questions about property division issues in divorce cases, our legal team at DiPietro Law Group, PLLC is here to help. With offices located in Fairfax and Friendship Heights, you can benefit from quality legal representation for divorces and other family law matters under Virginia and Maryland law.

Please call DiPietro Law Group, PLLC at (888) 530-4374 or contact our office online today.

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