Let’s say you were injured in an accident, you took legal action and you received a substantial out-of-court settlement. Now you’re going through a divorce. Do you have to divide your settlement with your soon-to-be ex-spouse?
The simple answer to this question is no, but as with so many things in the law, the answer in your case may depend on the exact circumstances.
Community property and separate property
Under California’s community property laws, married spouses are joint owners of nearly all types of property they acquire during the marriage. In divorce, they must divide this community property between them. In theory, this means they would split the community property 50/50, although property division usually doesn’t work out that neatly.
Property the spouses owned before the marriage is considered separate, and does not have to be divided in divorce.
Under California law, a personal injury award or settlement is generally considered separate property. So, if you were injured and received a settlement or verdict, you may not have to divide it in divorce. However, there are some exceptions.
Expenses related to your injuries
One important exception involves any expenses your spouse paid due to your injuries. For instance, if your spouse supported you while you were out of work for six months after your accident, your spouse has the right to ask for compensation for what they paid.
This could involve both the community property (for instance, if your spouse paid for your expenses with their earnings) and your spouse’s separate property (if, for instance, your spouse sold a separately owned artwork in order to pay for your expenses while you were injured).
Commingled property
It’s also important to note that separate property can be commingled with community property. This is particularly common in marriages of longer duration.
To illustrate the idea of commingled property, let’s say you received a $200,000 personal injury settlement in 2015, while you were married. You used $150,000 of it to pay for your medical expenses and other costs related to your injury, and you used the remaining $50,000 to pay for some home renovations that your whole family enjoys. The separate property of your settlement has been commingled with your community property, and when you get divorced nine years later, it’s nearly impossible to tell where one ends and the other begins — at least with regard to the $50,000.
Commingled property isn’t necessarily considered the same as community property, but it can complicate the process of property division. It’s wise to seek out experienced advice to untangle this kind of complex situation.