Personal Injury Proceeds
How Are Personal Injury Proceeds Divided In A Divorce?
Personal injury proceeds arising out of an incident that occurred prior to the date of separation are characterized as community property but are often treated as the separate property of the injured spouse in most situations.
Personal injury awards are characterized as community property in California divorces if the injury occurs before the date of separation. Generally, the date of the receipt of the funds is not relevant to the characterization, and the proceeds are assigned to the injured party as if they were separate property. However, the divorce court does have the discretion to award a portion of the proceeds to the community. Courts take the following issues into consideration: the economic conditions, needs of each party, time elapsed since the recovery of the damages, the date of the injury, and any other relevant factors.
An allocation of a portion of proceeds to the community may occur if the community or the other spouse paid unreimbursed medical bills related to the injury or if there are lost wages related to the injury.
If the personal injury proceeds have been commingled with community funds, the injured party may still be awarded the proceeds, if the proceeds can be traced using family tracing principles that are somewhat relaxed when tracing personal injury proceeds.