Is a Spouse Entitled to Any Part of a Lawsuit Settlement?

There's a chance you could receive part of the settlement, but the amount depends heavily on two things: when your spouse gets the money and what kind of damages they're being compensated for.

In general, property acquired during the marriage (except for gifts or inheritance) is considered marital property and can be divided fairly between spouses during a divorce. Being separated already shouldn't affect this, as the law considers the date of the final divorce decree, not separation, as the closing date for accumulating marital assets. Therefore, if a jury award or settlement from a lawsuit is received before your divorce decree is finalized, it can be considered a shared asset. If it's after the divorce is finalized, all the money goes to your spouse and becomes part of their total assets.

There's a twist to consider: even if you have a right to part of the recovery, claiming it might not be the best move. Here's why:

If the money becomes part of your spouse's total assets, you could argue they have the resources for a lump-sum alimony payment. This could be more advantageous than claiming your share of the recovery. Why? Some of the damages awarded to your spouse might be considered "personal" and not subject to division during divorce.

Why Sharing Might Not Be Best

While you might be entitled to a portion of the settlement, there's a strategic reason why claiming it might not be the most beneficial move. Here's why:

Personal injury awards cover various types of damages. Some, like medical expenses, lost wages, and property loss, are considered "monetary" and treated as marital assets. However, other damages compensate for the injured spouse's personal experiences, such as pain and suffering, emotional distress, and loss of consortium. These are considered "personal" and are not subject to division during a divorce.

Typically, compensation for personal experiences ("compensatory damages") is considered unique to the injured person and cannot be divided. This means parts of the settlement awarded for "pain and suffering" or "loss of consortium" are off-limits when dividing marital assets. It's similar to how gifts and inheritances are treated—they're considered the spouse's "separate property" and not subject to division. However, damages that cover lost wages or medical bills might be divisible because both spouses likely felt the impact of lost income or increased expenses. So, if you argue the settlement is marital property, you could claim a share of the damages for lost wages, medical costs, or other financial losses but not the portion awarded for your spouse's personal pain and suffering.

This situation requires careful consideration by your lawyer, especially when dealing with personal injury settlements during a divorce. They'll likely need specific documents from the court or settlement to determine the types of damages awarded and the breakdown of awarded amounts. If the damages are primarily monetary (lost wages, medical bills), you could claim a substantial portion. However, if a significant chunk is designated for "personal damages" like pain and suffering, you might be at a disadvantage. In that scenario, it might be more strategic to let the entire settlement become part of your spouse's assets, potentially increasing your alimony award.