How Are Personal Injury Settlements Divided in Divorce Cases?

Posted: 30 June, 2022

Whether you and your spouse are amicable or your relationship is high-conflict, any divorce is a major life event. The terms of your divorce may impact you for years to come. When you have a personal injury settlement, your divorce may be even more complicated.

You want to make sure that you receive what you deserve when it comes to the personal injury settlement. If you’re the injured party, you need to make sure that you receive enough to live on and compensate you for what you’ve been through. When you’re the spouse of the injured party, you need to make sure that the personal injury settlement goes towards paying joint expenses like medical bills.

What Does Nevada Law Say About Personal Injury Settlements in Divorce Cases?

Nevada has laws that dictate how personal settlements are divided. Nevada is unusual in that respect because in Nevada, there are laws that spell out how to treat personal injury settlements in divorce cases. How personal injury settlements are divided in divorce cases depends on when the parties receive the settlement, the type of payments they receive and whose name or names are on the lawsuit.

A Personal Injury Settlement Before the Marriage

We asked Las Vegas personal injury attorney Adam Kutner to share some thoughts. He states that Nevada law 123.130 says that a personal injury settlement that you get before you get married is separate property compared to community property. The court treats the settlement funds like any other separate property. For example, if you enter the marriage with $50,000 in the bank from a personal injury settlement, and you divorce ten years later with the same $50,000 in the bank plus interest, it remains your separate property. If you commingle the settlement with marital property, the funds become marital property.

A Personal Injury Settlement During the Marriage

When the personal injury settlement comes in during the marriage, how it’s divided depends on whose name is on the lawsuit and what the funds are for. Nevada law 123.130 says that when one party acquires an award for personal injury damages during the marriage, it’s their separate property. However, Nevada Revised Statute 123.121 says that when spouses bring their case together as a joint lawsuit, who gets the money depends on how the money is classified in the settlement.

For example, if the award is for pain and suffering, it goes to the injured spouse. If the award is for loss of comfort and companionship, it goes to the other spouse. Here’s how Nevada law 123.121 divides each type of settlement:

Pain and suffering – all to the injured spouse
Loss of use of body function – all to the injured spouse
Loss of comport, consortium and companionship – all to the other spouse
Hospital and medical expenses – community property to both spouses
Property damages – to the owner whether that’s both spouses or one spouse as compensation for damaged separate property

Nevada law doesn’t specifically mention lost wages when it comes to how to divide a personal injury settlement. However, hospital and medical expenses are community property because they’re meant to reimburse both spouses for debts that are also communal. Because wages and other income earned during the marriage are generally communal property if they’re earned during the marriage, there’s a good chance that a court may view compensation for lost income in a personal injury settlement as communal property and subject to equal division in a divorce. Related debts are also subject to equal division as community property.

You Personal Injury Settlement May Impact Spousal Support

Remember that your injuries and your personal injury settlement might impact other areas of your divorce. The nature and extent of your injuries as well as the settlement award that you ultimately receive can impact how the court treats a request for alimony. Nevada Revised Statute 125.150 addresses how the court determines spousal support or alimony. The goal is to provide for each party given the standard of living during the marriage, the incomes of each party and contributions of each spouse to the marriage.

When the court makes its decision, it looks at the income of each party, their respective earning capacities and their ability to work. If you’ve recently suffered a personal injury, your ability to work may be very different than it was even a few months ago. The court takes the current health and earning capacities of each party into account as they determine what’s appropriate.

In addition to considering your health, the court also looks at your personal injury settlement in order to determine what’s fair. If you receive compensation for lost future earning capacity, the court may look at your compensation as a replacement for your income. When it comes to alimony or spousal support, expect the court to look at the entire circumstances of the case taking your injuries and your personal injury settlement into account.

What If Your Personal Injury Case Is Still Pending at the Time of the Divorce?

Another way that your personal injury settlement may impact alimony is whether an alimony award gets modified after your divorce. Your personal injury case may still be pending at the time of your divorce. The court may allow the other spouse to modify the alimony award in order to account for the personal injury settlement after you finalize your divorce.

How an Attorney Can Help

When you have a personal injury case and a divorce case, the two cases intermingle and overlap. It’s important to have a divorce attorney on board as soon as possible in order to help you navigate both cases through the legal system with your best interests in mind. An experienced divorce attorney can help you ensure that the courts understand the complex issues in your case in order to craft a judgment of divorce that fairly represents your rights under Nevada law. If you’re contemplating a divorce, or if you’re already in the process, contact us today for a no-obligation consultation.