Are Personal Injury Settlements Considered Marital Property In Texas?

Property Division Lawyer

Property divisions in Texas divorces must follow the relevant community property laws, and the division is often–but not necessarily always–50/50. The division usually includes income, savings, retirement, and most assets acquired or earned during the union. But what about personal injury settlements? Learn about property division and personal injury settlements in divorce in this article, and our property division lawyers in Texas can help if you have specific questions.

How A Personal Injury Settlement Can Affect Property Division

A personal injury settlement can result in large compensation for an accident victim, such as a person injured in a car or truck accident. Typical compensation in a personal injury case includes medical bills, lost earnings, and pain and suffering. Whether you have to share your personal injury settlement with your spouse in a Texas divorce depends on several things.

First, a personal injury settlement is typically considered separate property under Texas law. But if the personal injury settlement was not allocated for each different type of injury or there was clear intent to defraud the other spouse, it could be regarded as marital property in a divorce. This is why retaining an experienced property division attorney is vital if you suffered a personal injury and received a settlement.

Factors Affecting Personal Injury Settlement Classification

Personal injury settlements are usually considered separate property, but various factors can affect how they are classified for property division purposes. These factors could include:

Injury Timing

If your injury happened before you were married, most of a personal injury settlement would probably be deemed separate property. But the judge may review the matter more closely if you were injured during the marriage, or if there was a lost-wages component (see below)

Type Of Compensation

The type of personal injury compensation can also affect the classification. For instance, if part of your settlement is for lost earnings that you would have accrued during the marriage, it is possible the judge would consider the settlement to be community property.

Commingled Funds

A common issue with property division in a Texas divorce is commingled funds. These occur when separate property is mixed with marital property in a way that makes it very difficult to trace or separate the funds. For example, suppose you received a $25,000 personal injury settlement for a Garland car accident. Then, you deposited the money in a joint bank account with your spouse, who used some money to remodel the house and some more to pay regular bills (credit cards, electricity, the lawn guy).

In this case, proving the funds are your separate property could be complex, and may require more money be invested to figure out which funds belong to which estate. With this possible future issue in mind, it is wise to set up a separate bank or investment account to hold the money from the settlement or judgment.

Another complex matter could happen if you used marital property or your partner contributed separate property to cover some out-of-pocket medical expenses related to the injury. During your divorce, the judge could order the spouse receiving the settlement to reimburse their partner or the marital estate for those expenses

Contact Our Property Division Lawyers In Texas Now

Personal injury settlements are usually deemed separate property in a divorce. However, the exact circumstances of the injury, the type of compensation, and possible commingled funds can affect the property classification and marital property division. Our property division lawyers in Texas at Orsinger, Nelson, Downing & Anderson can review your case and potentially offer legal solutions, so please call (214) 273-2400.