What Happens to the Personal Injury Proceeds I Received When I Get Divorced in California? Family
Family Code Beginning Presumptions in California
California is a community property state. “Community property” is broadly defined as all property acquired by a married person during the marriage. Unless an exception applies, community property is divided equally at the time of divorce or legal separation. This means each spouse takes one-half of the property at the time of divorce, provided the property was acquired between the date of marriage and the date of permanent separation.
The Question of How Personal Injury Proceeds are Divided
If a spouse receives proceeds from a personal injury settlement or judgment in California, how will the court classify and divide the property in divorce?
Property Received by a Married Person in Satisfaction of a Personal Injury Settlement is Community Property in California
With some exceptions which are beyond the scope of this article, money or other property which is received in a personal injury settlement or judgment is community property if the cause of action arose during the marriage. This means if your personal injury claim happened between the day you get married and the day you separate from your spouse, the award will be classified as community property.
How are Personal Injury Proceeds Assigned in Divorce?
Although the personal injury settlement or judgment proceeds are classified as community property if the cause of action arose during the marriage, this does not necessarily mean that the property is divided equally in divorce.
In a divorce or legal separation, the proceeds from the personal injury case will be “assigned to the party who suffered the injury” unless the interest of justice require a different division. Although the court has the power to deviate from awarding 100% of the proceeds to the injured spouse, in no circumstance is the injured spouse to receive less than 50% of the proceeds.
What Happens if I Used My Personal Injury Proceeds to Buy Property During My Marriage
A common situation arises where a spouse receives money from a personal injury settlement of judgment and that money is used during the marriage to acquire assets. For example, assume the personal injury settlement is used to buy a new car and the car is acquired during the marriage. Because the car was “acquired during the marriage,” is the car now community property?
This issue was addressed in Marriage of Devlin. In Devlin, the court found that the only time proceeds from a personal injury award lose their character, in the absence of an agreement otherwise, is when the proceeds have been commingled with other community property such that it is impossible to trace back the funds to the personal injury award.
If you are going through a divorce or legal separation in California, your property rights and responsibilities are important to understand. If you have received a personal injury settlement or money judgment, it is important to properly classify the amounts received and fight to receive your due share. Contact one of our attorneys to discuss your case today. Our attorneys have addressed the issue of assignment of personal injury awards in divorce in Orange, San Bernardino, Riverside, Los Angeles and San Diego Counties .
THIS INFORMATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY. EVERY CASE IS DIFFERENT AND THIS GUIDE SHOULD NOT BE CONSTRUED AS LEGAL ADVICE. THIS ARTICLE DOES NOT CREATE AN ATTORNEY CLIENT RELATIONSHIP BETWEEN THE READER AND ITS AUTHOR. IF YOU HAVE LEGAL QUESTIONS, CONSULT WITH A FAMILY LAW ATTORNEY.