June 28, 2022

When a Couple Gets Divorced, What Happens to That Settlement Check?

Divorce is rarely easy.

Emotions aside, there are many things to consider: do you need to pay or receive child support? Will you be required to make or be eligible for an alimony payment? Is child custody or parenting time arrangement necessary? Will there be a division of the real estate and matrimonial assets?

During your divorce proceedings, and after you've received a personal injury settlement, it is understandable that you may be concerned about losing a large portion of the compensation. There is also the question of how to deal with the overwhelming legal information coming your way.

It is crucial to remember that your personal property may be split between you and your spouse when you divorce. There is a legal process for doing this so that everyone benefits.

How Division of Property Works

States can divide property using two methods: community property division and equitable division. In some states, joint marital property and assets are not necessarily equally divided or split 50/50. Marital assets are divided “equitably” or “fairly” between the spouses in these states.

Other states treat assets as community property, which presumes that all property the spouses acquired during their marriage belongs equally to them, regardless of who purchased it and how many parcels they each owned.

If you are going through a divorce, you may need help protecting your financial interests and avoiding settling too low. An experienced lawyer specializing in personal injury cases is the best way to ensure that your interests are protected.

Divorce is a complicated, challenging, and overwhelming process that can leave you feeling scared and confused. So before you make any important decisions, let's take a look at the financial details. Here is what happens to a personal injury settlement check when a couple gets divorced in Texas.

Is Texas a Community Property State?

Yes, Texas has a community property system generally used in marital dissolution. According to the courts’ decision, the property acquired during the marriage is divided fairly between both spouses. This can be less than ideal, but the alternative is having to divide your property messily.

In other words, in Texas, each spouse is considered to have a one-half interest in the assets acquired during the marriage.

A judge decides whether or not to have the items classified as community or separate depending on the division in question. When a spouse recovers damages in a personal injury suit, the type of personal injury recovery received will determine whether the recovery is "community" or "separate property."

When you find yourself going through a divorce after receiving a financial settlement, enlisting the help of an experienced personal injury attorney can be useful. When you're dealing with legal complications, it's essential to work with one who is experienced in handling the demands of your case.

Is Personal Injury Compensation Considered Community Property?

If you've been injured due to another person's negligence, you may be entitled to financial relief like compensation and reimbursement by suing them in court. You can also get monetary assistance for your ongoing medical expenses and pain and suffering.

Divorce is an especially difficult process if you suffer from the residual effects of an injury and the inability to move around freely. Divorce can be challenging but don't worry; due to Texas laws, your marital settlement agreement can be favorable.

Damages for Personal Injury are Separate Property

Your body is considered separate property.

Therefore, a personal injury settlement check is classified as that spouse's separate property, regardless of when it is received during the marriage.

However, if the financial settlement in a personal injury lawsuit is not allocated for each injury separately, it might be distributed as community property during a divorce. In other words, if the settlement agreement doesn't specify the damages, there is a community-property presumption.

This is why it is crucial to work with an experienced attorney if you have suffered a personal injury.

Commingled Settlements

Personal injury settlement funds can become commingled or 'mixed in' with marital assets, which must be examined during a divorce case.

If the funds received in a personal injury settlement become tangled in other marital assets, the law might say they are now considered community property during a divorce. In Texas, this means they will be split evenly.

To ensure that the settlement money won't be community property, you may wish to set up a separate account to deposit the settlement funds you receive.

Ultimately, it's up to the judge to decide whether funds were commingled and should be treated as separate assets in the case. Personal injury attorneys who understand the court procedures will know how to deal with this and give insight into your settlement allocation, so ask your attorney more about their practices in such cases.

Community or Separate Estate Damages

If your spouse was injured and their income is taken away because of that, then any compensation by way of a personal injury settlement, workers' compensation, or disability payments by them would be considered community property.

For example, suppose someone earns a hefty salary but loses their ability to make money due to a personal injury. This would affect both parties in the marriage, as well as community property laws, part of the settlement may be awarded to their spouse.

Medical expenses recovered by a spouse in a personal injury suit are based on the estate that paid the expenses. If the community estate (both spouses) were burdened with the medical expenses, then the expenses would be categorized as community.

Unfortunately, these types of situations happen to many people. But what if you or your spouse brought in separate assets to cover the cost of your medical expenses? You may have also had to pay for medical expenses upfront and from your joint accounts. In these cases, you may be responsible for paying the estate back during a divorce.

How to Choose Which Texas Attorney Fits Your Personal Injury Needs

In Texas, Rose Sanders Law Firm's attorneys are known for their experience and knowledge in personal injury cases.

What makes our attorneys great is the years of experience they have under their belt and the attention to detail that they give to each case. With offices located in Houston, Dallas, and McAllen, we offer years of insurance and personal injury law experience. When you decide to hire a personal injury attorney to represent your case, you will want to make sure you choose the right person to handle your case.

To learn more about a divorce's impact on personal injury settlements, contact Rose Sanders Law Firm, PLLC.

Rationale

Divorce is rarely easy. But understanding where your divorce settlement check goes in a Texas divorce shouldn't be a challenge.

With the support of Rose Sanders Law Firm, PLLC, we can make sure you get the funds you deserve without the headache of managing the settlement check and division of assets.

In a Texas divorce, the state can divide property using two methods: community property division and a separate property or equitable division. So understanding how much of the settlement check is yours is as simple as understanding what is defined as community property and separate property.

Rose Sanders Law is here to help.