Is an Accident Settlement Marital Property?
In Pennsylvania, more than 350 accidents occur every day on average, and those accidents result in more than 200 injuries that warrant damages. Even if there are multiple plaintiffs in a case, most settlements that a Philadelphia accident attorney helps finalize are awarded on an individual basis. Although awarded to an individual, the spouse of that person may have a right to that money as well.
Consider When the Compensation Was Awarded
An important determinant in the issue of a shared settlement is when compensation was awarded. This is an important distinction from when payment was actually received. If the compensation was awarded prior to the marriage or after the divorce decree, then the ex-spouse will usually have no claim to the settlement. There can be exceptions here such as if there was a loss of income during the marriage, but the settlement was not finalized or paid until after the marriage had officially ended.
Community Property vs. Equitable Distribution
If the compensation was awarded during the marriage, then whether a spouse has rights to some or all damages varies from case to case and depends on a number of factors. The first factor to consider is that Pennsylvania has equitable distribution laws, which means that property acquired during a marriage belongs to the spouse who acquired it. That doesn’t mean that the other spouse has no rights to the settlement at all but that the court must assign it in a fair and equitable way.
The Reason Why Compensation Was Awarded
It is also important to consider the factors behind the compensation in the first place. There are many reasons why damages are awarded, including medical expenses, rehabilitative costs, property damages, lost wages, future lost income, pain and suffering and so on. Factors such as emotional distress and pain and suffering are considered personal in that they are awarded to compensate the individual for the distress that they had experienced. However, damages awarded to cover expenses, offset property losses and to make up for current and future lost income is divisible in many cases. This means that a spouse may have a right to some compensation but not other aspects of the settlement.
Settlements Considered as Income
Something else that may be assessed is whether the settlement is considered income. Generally, settlements are not considered as such. The federal government doesn’t require such monies to be taxed, and Pennsylvania follows suit. However, there are exceptions to that rule. In those special cases, monies that are income and taxable may be divisible regardless of why they were originally awarded.
Keeping the Money Separate From Other Marital Funds
In many cases, it can matter how the settlement money was used within the marriage. Compensatory damage may very well be awarded for the individual. However, if a wife were to receive that money, deposit it into a joint checking account with her husband and they both preceded to use those funds, then those actions may have established the money as a joint marital asset. If the court deems it as such, then it may not matter why the money was awarded, and other factors may be irrelevant as well.
Total Assets
Even if a spouse has no claim to a personal injury settlement awarded to the other spouse, it can still work toward his or her benefit. This is because it’s likely to be considered among total assets. Therefore, it could be used to make an argument for a lump-sum spousal support payment.
The Assistance You Need Just a Phone Call Away
Metzger & Kleiner practices personal injury law only in Pennsylvania. At our firm, we have assisted many individuals and married couples navigate what can be a difficult process. If you require local representation from a Philadelphia accident attorney, we’d welcome the opportunity to meet with you. Feel free to contact us online or call us at our Lehigh Valley location at 610-435-7400 or our Philadelphia location at 215-567-6616.
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