While an Argument Can Be Made that Personal Injury Settlements Are Personal Property, in Some Circumstances, Texas Courts Have Found Certain Damages to Constitute Marital Property
When it comes to what is considered marital versus separate property, each state defines what it considers to be in each of these categories, should a couple divorce. Texas is one of nine community property states, which means that most-all assets acquired during the marriage are considered to be marital assets belonging to both spouses.
Some state statutes explicitly state that personal injury settlements are separate property (similar to inheritances or gifts). This includes the state of Texas, which defines separate property as that which is owned or claimed by the spouse before marriage; property acquired during marriage by gift devise or descent; and the recovery for personal injuries sustained by the spouse during marriage (except for any loss of earning capacity during marriage).
However, it is important to also note that Texas requires clear and convincing evidence to prove that property is separate property. In various Texas cases, not only has loss of earning capacity been deemed to be community (marital) property under some circumstances, so has the following: damage to credit reputation, disfigurement, disability insurance payments (workers’ compensation), loss of spouse’s companionship and love, mental pain and anguish, medical expenses incurred during the marriage, other expenses associated with the injury to the estate, and physical pain and suffering.
In sum, it largely depends upon when the settlement is received, as well as what type of damages are involved in terms of your ex being able to claim some of your personal injury settlement. How you want to address a personal injury settlement that was received during the marriage, or after the marriage (based upon circumstances that occurred during the marriage) is something you will want to speak at length with your divorce attorney about, as in some circumstances, portraying the recovery as a joint asset can affect whether or not lump-sum alimony payments are involved, especially given that the spouse who receives the personal injury settlement can make the argument that at least some of that is their own, separate property.
If you live in Texas, are contemplating a divorce, and are concerned about your personal injury settlement, it is ideal to work with attorneys who know both personal injury and family law. Contact one of our attorneys today to find out how we can help. We can assist you throughout each step of your case and ensure that your rights are protected according to Texas law.