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Knoxville Divorce Lawyer > Blog > Divorce > When Does a Personal Injury Settlement Become Marital Property?

When Does a Personal Injury Settlement Become Marital Property?


When a couple gets a divorce, not all of their property is subject to division.  The court will divide the couple’s marital assets in a way that it deems equitable (that is, in the fairest possible way, but not necessarily equally), but each spouse gets to keep his or her own non-marital assets.  If you signed a prenuptial agreement, then the assets designated as separate property in that agreement will not count as marital property if you and your spouse divorce.  Even if you do not have a prenup, certain types of assets count as separate property even if you acquired them during the marriage, such as inherited wealth and damages from personal injury lawsuits.  Whether your separate property stays separate or becomes marital property depends on how you use it.  If your marriage is on the rocks when you inherit money or win a personal injury lawsuit, a Tennessee divorce lawyer can help protect you from having to divide the proceeds with your estranged spouse.

If You Used Your Personal Injury Settlement to Pay for Your Husband’s Debt and Your Stepson’s Car, It Is Marital Property

Karen and Richard Roth married in 1981; he had a son from his first marriage, and Karen and Richard went on to have three children together.  They were successful in their respective careers, Richard as a dentist and Karen first as a nurse and then as a professor of nursing.  In 1989, Karen was seriously injured when a dump truck crashed into her car.  After the accident, she was no longer able to work full time, since her teaching duties required her to stand for long periods and to lift patients.  She continued to teach only two days per week.  She filed a personal injury lawsuit and received a settlement of $123,000.

Karen deposited her settlement money in the joint bank account she and Richard shared.  Richard used some of the money to pay off the balance on his car loan.  He also used money from Karen’s personal injury settlement to buy a car for his son from his first marriage.  The parties’ marriage later deteriorated, largely because of Richard’s extramarital affairs, and they divorced in 1997.  During their divorce case, there was some disagreement as to the value of their marital assets, including whether Karen’s personal injury settlement was separate property or marital property.  The trial court ruled, and the appeals court affirmed, that it was marital property because Karen had deposited it in a joint bank account and Richard had used it for his own expenses.

Contact an Attorney Today for Help

If your financial circumstances change when you are planning to divorce your spouse but you have not yet separated or filed for divorce, you need the help and expertise of a divorce lawyer to protect you from accusations by your spouse that you were plotting to impoverish him or her.  Contact Knoxville divorce attorney Patrick L. Looper for help with your case.




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