Although California is a community property state, the courts have special rules regarding settlements from personal injury cases. Personal injury settlements may or may not be considered community property, depending on when the injury occurred.
If you are considering a divorce, you may be wondering if your spouse’s personal injury award will be considered separate property or community property. In California, any reward that is the result of a personal injury settlement may or may not be characterized as community property. Whether or not a personal injury settlement is classified as community property depends on when the cause of action occurred, not when the proceeds were received by the injured spouse.
The proceeds of a personal injury settlement are characterized as community property, if the cause arose during the course of the marriage, and before separation. If the cause of action occurred outside of this time frame, the proceeds of the settlement are considered separate property of the injured spouse under California Family Code 760 and 761. If the damages from a personal injury settlement were commingled with other community property funds, then it may be difficult to trace the source property and, as a result, the funds may all be considered community property.
Normally, the court will award the damages to the spouse who suffered the injury, unless there are special circumstances to be considered. Factors that the court may consider include the financial needs of each party, economic conditions, costs incurred by the non-injured spouse if he or she cared for the injured spouse, the time that has elapsed since the injured party recovered the damages, as well as any other factors relating to the case. In the event that the court considers these issues, damages will be assigned to the parties in a manner that the court finds to be just. Ultimately, though, the court will award at least one-half of the damages to the injured spouse when the damages are characterized as community property under California law.
If you are contemplating filing for divorce in California and are concerned about how a personal injury settlement will be divided, make sure you hire an expert divorce lawyer who can provide you with all of the details about community property.