Accident Settlements – Divorce

Equitable Distribution is North Carolina is notoriously complex. Determining what is, and what is not, a marital asset may depend on the status of separation and divorce.

Things can get a bit complicated when there are outstanding legal claims for a car accident, truck accident, Workers’ Compensation claim, or some other form of personal injury matter.

Achieving a settlement or verdict on a personal injury case can be, in itself, a complicated process.

That’s why “PI lawyers” (personal injury lawyers) are generally pretty careful to tell clients, from the outset, that there are no promises.

North Carolina is not terribly “victim friendly” to people hurt in accidents.

Insurance companies, adjustors, and their lobby are incredibly powerful in Raleigh. It shows in our accident laws.

Indeed, we’re one of only four states left in the nation that still recognizes the antiquated theory of contributory negligence.

The rest of the country operates under some form of comparative negligence, where each party bears responsibility for their own actions and mistakes.

Legal liability and compensation for damages is apportioned in a fair, reasonable manner. Unfortunately, that generally is not how things work in North Carolina.

We also are a “bill vs paid” state, making recovery for damages after a wreck an all the more complicated process, involving careful consideration of insurance policies and billing statements.

Anyone who thinks making a claim for damages after a wreck is just a matter of providing an adjuster proof of lost wages and medical bills is in for a bit of a surprise.

It’s both complicated and adversarial. The adjuster isn’t out to help you.

They work for the insurance company. They make money, and profit greatly, by paying less than they should.

The best opportunity to profit is to deny a valid claim altogether.

Is an Accident Settlement a Marital Asset?

Unfortunately, the honest answer is, “It depends.”

We’re not trying to be coy in saying that.

Determining whether the settlement check is a marital asset or separate property is complicated by the fact that damages vary from case to case.

The type of damages matters.

The stage of separation and divorce, where you are in the legal process of ending a marriage, also makes a difference.

Fortunately, there are some general precepts worth discussing that help explain the process.

We strongly recommend you consult with an experienced family law attorney to discuss any specific questions you may have relative to your injury, loss or losses, and your separation/divorce.

At our law firm, we prefer to start big picture and gradually focus closer-and-closer on the nature of the accident and type of injuries sustained after a wreck.

The first question therefore is: When did the accident take place? Was it before or after legal separation?

The official date of separation can be incredibly important to many aspects of a divorce, including the distribution of assets, alimony, and sexual relationships outside the marriage – Bill Powers, Charlotte Divorce Lawyer

 

Thereafter we want to know who was injured.

• Were both spouses involved in the accident?
• Who was driving?
• Was it a single car wreck or was more than one vehicle involved?
• Who was at fault?
• Did both spouses receive injuries?
• Was anyone out of work?
• What happened?

Clients often do not fully understand the importance of establishing a “bright line” relative to legal separation.

In fact, it’s not terribly unusual for clients to think, because they moved into separate rooms in the same house, that they’re separated.

They’re not.

Legal separation means moving out, establishing a separate residence, and intending to stay separated. Timing can be everything.

Date of Accident or Loss

If after legal separation a spouse is injured, with few exceptions, compensation for an accident is likely going to be deemed “separate property.”

The injured spouse keeps the settlement check.

Separate property it is not a “marital asset” and therefore is not subject to Equitable Distribution in North Carolina.

If a spouse is injured during the period of marriage, and the personal injury settlement is received while the parties remain married, there is a general presumption the settlement check is a marital asset.

Divorce lawyers call that the marital presumption.

If that is disputed, the injured spouse bears the Burden of Proof to show any portion of the settlement is separate property.

That “burden” is the evidentiary standard of “By a Preponderance of the Evidence.”

A “preponderance” means “more likely than not” something happened. It’s proven by the “greater weight of the evidence.”

If injured during the period of marriage, classification as marital property or separate property requires consideration of the purpose or purposes of the compensation.

For example, is the settlement check for property damage to a marital vehicle? Is settlement by the insurance carrier for lost wages or reimbursement for medical bills?

Pain and Suffering

Damages for pain and suffering, something that is “particularly personal to the party who receives it,” may be deemed separate property.

The injured party suffered the pain. Those damages, and compensation for them, likely are theirs to keep and not a marital asset.

If, on the other hand, the settlement is for compensation relative to lost wages and medical expenses (during the marriage), that likely would be deemed an asset of the marriage and therefore subject to Equitable Distribution as marital property.

As experienced Charlotte personal injury lawyers well know, that is more often the case.

Settlements nowadays are largely predicated on a concept of reimbursement for lost wages, property damage to a vehicle, and medical bills.

While it was once common, “pain and suffering” is rapidly becoming a thing of the past and incredibly hard to recover in an ordinary car accident with a carrier.

Because it can be hard to quantify a value for pain, insurance adjustors generally to prefer to focus on hard numbers like bills for doctor visits, physical therapy, surgeries, prescription costs, and lost wages.

As such, the type and purposes of compensation for a car accident must be considered.

That may require reviewing a Settlement Statement prepared by the plaintiff’s lawyer and possibly the associated Settlement Agreement.

It therefore doesn’t hurt for your Charlotte divorce lawyer to be familiar with how claims are settled and why.

It makes sense to retain an attorney experienced handling both accident cases and Equitable Distribution, as there can be an interaction between the PI case and the divorce.

Personal Injury and Workers’ Compensation Awards

Determining whether any portion or all of a Workers’ Compensation award is the separate property of the spouse injured on on-the-job accident also depends on the purpose of the “award” or settlement.

The injured spouse has the burden to show, again by the preponderance of evidence, the portion he or she believes to be separate property.

When the injured spouse is hurt during the marriage and the personal injury or Work Comp settlement is obtained after legal separation there is no marital presumption.

The non-injured spouse will not receive the benefit of that presumption that the asset (the recovery) is marital property.

The Burden of Proof shifts to the non-injured spouse. They have to prove the settlement check is a marital asset.

He or she must prove, again by the preponderance of the evidence, that some or all of the compensation from the insurance carrier is for economic losses that took place during the course of marriage and prior to legal separation.

Related Legal Issues

1. Equitable Distribution in North Carolina
2. 529 Savings Plans
3. Equitable Distribution and Gifts
4. Divorce Lawyer Charlotte NC

Bill Powers – Charlotte Divorce Lawyer

We enjoy helping people work through complicated legal matters.

It is both personally fulfilling and intellectually challenging to analyze a complex case and offer solutions to our clients.

Few areas of practice are as complicated as divorce law. That’s what makes it interesting, at least for us.

If you feel overwhelmed by the process, that’s OK. That’s entirely normal.

We’re here to help.

Give our Charlotte divorce attorneys a call now to schedule an office visit or secure video conference.

Everything you tell us is strictly confidential.

That’s true even if you decide not to move forward with separation and divorce.

Attorney-client privilege applies to legal consultations with our lawyers and support staff.

The fact you even met with a lawyer is something we keep secret.

Call NOW: 704-342-4357

You may also reach Bill Powers directly by email at Bill@CarolinaAttorneys.com