Personal Injury Settlements and Marital Property – What You Need to Know
In all of our divorce cases, we have to analyze and discuss with our clients the concept of marital property. In Pennsylvania, anything classified as marital property will be subject to equitable distribution amongst the parties in a divorce. This makes it extremely important to us that our clients understand what is considered marital property and what a Divorce Hearing Officer or a Judge will be dividing.
The general rule is marital property is any property acquired by either party during the marriage and the increase in value of any nonmarital property. (23 Pa.C.S.A. § 3501).
A recent question posed to our office was: Do the proceeds from a personal injury settlement constitute marital property? The answer is, “it depends.” The first question we need to answer is when the injury occurred. The Statute that defines marital property makes it clear you must look to when the injury occurred, that gave rise to a legal suit. If this injury was prior to the marriage or after the date of separation, then the proceeds would be considered nonmarital property. To the opposite, if the injury occurred during the marriage, then the proceeds are considered marital property regardless of when payment is received. (23 Pa.C.S.A. § 3501(a.1)(8)).
In a case before the Pennsylvania Supreme Court, this very issue was addressed. In that case, the husband was injured in a car accident while the parties were married. They filed a lawsuit with the help of an attorney, but the lawsuit lasted for several years. The parties filed for divorce and were formally separated as of February 2004. The husband’s personal injury claim was then settled shortly thereafter, in November 2004. Focht v. Focht, 613 Pa. 48, 32 A.3d 668 (Pa. 2011).
The Court held in its decision that the law requires the parties to look to when the injury occurred and not when the overall case was decided or settled. The Court stated, “when a cause of action accrues (i.e., when an injury has been inflicted, leading to the right to institute and pursue a suit for damages) after the date of marriage and before the date of final separation, then any settlement proceeds resolving that cause of action are marital property, regardless of when the settlement actually occurs.” Focht v. Focht, 613 Pa. 48, 32 A.3d 668 (Pa. 2011).
While this is a very technical issue that may not apply to all of our cases, it’s worth noting that many nuances in divorce law need to be navigated by an attorney to ensure your rights are protected. If you or anyone you know has questions about divorce or other related matters, please contact our office at 717-358-0600 to schedule a consult with a Lancaster PA divorce attorney.
