Many people may receive money in the form of an award or settlement after a personal injury. Since the awards or settlements from personal injury cases are often substantial, it tends to become one of the bones of contention at the time of property division during a divorce. How that money should be divided among separating spouses usually depends on a number of factors such as the date of the injury, the date of the couple's separation, their date of divorce, what Michigan laws say about property division and how the facts are presented in court.
Usually, the most confusing cases involving assets acquired from a personal injury settlement or award are those where the spouses decide to separate during the course of litigation or arbitration. That means that a couple decides to separate before a final award or settlement is announced or approved by the judge.
In property division cases involving settlements or awards from personal injury claims, courts usually analyze various factors including the nature of the damages themselves. That means that the court determines whether the damages are for pain and suffering, lost wages, loss of companionship or damage to property. Once the court is able to determine this, it usually classifies it as marital or non-marital property and then, based on Michigan's equitable property division laws, it makes a final decision.
It may be wise for Michigan residents contemplating divorce to take some basic precautionary steps in order to protect their money. First, a person must claim damages while specifically mentioning which part of it would be personal and which part of it would be marital property. Second, if that person sees the likelihood of divorce at the time of lodging the personal injury claim, it is best to speak with an attorney about this before claiming damages. Finally, it is always a wise decision to have a separate bank account so that the settlement money is untouched until the issues related to property division are resolved.
Source: Huffington Post, "3 Ways to Protect Your Personal Injury Award or Settlement from Your Divorce," Diane L. Danois, Feb. 19, 2015