Are Personal Injury Awards Divided in New York Divorces?

When one spouse receives income during the marriage, it’s common for the married couple to use the money to pay medical bills, pay the rent or mortgage, to pay down credit cards, to buy groceries, to pay the auto loans, and maybe even save some money for a rainy day.

But what if that money isn’t a paycheck, but it’s a personal injury settlement or jury award that is paid to one spouse alone? Is the personal injury money counted as a marital asset or as separate property?

Generally, only marital assets are subject to division in a New York divorce. Separate property is not divided. Separate property includes assets and income acquired by one spouse before the marriage, gifts, personal injury awards, and inheritances received during the course of the marriage.

New York’s Approach to Personal Injury Awards

Each state has its own way of dividing marital property and personal injury awards. Under New York law, one spouse’s personal injury award is considered “separate property,” but there is an exception to this rule.

This is how it works in New York: If you receive a personal injury award while you’re married, the compensation you received that was not for lost income or wages or lost earning capacity is yours to keep, but the damages for lost wages and earning capacity are subject to division.

It’s important to keep the separate property portion of your personal injury award separate. If you mix or commingle the separate part of your personal injury award with marital property, for example, if you deposit it into a joint bank account or deposit it into a jointly-owned investment account, it can lose its separate property status.

What if your spouse was injured while you were still married, but he or she has not received their personal injury settlement yet? What happens if you file for divorce and he or she receives this award before the divorce is finalized? To answer these questions, contact our firm directly to schedule a consultation.

Next: Can a Spouse Be Disinherited in New York?

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