DIVORCE AND PERSONAL INJURY SETTLEMENTS: TIMING IS EVERYTHING

PROCEEDS FROM ACCIDENT SETTLEMENTS: SEPARATE OR COMMUNITY PROPERTY?

The answer to this question depends on when you were in the accident.

SCENARIO 1:

Bob gets in a car accident two weeks before he gets married. Bob gets a fat settlement check for $100,000 two years later, after he's been married almost two years.

If Bob keeps his settlement money in a separate (not joint) account in his own name, it will be a lot easier to avoid arguments that this settlement is community property to be divided; however, if community money or credit was used for Bob's treatments, medical bills, etc., Bob may have to reimburse the community for those expenses.

If Bob decides to re-do the kitchen and bathroom and buy a new car for his bride, he will have a tough time showing he didn't mean to make the funds part of the community. When in doubt, don't mix!

SCENARIO 2:

Bob gets into his accident the day after he gets married (or 30 seconds after the wedding). Now the settlement is viewed as community property and needs to be divided (absent other facts):

California Family Code Section 780 reads:

". . .money and other property received or to be received by a married person in satisfaction of a judgment for damages for personal injuries, or pursuant to an agreement for the settlement or compromise of a claim for such damages, is community property if the cause of action for the damages arose during the marriage.”

SCENARIO 3:

Bob gets into the accident during marriage, but gets the settlement check after he separates from his spouse. SEE SCENARIO 2, ABOVE. (F.C. Section 780)

SCENARIO 4:

Bob gets in his accident after he separates from his spouse; absent other facts, the settlement is separate property.

This is a bit like bonuses at work. If the work done to earn the bonus was done during marriage and before separation, even though the money isn't received until after separation and/or divorce, the bonus is 99% of the time going to be community property. . .but that's another blog.

Protect yourself at all times, and remember: Action Kills Fear.

Yours,

Robert Brownlee, Esq.

THE ABOVE IS NOT SPECIFIC LEGAL ADVICE. EVERY CASE IS UNIQUE. CALL 951 680 9058.

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