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The Divorce Encyclopedia
Compensatory Damages

Term Definition Compensatory Damages - money awarded to an injured party to make up for the injury.
Application in Divorce Divorce actions normally do not include damages. But compensation one spouses received as part of a settlement in a personal injury lawsuit may be divisible upon divorce.

Nationwide case law on the classification of personal injury proceeds is divided among three distinct approaches. The majority rule in dual-classification jurisdictions is known as the analytic approach. Under that approach, different portions of the proceeds are given different classifications, depending on whether they are compensation for injuries suffered by the marital or separate estate. The minority rule in dual-classification jurisdictions, and of course the unanimous rule in all-property jurisdictions, is known as the mechanistic approach. Under that approach, personal injury proceeds are always and entirely marital property. Finally, a very small number of states (most notably New York) follow the unitary approach, which treats personal injury proceeds as entirely separate property.

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