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The Divorce Encyclopedia
Personal Injury Proceeds

Term Definition Personal Injury Proceeds - mostly marital but sometimes separate.
Application in Divorce Depending upon the jurisdiction of the divorce, the proceeds of personal injury awards are mostly marital but sometimes separate property. In divorce actions, jurisdictions use one of three methods to classify the proceeds of personal injury awards: the analytical approach, which is most common; the mechanistic routine, which is the second most common; and the so-called unitary approach, which is least common.

When a party wins a personal injury suit, a majority of dual-classification jurisdictions use what is termed the analytical approach, by which different portions of the proceeds are compensation for injuries suffered by the marital or separate estates. Some dual classification and all all-property states treat all of the proceeds as marital. Under this regime, which is termed mechanistic, "personal injury proceeds are always and entirely marital property." A few states, following what is termed the unitary approach, treat personal injury proceeds as entirely separate.

Under the analytical approach, damages that marital property when they compensate for injuries to the marital estate, including but not limited to, lost wages, medical expenses, damage to martial property.

Postjugdment interest income on the award is classified under the normal rules of passive income in the jurisdiction; therefore, interest on martial income is always marital and interest on separate property award is marital if the income from separate property is treated as marital.

Under the analytical approach, pain and suffering, however, "...is the most personal type of compensation an injured spouse can receive." Thus, awards for pain and suffering are the separate property of the injured spouse. In a like manner, loss of consortium compensates the uninjured spouse for pain and suffering. Disfigurement, which compensates for the "pain and embarrassment having a highly obvious injury," is separate property.

Under the mechanistic approach, proceeds are very often divided unequally, but compensation for damages both the marital estate and the individual spouse are treated as marital.

Some jurisdictions have held that unliquidated personal injury claims are too speculative to be considered property subject to distribution in a divorce; others have concluded that these claims, despite their contingent nature, "should ... be treated as property acquired during the marriage." Because the value of the unliquidated damages is unknown, courts that consider the damages to be property simply assign a percentage of any future recovery or reserve jurisdiction about any future distribution.

New York considers personal injury proceeds under the unitary regime.

See Personal Injury Awards.

See also Equitable Distribution; Community Property; Kitchen Sink States; Dual Classification States.

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