A personal injury settlement can get divided during a divorce in Louisiana. Divorce law is complex. Whether or not a divorcing spouse is entitled to the settlement and to what extent of the recovery they can claim will depend on the nuances of Louisiana divorce law.
How is Marital Property Divided in Louisiana?
Louisiana is a community property state. In the U.S., the division of marital assets falls under one of two doctrines: equitable distribution or community property. While most states follow the equitable distribution doctrine, Louisiana is one of nine states to follow community property laws.
- Equitable distribution states seek to divide marital property fairly, though not necessarily equally.
- Community property states divide marital assets evenly.
The most significant difference between equitable and community distribution is how marital assets are defined. Under community property laws, assets are either considered separate property or community property.
What is the Difference Between Community Property and Separate Property?
Marital assets are categorized as either separate property or community property. Only community property is divided evenly in a divorce. Separate property is not subject to equitable division laws.
Community property refers to the assets acquired throughout a marriage. Any asset or debt that does not qualify as separate property will be considered communal property and divided equally.
Defining separate property in Louisiana is complex. Generally, separate property refers to assets a spouse acquired before the marriage. For example, a spouse’s car or house would be considered separate property.
A spouse can also gain separate property during the marriage. An inheritance or gifts received during the marriage is considered separate property.
The complication divorcing couples often face is when separate property becomes community property. If a spouse uses their inheritance money to purchase a family home, or if the funds are placed in a joint account, it can be considered community property. Additionally, if a spouse lacks documentation or other supporting evidence that an asset is separate property, the court will likely consider it to be community property and subject to division.
Exceptions to Communal Property Laws
Any contested divorce will be subject to community property laws with a few exceptions:
- A prenuptial or post-nuptial agreement is being challenged
- The spouses have disproportionate earning capacities
- One spouse is the primary caregiver to their minor children
- A fault-based divorce
- A spouse failed to divulge all assets
The presiding judge has some discretion on how marital property is divided between spouses. Fault-based divorces can deviate from equal distribution. If one spouse attempts to hide assets during the divorce proceedings, they can be held in contempt of court.
Is a Personal Injury Settlement Considered Community Property or Separate Property?
A personal injury settlement is considered separate property with a few exceptions. Personal injury settlements consist of monetary compensation for injuries incurred in a negligent accident. Recoverable damages involve economic and non-economic damages.
Economic damages are subject to communal property laws. Non-economic damages are considered separate assets.
Economic damages in a personal injury claim may include:
- Medical bills
- Property damage
- Lost wages or potential income
Non-economic damages involve:
- Pain and suffering damages
- Emotional distress
- Punitive damages
- Loss of consortium
Since debts are considered community property, economic damages are split between spouses. However, only one spouse experiences the trauma and pain of the accident. Therefore, only the injured spouse is entitled to compensation for trauma and pain. Loss of consortium is the only exception to the rule.
What is Loss of Consortium?
Loss of consortium is a unique damage that compensates the spouse of the injured party for damages to the marital relationship. A spouse can claim loss of consortium for the deprivation of love, affection, or sexual relations.
How Does Loss of Consortium Affect a Personal Injury Settlement?
When a spouse pursues a loss of consortium claim, the entirety of the settlement will be delayed. Loss of consortium frequently requires litigation. The uninjured spouse must prove:
- That the marriage was intact prior to the accident and the separation or divorce was not pre-existing
- That their spouse’s injuries caused damage to the relationship
While only the injured spouse can agree to a settlement, both spouses must consent to the offer in writing.
Can a Spouse Claim a Higher Percentage of a Personal Injury Settlement in a Fault-Based Divorce?
A spouse cannot claim personal injury damages that are not considered a part of the communal property. However, a spouse may receive a higher percentage of the settlement indirectly.
How Fault Affects the Division of Communal Property
A fault-based divorce affects the division of communal property. A judge has the discretion to award a higher percentage of the total community property if one spouse is responsible for the end of the marriage. Economic damages from a personal injury settlement are considered community property. In a fault-based divorce, a spouse would indirectly gain a greater share of the settlement by receiving a larger share of the communal property.
How Fault Affects Alimony
A judge also considers fault when awarding temporary or permanent alimony. Only a spouse that is found not at fault during a divorce can pursue alimony. Generally, the duration and amount of alimony awarded are based on a spouse’s needs, the ability of the other spouse to pay, and the length of the marriage. However, a judge may award additional punitive alimony in a fault-based divorce.
Can How a Personal Injury Settlement is Paid Affect Alimony?
Personal injury settlements are paid out as either a lump sum or a structured settlement. If the injured spouse receives a lump-sum settlement, a non-injured spouse can argue that alimony can be paid in a lump sum.
If the settlement is paid out as a structured settlement, the non-injured spouse can claim the economic damages are subject to communal property law and be granted a portion of the payments.
Divorces are highly emotional and often contentious events. A Louisiana divorce lawyer from Stephenson, Chávarri & Dawson can represent a spouse’s best interests and secure the portion of a personal injury settlement they are entitled to. Schedule a consultation today by calling (504) 523-6496.