Are Personal Injury Proceeds Marital Property?
Are personal injury proceeds in the marital pot, when the injury occurred before date of separation and the settlement of the case (or verdict resulting in payment) happened after the date of separation?
Appellate courts in Pennsylvania have wrestled with this question for years. In a relatively recent case, the Pennsylvania Supreme Court, in a case entitled Focht v. Focht, decided that the occurrence of the injury was the important fact, not the date when money was paid to resolve the personal injury case.
However, the inquiry does not end there. The issue to then be determined is how much of the money paid is in the marital pot? In a case where the injured party has substantial and permanent injuries, which will continue long after the payment of money in the personal injury case, a larger percentage of the money will likely be awarded to the injured spouse.
On the other hand, if the injured spouse is substantially recovered from their injury, a larger percentage of the settlement will likely be “in the marital pot” and considered a marital asset.
Finally, there are the several factors, enumerated in the Divorce Code, which will be addressed to determine whether and how much of a personal injury award will be marital in nature.
These are difficult cases and the individual facts of each case must be carefully considered in analyzing these matters.