Personal injury compensation and divorce

Is my spouse entitled to my personal injury settlement?

Divorce and personal injury can be two of the most challenging and devastating events to happen to someone. Research shows that the instance of divorce increases where a party to the marriage has suffered a personal injury.

Cases involving personal injury and divorce can be complicated. It is necessary to balance the competing interests of the respective needs of the spouses, one of whom may have suffered life-changing injuries, and the needs of any children of the family.

In England and Wales, the court’s objective when resolving financial matters on divorce is to achieve a fair outcome between the parties. Priority should be given to the welfare of any child of the family. The court also has a variety of other factors that must be taken into consideration including the income and earning capacity of both parties, their needs, obligations and responsibilities, their standard of living, their ages, any physical or mental disabilities and their contribution to the family.

The court has provided the following guidance as to the treatment of personal injury awards in divorce cases:

1. The starting point for division of assets will be equality. The issue of need will be particularly important in a case involving personal injury and will frequently justify departure from equality.
2. Personal injury compensation awards will not automatically be excluded from that party’s assets upon divorce.
3. The nature and the complexity of the injuries sustained by an individual will be a relevant consideration.
4. The court will consider the circumstances in which any personal injury damages were received together with the size of the award as this will affect how a damages award may be shared with the other spouse.
5. The needs of any children of the family will usually be treated as paramount, although this must be weighed against the needs of the party with a personal injury.

This area of law is extremely fact specific, so it is important to seek expert legal advice. Our team of divorce and family law solicitors has particular expertise in this complex area of law and can advise you on the right course of action based on your personal circumstances.

What can you do to protect your personal injury award?

There is no guarantee that capital or interim payments received from a personal injury claim will be excluded from a financial remedy claim upon divorce; so if you have received substantial personal injury compensation and are married, or proposing to get married, you should consider setting up a formal  agreement with your partner to protect your award.

1. Prenuptial or post nuptial agreement

A pre-nuptial agreement is recommended if you are planning to marry, to help protect not just personal injury awards, but also inherited or pre-owned assets and avoid costly court proceedings in the event of a separation.

Although not currently strictly legally binding in the UK; the courts are becoming more and more inclined to follow the terms of nuptial agreements, provided both of you have:

• received independent legal advice and engaged in full and frank financial disclosure;
• the agreement is properly drafted (and within good enough time of the marriage);
• the agreement reached is deemed ‘fair’ in that it meets the needs of the family following separation.

If you are already married, a post-nuptial agreement can be used in the same way.

2. Cohabitation agreement

If you’re in a relationship but not married, you may wish to enter into a cohabitation agreement to protect your personal injury compensation award from a claim by your former partner should you split up. Planning ahead will be the most sensible way to ensure that a personal injury award is not disbursed upon separation.

It is often not until there is a major life event like separation or divorce that we think about such matters. Although not a romantic concept; having a discussion at an early stage, and having an agreement drawn up by an expert family law solicitor can help to avoid stressful and costly court proceedings later down the line.

Contact a divorce and family solicitor today

For expert advice about setting up a prenuptial or postnuptial agreement to protect a compensation award, call 0800 422 0123 or contact us online for a free and confidential initial consultation. We have family law solicitors ready to help  in London, Manchester, Bristol, Cardiff, Birmingham, Southampton and Taunton.