The bottom line is that the answer may not be quite what you expect. Sadly, changes in family circumstances quite often follow on from someone suffering a serious injury.
Most people are aware that their spouses have financial claims against the other’s income, property, savings, and pensions. As part of divorce negotiations, if no agreement can be reached, a Court may have to make an Order, which could include selling the property and dividing up the savings and pension funds.
It would be natural to assume that if one spouse has received personal injury damages or compensation after being injured at work or in a traffic collision, that money would be ‘ringfenced’ for them to keep. This is not always the case, particularly if it is not easy to identify how much of the compensation remains. For example, it can be particularly complicated if it has been ‘invested’ in the family home and is not simply sitting in a bank account.
Some proportion of the personal injury settlement may be compensation for loss of income or pension benefit. The uninjured spouse might have a claim on the income or pension in ‘normal’ circumstances, meaning they may have a claim for a share of the compensation which has been paid to replace this.
If the family assets are very limited, and there are children to look after, the Court may have to ‘dip in’ to the compensation if ringfencing it would mean the uninjured spouse could not pay for housing. However, if there is a proportion of the settlement which represents compensation for pain and suffering, this may be kept by the injured spouse.
The Court will also need to think about the injured spouse’s future earning capacity – if they are not able to carry on working full-time until retirement age, they may need to keep the compensation to pay rent or mortgage, whilst the uninjured spouse may be able to work to support themselves.
Negotiating a financial settlement on divorce can be complicated, with the Court having to consider factors such as family dynamics, including child rearing responsibilities and different types of assets. If compensation has been received before marriage, it may be prudent to consider entering into a Pre-Nuptial Agreement, which might look to ‘ringfence’ the money, and protect it just in case the marriage breaks down in the future.
Fraser Dawbarns have a team of friendly and experienced lawyers who can offer advice on a range of family matters in King’s Lynn, Wisbech, Downham Market, March and Ely.
This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek advice specific to your own circumstances. Fraser Dawbarns LLP are always happy to provide such advice.
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