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Is A Workers’ Compensation Settlement Property In A Divorce?

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If you want to try and tackle one of the most subjective and difficult topics in all of law, then you should try to figure out how workers’ compensation gets handled in a divorce settlement. Every state has different divorce laws, which means every state handles the idea of marital property differently. But if you ask several lawyers from several states how a workers’ compensation settlement is split up in a divorce, you are bound to get a variety of answers, even from lawyers who practice in the same state.

Marital Property

The primary argument that has to be answered when deciding the fate of a workers’ compensation settlement in a divorce proceeding is whether or not the settlement is considered marital property. The general rule of law in most states is that marital property is any money or tangible property that is acquired during the marriage.

Any property acquired before or after the divorce is normally not considered marital property. Under normal circumstances, that would mean that property acquired during the marriage would be marital property. But when it comes to a workers’ compensation settlement, that area of divorce law is not always so cut and dry.

Variations In The Law

In many states including PA, equitable distribution is how courts proceed during a divorce in order to distribute property and debt obligations when dividing marital property during divorce proceedings. In a nutshell equitable distribution means “fair” division. However, equitable distribution can be difficult to predict the actual outcome of distribution, due to what courts will take into consideration when dividing property.

The division of a workers’ compensation settlement that is acquired during a marriage could be difficult to predict under such circumstances as it might be subjective under equitable distribution. Courts that use equitable distribution take into account marital property and it could be viewed that any money awarded for loss of wages during the marriage is considered marital property and is treated as such. This means that money awarded to pay medical expenses and to compensate for pain and suffering is not considered marital property.

Some states treat all benefits acquired during the marriage as marital property. This means that the entire amount of a settlement received during a marriage is considered marital property and can be distributed by a judge as the judge sees fit. In most states that follow this rule, there is a cap of 50 percent put on income derived from sources such as workers’ compensation benefits. But that is not always the case and it can change from divorce to divorce.

So How Is A Workers’ Compensation Settlement Worked Into A Divorce?

In some states the courts will rule that some percentage of the settlement must go to the non-injured spouse, and the injured spouse would keep the rest. However, in other states things are not quite that cut and dry.

If a state considers that any income acquired after the divorce is not considered marital property, a workers’ compensation settlement could be hard to include. This is because workers’ compensation benefits are settled to compensate an injured worker for the future. It could stand to reason that a settlement is not considered marital property and not able to be rolled into the divorce. However, there is a time period that runs from the moment the settlement is agreed upon to the day the divorce is finalized. Some courts look at the compensation settlement that was designated for that stretch of time to be marital property.

As you can see, there is no cut and dry answer for how workers’ compensation settlements are treated in a divorce in various states. The courts feel it is their duty to determine how much of the settlement was awarded during the marriage and how much of the divorce was intended for the time after the divorce was settled. This gray area can have different interpretations from county to county, and even court to court.

If you are planning on getting a divorce after you have been awarded a workers’ compensation settlement, then it is imperative that you hire an experienced attorney to take your case. A good lawyer can mean the difference between giving up or keeping a large percentage of your settlement and a good lawyer can help the court to see the situation from your perspective.

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