Who Gets The Workers Comp Money After A Divorce
Divorce often creates financial tension, especially when one or both spouses are receiving benefits or compensation due to an injury. One common issue that arises is how workers’ compensation settlements are handled during a divorce. These funds can represent a significant asset, particularly if the injured spouse received a lump sum payment or structured settlement. When it comes to dividing these funds, state law, timing of the injury, and the purpose of the compensation all play a role.
Factors Courts Consider When Dividing Compensation
Courts typically evaluate whether the workers’ comp settlement is considered marital property or separate property. This usually depends on when the injury occurred and how the funds are allocated. If the injury took place during the marriage, any compensation received may be partially or entirely viewed as marital property. In contrast, if the injury occurred before the marriage or after separation, the funds may remain the injured party’s separate property.
Even when the settlement is considered marital, courts often break it down further. Money intended to cover lost wages during the marriage may be subject to division, while amounts designated for future medical care or future earnings may be treated as separate.
How Timing Influences Distribution
Timing plays a critical role in determining how these funds are treated. If a workers’ comp claim is filed and resolved before divorce proceedings begin, it may be easier to argue that the compensation is separate property. However, if the claim is ongoing during the divorce or the settlement is finalized while the marriage is still legally intact, a judge may consider the payout part of the marital estate.
Medical Bills And Future Care Considerations
Another important aspect is the purpose of the funds. Courts may analyze what portion of the compensation is meant to cover ongoing medical treatment. This can become a point of debate during divorce proceedings. While funds earmarked for medical care may seem like they should belong solely to the injured spouse, some courts may view them as shared resources if the care benefits the family unit as a whole.
Judges might also take into account whether the non-injured spouse provided care or support during recovery. This kind of contribution can influence the way compensation is divided, particularly in long-term marriages where one spouse gave up income or other opportunities to support the injured partner.
When A Structured Settlement Is Involved
In some cases, workers’ comp payments are distributed over time as a structured settlement. These arrangements add another layer of complexity during divorce. Courts may evaluate whether payments should be split, assigned to one spouse, or even offset by awarding other marital assets. A legal advisor can help determine the present value of future payments so they can be factored into an overall divorce settlement.
Legal Guidance Helps Avoid Costly Mistakes
Because workers’ compensation benefits are not always straightforward to divide, both parties need to seek sound legal advice. Courts need clear documentation and evidence showing the purpose and timeline of each portion of the settlement. Without this, the division may not reflect the intent of the original compensation or the best interests of both spouses.
Our friends at Hurwitz, Whitcher & Molloy discuss how state laws and the details within each case guide how compensation is treated during divorce. Careful legal preparation can help both parties avoid unnecessary disputes and protect their financial future.
Call To Action
If you’re going through a divorce and workers’ comp payments are part of the picture, don’t take chances with your financial rights. Working with a knowledgeable attorney can help you understand your position and avoid common pitfalls. Contact a workers’ comp lawyer to review your options and safeguard what you’ve earned.