Equitable Distribution Of Personal Injury And Workers’ Compensation Awards In A Divorce

When a couple divorces in New Jersey, a large part of the legal process involves dividing the money and property the couple has accumulated. In addition to things like bank accounts, real estate, and personal property, personal injury and workers’ compensation awards may also be divided upon divorce.

Classifying the Award as Marital Property

In determining how to assign this unique type of asset, a key question is whether the cause of action (typically an accident or medical problem) that resulted in the personal injury or workman compensation award occurred during the marriage. If it did, the award can be characterized as “marital property” and will be subject to division at divorce. In contrast, if the cause of action that led to the award occurred before or after the marriage, that money is nonmarital property and will usually be given solely to the injured spouse.

The Approach to Dividing the Award

New Jersey courts follow what is known as the “analytic approach,” which attempts to divide the asset based on what the award was intended to replace. Some personal injury or workers’ compensation awards are meant to replace the financial or economic burden the underlying injury caused, whereas other awards are not economic, but rather intended to compensate the injured person for the personal effects of the injury.

The court in Amato v. Amato, 180 N.J. Super. 210 (1981) said that the asset will be divided into two parts: 1) awards to the injured spouse for his or her lost wages and medical expenses, and 2) awards for things like disfigurement, pain and suffering and disability. The first group is classified as marital property, while the second group are nonmarital property.

How to Classify the Type of Compensation

In order to take the approach outlined above, the court needs to determine if the award is for economic or noneconomic damages. In doing so, the court will look at the relevant statutes (such as the Workers’ Compensation Act) and case law which may be instructive on the purpose of such an award. Further, the judge will look at the award itself to determine if it outlines the purpose of the award. The facts surrounding the injury, as well as the effect the injury has on the injured person’s life are also examined. Determining how to classify the type of compensation awarded is not always apparent, so the court will look at all of the surrounding factors to make the fairest assessment that it can.

Equitable Distribution

New Jersey courts attempt to equitably divide marital property upon divorce. Equitable does not necessarily mean equal or a 50/50 split, instead it means fair. The court attempts to divide property in a way that is most fair to both parties. To equitably distribute the personal injury or workers’ compensation awards, the court will apply

If you or your spouse have received a personal injury or workers’ compensation award and you are considering divorce, call the Law Offices of Peter Van Aulen at (201) 845-7400 for a free consultation.

Sources

Amato v. Amato, 180 N.J. Super. 210 (1981)

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