How is Personal Injury Compensation Treated in Divorce?

Author:
Lorraine Harvey
Partner, Family Law
Date:
03/06/2021

When a couple gets divorced in England or Wales, the Court has a checklist to help them decide what is fair and reasonable when looking at a divorce financial settlement.

The Court will look at each person’s income, earning capability, property and any other financial resources they each have. They’ll also consider their financial needs and responsibilities, disabilities, and their respective contributions.

Is Everything in Divorce Split Equally?

There is a common misconception that everything is divided equally, regardless of its source, but that’s not the case.

The source of any asset will be taken into account and most personal injury or medical negligence compensation is classed as a non-matrimonial asset. This compensation is usually classed as external to the marriage because the money is a direct result of any injury to that person and is not jointly brought into the marriage.

Your Family Lawyer should speak to the Personal Injury Lawyer about how the compensation award is made up, as it may include payments for past losses and future losses so the Court will need to take all of that into account.

But if the needs of the uninjured husband or wife can’t be met without the personal injury compensation, it really doesn’t matter if the money is classed as non-matrimonial.

What Can I Do About My Compensation If I’m Getting Divorced?

The most important thing to do is to get legal advice from a specialist Divorce Solicitor who, once instructed to represent you, will do all they can to protect your compensation.

In a case from 2012 (Mansfield v Mansfield), the Court decided to award the wife £285,000 of joint funds of £600,000 (£500,000 of which was the husband’s personal injury compensation) as she was the primary carer for their two children. This case went to the Court of Appeal, who agreed with the original decision but added that a third should be paid back to the husband once the children reached 18.

The Court will always try to balance the needs of any dependent children and the source of the compensation.

There are some key ways you can protect your Personal Injury Compensation. They are:

Our Divorce Solicitors can help advise you on which one best suits your needs.

Personal Injury Trust

This means you put all of your compensation into a Trust and appoint Trustees to manage the funds for you. You would need permission to access the money. You may also benefit from getting regular payments, called Periodical Payments, rather than a lump sum.

If you’re still finalising your Personal Injury claim, speak to your Personal Injury and Divorce Lawyers so they can give you the best advice on how to structure your compensation before it’s paid.

Prenuptial or Postnuptial Agreement

The Court places much greater weight on prenup and postnuptial agreements since a case called Radmacher v Granatino went to the Court of Appeal in 2010.

If you received compensation before your marriage, you can put a prenup agreement into place, which should protect your compensation. You could also consider making a postnuptial agreement if you are already married.

As long as the agreement is freely entered into by both people, with a clear and full understanding of what it means with independent legal advice, then it should be taken into account. Any children of the marriage or civil partnership will need to be maintained though.

The key is to get specialist legal advice as early as possible. Serious injuries can impact your life in many different ways. Our team at Simpson Millar can help you with your Personal Injury claim and also help you with divorce advice.

For initial legal advice call our Family Law and Divorce Solicitors

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