Dividing property is a significant issue in any divorce or legal separation. It can be further complicated if one party has been injured and has a potential personal injury or workers’ compensation claim. While personal injury awards and workers’ compensation claims are similar in nature, Colorado courts treat them very differently.
How Colorado courts handle personal injury awards in divorce proceedings
In re: Marriage of Fjeldheimis Colorado’s seminal case when it comes to personal injury awards and divorce. In Fjeldheim, the trial court classified a wife’s personal injury settlement, which compensated her for her pain and suffering, as separate non-marital property. The Court of Appeals reversed this ruling, reasoning that a personal injury settlement should be treated as marital property. The Court of Appeals relied on the presumption that all property acquired during a marriage is marital property.
The Court did note, however, that the trial court has broad discretion in determining the equitable distribution of property, and that their holding should not to be interpreted to mean that husband should get a particular amount or proportion of the award. Instead, the court determined that such personal injury awards should be considered marital and should not be excluded from the equitability (aka fairness) analysis.
The presumption that personal injury awards are marital property also applies to unliquidated personal injury claims. The husband in In re Marriage of Fields argued that his pending tort claim lacked the necessary attributes of property and that, therefore, Fjeldheim was not dispositive. He pointed out that, at the time of entry of permanent orders, the tort claim had no cash value, no loan value, no redemption value, no lump sum value, no value realizable after death, and no known settlement value. He argued that the potential personal injury award should not be considered marital property.
The Appellate Court disagreed, saying they did not view the uncertainty encountered in valuing the potential award as indicative of separate non-marital property. They pointed out that the Colorado Supreme Court has held that pension benefits are marital property, despite their contingent nature. While courts often struggle with how to value and/or divide unliquidated claims, they are still considered a marital asset that must be assigned a value and considered in the division of marital property.
The classification of personal injury awards as marital property does not indicate what amount, if any, will be awarded to the non-injured spouse. The court can consider “all relevant factors” in the division of property, which includes the medical expenses of the injured spouse and their physical/mental conditions. Therefore, the injured spouse may still be awarded most or the entire personal injury award.
If you or your spouse stand to receive a personal injury award and you are going through a divorce, our seasoned Family Law attorneys can assist you in determining what your best options are moving forward and assisting you to protect your interest in negotiations and in court.
Authored by: Meagan K. Moodie, adapted from an article that she authored in Trial Talk