Car Accident Settlements in Divorce

Nearly every divorce involves some degree of property division. In most cases, the forms of property divided include the economic value of the family home, car, bank accounts, and other regular forms of possessions. However, legal settlements and judgments can also be divided in divorce. One common settlement that arises in divorce negotiations is car accident settlement funds.

Property Damage vs. Personal Injury

A car accident settlement can compensate the victim for various injuries. Some forms of damages in a car accident include property damage, lost income, and personal injury.

A property damage settlement for a car accident is usually community property subject to 50/50 division in divorce. However, that may not be the case in rare circumstances where the car was not purchased during marriage or was obtained during the marriage but with separate property funds (like an inheritance). The same is true for car accident settlements that provide compensation for lost income. Damages for lost income during the marriage is community property, just as wages earned during the marriage is community property.

Car accident settlements for bodily injury may be classified as community property, but a section of the Family Code excepts these settlements from the 50/50 property division norm. While Family Code 780 classifies personal injury damages as community property, Family Code 2603(b) excepts personal injury damages from the 50/50 norm for dividing community property.

Community estate personal injury damages shall be assigned to the party who suffered the injuries unless the court, after taking into account the economic condition and needs of each party, the time that has elapsed since the recovery of the damages or the accrual of the cause of action, and all other facts of the case, determines that the interests of justice require another disposition. In such a case, the community estate personal injury damages shall be assigned to the respective parties in such proportions as the court determines to be just, except that at least one-half of the damages shall be assigned to the party who suffered the injuries.

Family Code 2603(b)

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