In Illinois, under certain conditions, personal injury settlements are considered part of the marital property and therefore may be subject to asset division during a divorce proceeding. Certain items, like gifts or inheritances, are not considered marital property. However, legal settlements such as workers’ compensation, employment lawsuits, and personal injury settlements, are usually considered part of the marital property and subject to asset division.
Marital Property Defined
Marital property includes all assets and property acquired during the marriage, subject to exceptions. Most property acquired during the marriage is marital property unless an exception is present. For example:
- Property acquired after legal separation,
- Gifts or inheritances,
- Items excluded by agreement, and
- Assets obtained before the marriage.
Asset division is the procedure by which the court determines whether and how to divide the marital property. First, the court determines what is and is not marital property. Second, the court divides the property equitably – which isn’t necessarily evenly.
Conditions That Subject a Personal Injury Settlement to Asset Division
Personal injury settlements are subject to asset division if the injury occurred during the marriage. The key event in these disputes is the date the injury occurred, from which the right to collect a settlement is derived.
For example, if the injury occurred before the marriage, then a settlement is separate property – even if the compensation is received during the marriage. Conversely, if the injury occurred during the marriage but the settlement is received after divorce is finalized, the settlement or judgment is part of the marital estate and subject to asset division.
The courts are unlikely to award an even split of the personal injury award because the courts may consider other factors to ensure the division is equitable (or fair). The court may consider the nature of the injury, the person’s ability to work, and the purpose for the settlement.
For instance, if the injured person is unable to work and the settlement is to pay for his or her long-term care and medical costs, then the court will likely award more of the settlement to the injured party. Conversely, if the injured party is able to work and the majority of his or her settlement is for lost wages, then the court is more likely to award a more even division.