Protect your personal injury settlement
Personal injury claims can be a long and emotional process, often taking several years of litigation before a settlement is reached. It’s important that injured individuals protect their settlement to the best of their ability—even if they are happily married.
If an injured party goes through a divorce, it is important to note that the Court does not automatically exclude a personal injury award from potential division upon divorce. As part of the financial matters that must be resolved alongside divorce, a party would be expected to provide a breakdown of their personal injury settlement, even if it is protected by a Personal Injury Trust, or the potential settlement they may receive (if matters are not yet resolved), as part of the full and frank financial disclosure that is required in proceedings. This disclosure is often provided even when individuals try to resolve matters outside of Court.
Such disclosure could involve the injured party providing a full breakdown of the Heads of Loss within their settlement and a detailed description of what the funds are intended for—for example, the ongoing care they will require and the estimated cost of this. Where settlement hasn’t yet been reached, it will be important for an individual to liaise with their personal injury lawyer to understand what is known about the sum they are claiming, so they can comply with their duties of disclosure.
Whilst personal injury awards are often initially considered non-matrimonial assets as they are an award being received by one person for the injury they have suffered, that does not mean they are fully protected from a spouse or upon marriage. It is also important to note also that often personal injury awards contain claims for past care that a spouse or partner may have provided when the injury occurred so part of the award may technically be for the other person.
In financial separation upon divorce, the financial needs of the parties often outweigh the origin of the funds where there is not enough money elsewhere to meet everyone’s needs. Even when damages are deemed non-matrimonial (for example, this could be monies for your future accommodation needs), the Court can invade them to meet the reasonable needs of your spouse or children if required.
For this reason, it is very important to take early legal advice if you are considering getting married during the lifetime of a personal injury claim, or at its conclusion, or are already married and anticipate receiving an award.
You should also make your personal injury lawyer aware of your relationship status and any intentions you have regarding marriage, or sadly divorce, as considering the structure of a personal injury award, and ensuring it is clear as to what the monies are for can assist in helping the family Court understand why the monies are required for your needs rather than anyone else’s.
"Where personal injury claims run alongside a relationship breakdown, early collaboration between our PI and Family teams can be invaluable in helping clients understand the implications for any future financial arrangements. In recent years, our teams have collaborated frequently. In one matter, liability for the incident was heavily disputed and the likelihood of recovering substantial damages remained uncertain for a considerable time. The parties’ divorce was concluded before any award was made, meaning that any future compensation fell within the scope of the financial proceedings. When damages were eventually recovered, a portion was provided to the claimant’s former spouse for the benefit of their children, which led to practical issues.
At the time of the divorce, no damages existed and liability remained in dispute, therefore quantum negotiations had not yet been explored. We did however, benefit from discussing options with the family law team from the point of separation.
Once a personal injury claim is in contemplation, shared awareness between PI and Family practitioners can support families to plan with greater clarity. In particular, having a pre‑nuptial or post‑nuptial agreement in place, even in cases where compensation has not yet been obtained and is only anticipated, can offer a valuable framework for ring‑fencing future awards and reducing the risk of disputes arising later.
By working together at the right stage, our teams help clients understand their options and create arrangements that protect the needs of both injured claimants and their families."- David Withers (Partner) and Kelly Lingard (Solicitor).
It is therefore often beneficial to consider a pre- or post-nuptial agreements (pre – before marriage, post- after marriage) as a protective layer; think of it as an insurance policy. Nuptial agreements can outline both parties’ intentions for how the personal injury award should be treated if there is sadly a breakdown of the marriage. Provided they are drafted properly, the agreement is fair and proper, and both parties’ needs are met by the terms, these agreements are often given significant weight by the Court upon separation.
Following a traumatic event, it’s important to start planning for the future and one of those steps is to protect your personal injury settlement so that it does what it is meant to, support and assist you in the future. Our specialist Family Team has extensive experience in drafting pre- and post-nuptial agreements and given their close ties with our personal injury teams, they know the complexities of how personal injury awards should be considered and protected in such agreements. They would be happy to provide you with expert legal advice, so please do not hesitate to reach out to one of our Irwin Mitchell colleagues, or Taler Kelly specifically, if you’d like to discuss these matters further.
