Will My Accident Compensation Still Be Mine If We Divorce?
In a successful accident claim, the Court will decide the amount to be paid to the Claimant. When a person has suffered a serious injury with longer term consequences and possibly the award includes sums for future loss of earnings, future care and perhaps aids and appliances, most Claimants will consider that the funds are “theirs” and should not be “shared” in any way!
Should the Claimant be in a relationship – either a Marriage or Civil Partnership, that fails, then there are legal consequences that might challenge this assumption.
Firstly, before beginning any arguments as to whether certain matrimonial assets can be “ring fenced” for the benefit of one of the parties, the Claimant must realise that he or she is obliged to disclose the extent of those assets so that they can be ‘taken into account’ by the Court.
Section 25 of the Matrimonial Causes Act 1973 contains the essential factors that will be taken into account by the Court when deciding a matrimonial/Civil Partnership settlement.
These include the income, earning capacity, ages and standard of living of the parties. Physical and mental disabilities are also considerations but carry no more weight than the others.
In a leading case in 1992, when considering monies received as a personal injuries settlement, the Court found that it was not “sacrosanct nor any part of it secured against the application of the other spouse”.
The Court will first assess the financial “needs” of each party and if the joint assets do not produce a surplus over and above these needs, then the Court will assess the ongoing needs of each spouse/partner including their housing and future care needs.
It might be the case that the injured spouses’ (or partner’s) future needs will increase in time as his or her disability worsens with age; it may be that the party who is the primary carer for the children will reduce once the children become independent or finish education.
In cases of catastrophic injury where ongoing care needs are very substantial, the Court may consider that a substantial amount of the joint capital and income is required by the injured party and that to use any or any substantial amount or all of the settlement sum will be to the detriment of the injured person’s quality of life and needs of the future.
If the parties are Married or in a Civil Partnership prior to the award being received, then a ‘Postnuptial Agreement’ is worth considering. If a Marriage or Partnership is to take place following settlement then a ‘Prenuptial Agreement’ might be considered. Although these Agreements do not automatically “bind” a Court, if they are drafted properly they become very strong evidence of the parties agreed intentions and difficult to displace.
If the parties are not married and a home is to be purchased and or adapted from the settlement funds, a ‘Co-habitation Agreement’ or ‘Declaration of Trust’ might be considered so that the extent of the injured parties share in the property can be clearly set out.
If you wish to know more please contact us as my firm has considerable experience in both complex and substantial personal injury claims and also in giving family law advice in complex financial situations.