Thursday, January 26, 2017

New Jersey Divorce: Equitable Distribution of Personal Injury Awards

By: Justin M. Smigelsky, Esq.
Under New Jersey law the Court has the authority to distribute all eligible property that was legally and beneficially acquired during the marriage or civil union as part of equitable distribution. Some assets, however, are so inherently personal in nature that they may not be considered marital property for purposes of equitable distribution. Whether a personal injury award or settlement, or an amount recovered in a workers’ compensation claim, is subject to equitable distribution depends on the allocation of the recovery.

With respect to a settlement or award allocated as compensation for pain, suffering, and disability, the purpose of such funds is generally to make the injured party whole and restore the injured party to the condition preceding the accident. As set forth by the New Jersey Supreme Court in Landwehr v. Landwehr, an injured party’s pain, disabilities, and emotional suffering “persist unaffected by the breakup of the marriage.” Therefore, this portion of a personal injury recovery is meant to “fill a gap or loss in the physical and mental wellbeing of the injured spouse,” and does not represent an accumulated asset or surplus of marital property subjecting it to equitable distribution (“…a spouse receives compensation for pain and suffering and physical and mental disabilities for excrutiatingly personal reasons, wholly apart from the labors or efforts of economic transactions of the marital partners”). Similarly, the per quod claim (a claim for deprivation of spouse’s aid, society, and conjugal fellowship) of the uninjured spouse is generally viewed as being “just as personal as the pain and suffering at issue in the primary action”; accordingly, per quod claims are ordinarily not subject to equitable distribution.

Treated differently, however, is that portion of a personal injury award or settlement (or the amount recovered in a workers’ compensation claim) that is intended as compensation for lost earnings and medical expenses of the injured spouse – this portion of the award or settlement generally reimburses marital assets that were lost because of a spouse’s injury, belongs to both partners of the marriage and, therefore, is subject to equitable distribution upon divorce. It is worth noting that the allocation of such awards is not always clear, and the injured spouse has the burden of demonstrating what portion of his or her recovery represents compensation for pain, suffering, and disability. Should a party fail to demonstrate that a portion of the recovery is rightfully separate property, it will be deemed a marital asset subject to equitable distribution.

If you have any questions in regards to divorce in New Jersey, equitable distribution, family law, or personal injury law, you may wish to consult with an experienced attorney. This article is for information purposes only, and is neither legal advice nor the creation of an attorney client relationship.

Justin M. Smigelsky, Esq. / Timothy J. Little, P.C. / 2017 – All Rights Reserved

Timothy J. Little, P.C. is a full-service law firm with offices in Woodbridge and Chesterfield, New Jersey. Justin M. Smigelsky, Esq. is a member of the firm and offers specialized legal assistance to individuals, families and businesses throughout New Jersey including Middlesex County (Old Bridge, Woodbridge, Sayreville, East Brunswick, Spotswood, Perth Amboy, Dunellen, Colonia, Sewaren, Iselin, Avenel, Fords, Keasbey, Menlo Park, Port Reading, South Amboy, Monroe, Edison, Carteret, Cranbury, Helmetta, South River, Milltown, Highland Park, Jamesburg, Laurence Harbor), Monmouth County (Aberdeen, Matawan, Hazlet, Cliffwood Beach, Keyport, Keansburg, Middletown, Lincroft, Manalapan, Englishtown, Marlboro), Union County (Rahway, Elizabeth), Ocean County, Somerset County, and Burlington County. If you have any questions or concerns regarding family law or divorce, please contact the attorneys at Timothy J. Little, P.C.

Family Law Practice Specialties:
Divorce, equitable distribution of assets and liabilities, alimony, domestic violence, child custody, child support, parenting time, emancipation applications, removal applications, Marital Settlement Agreements, post-judgment enforcement and modification applications

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