Suffering a severe or disabling injury can put an incredible strain on a marriage. The caretaker burden placed on a spouse and the diminished lifestyle can cause a couple to split up and divorce. What happens then to the proceeds from a workers’ compensation settlement obtained for a workplace injury or other compensation recovered for a personal injury? The uninjured spouse may seek a share of a workers’ comp settlement finalized before the couple separated.
A fight over money meant to sustain a seriously injured spouse can quickly turn a divorce into a heated and heart-wrenching experience. If you find yourself in such a situation, you need to speak with an attorney who understands North Carolina divorce law and can protect your interests during the process of equitable distribution.
Why Divorce Puts Your Workers’ Comp Settlement in Jeopardy
In a divorce, North Carolina law requires an equitable distribution between each party of the couple’s marital assets and divisible property.
- Marital assets are those obtained during the marriage.
- Divisible property refers to assets acquired from the date of separation through the date of your divorce trial.
Separate property is not part of the marital estate and is not subject to equitable distribution. Separate property includes any assets acquired by either spouse before the marriage began or as a gift or inheritance during the marriage.
When determining whether assets from a workers’ compensation settlement may need to be divided, what is crucial is when the injured spouse obtained the settlement and why exactly they were paid out. If a settlement was recovered after the couple married, it is likely subject to division and equitable distribution.
How Is a Workers’ Compensation Settlement Divided in a Divorce?
Workers’ compensation is insurance carried by employers to provide benefits to employees who have been injured on the job or become ill because of work conditions. The insurance benefits include:
- Payment of all medical bills related to the occupational injury or illness
- Replacement of about two-thirds of wages or income lost because of a disabling injury or illness or reduced earning capacity.
- Stipends for specific losses or disfigurement, such as the loss of a leg or facial scarring from burn injuries.
A workers’ compensation beneficiary who has been disabled may receive payment for years or may in some cases opt for a lump sum settlement.
The North Carolina Court of Appeals ruled in Freeman v. Freeman, 421 S.E. 2d 623, 107 N.C. App. 644 (1992) that what must be considered is what the workers’ compensation award or settlement is meant to pay for and when.
Does One Have to Share Workers’ Comp in a Marriage?
Under Freeman, benefits recovered during the marriage should be considered marital property, meaning the uninjured spouse may be entitled to a portion of that money. However, any part of a settlement acquired for medical expenses or other needs expected after the couple separated due to the spouse’s permanent disability would be the injured spouse’s separate property and not subject to division and distribution.
If your workers’ compensation claim was ongoing at the time of your separation, delaying a settlement may protect much of your benefit from designation as marital property. If you already had a settlement, you would need to designate to the satisfaction of the court what portions of the settlement were meant to replace past, current, or future losses. A knowledgeable family law attorney at Younce, Vtipil, Baznik & Banks, P.A., can help you understand how the process of equitable distribution as part of a divorce affects your workers’ compensation settlement or payments.
Let Our Divorce and Workers’ Comp Lawyers Help
Without proper legal counsel, it’s easy to overlook the financial impact of divorce and wind up with a separation agreement that proves costly for years to come. The attorneys of Younce, Vtipil, Baznik & Banks, P.A., in Raleigh know divorce law and workers’ compensation law in North Carolina. We can help you navigate this difficult time. Contact us today at 919-661-9000 or online.