Big changes in life can often be a trigger for a divorce. There are fewer bigger changes than sustaining a significant personal injury and then receiving a subsequent settlement or award for that personal injury. Often, this change in physical and financial circumstances can make a marriage unsustainable and, thus, subject to divorce. What is the relationship between divorce and personal injury in Illinois? What happens to a personal injury award in an Illinois divorce?
Marital vs. Non-Marital Property In Illinois
All assets that either party has in their name or possession at the time of divorce must be classified as marital or non-marital for the purposes of division of assets pursuant to that divorce.
After an Illinois divorce, property classified as “non-marital” assets will remain with the party that has those non-marital assets in their name and/or possession.
However, property classified as “marital” assets will be divided by Illinois divorce courts.
Illinois courts divide marital assets equitably. This means that an Illinois judge has great powers to divide marital property as the judge sees fit.
90% of the time an Illinois judge will divide the marital property 50/50 for the sake of fairness and efficiency. Any deviation from 50/50 is usually based on some outside factor like “he makes a lot more than she does so I’m going to divide the marital property 55/45 in her favor.” I, personally, have never seen an Illinois court “equitably” split a marital asset in a greater ratio than 60/40…except in the case of personal injury awards (more on this later)
So, in the context of a personal injury award, is a personal injury award marital or non-marital property in Illinois?
Are Personal Injury Awards Marital or Non-Marital Property in an Illinois Divorce?
In re Marriage of DeRossett, 173 Ill. 2d, was an Illinois Supreme Court case that settled this question.
Mr. DeRossett got terribly injured in 1990. Mr. DeRosset filed a workers’ compensation claim and proceeded to wait for resolution of worker’s compensation claim…which took years.
Well, marriage is hard and marriage even harder when one person is horribly injured. Mr. DeRossett filed for divorce four years later in 1994 and his workers compensation settlement still was not finalized.
The Iocal Illinois court found that the workers compensation award would be split 70/30 between Mr. and Mrs. DeRossett, respectively, once it was finally awarded.
Mr. DeRossett went all the way to the Illinois Supreme Court to contest this divorce court’s ruling. Mr. DeRossett argued that a bulk of the settlement was to compensate Mr. DeRossett for wages he couldn’t earn because of the accident. Mr. DeRossett further argued that those unearned wages would have been earned AFTER the divorce so that portion shouldn’t be marital.
The Illinois Supreme Court rejected that argument because it “completely ignores section 503 of the [Dissolution] Act, which mandates what constitutes marital and nonmarital property for purposes of disposition on dissolution of marriage.” The Illinois Supreme Court specified “marital property” means “all property acquired by either spouse subsequent to the marriage.”
So, if you get a personal injury award while you’re married, that personal injury award is marital property.
Once a personal injury award is deemed marital, the award may be divisible. “The proceeds of the personal injury settlement having been properly declared to be marital property, they are subject to disposition, along with other marital property, pursuant to the provisions of section 503(c) and (d) of the Act.” In re Marriage of Gan, 83 Ill. App. 3d 265, 270 (1980)
The Timing Of The Injury Can Impact Whether A Personal Injury Award Is Marital or Non-Marital Property In An Illinois Divorce.
Mr. DeRosset’s error was simply one of timing. If Mr. DeRosset had been injured before he was married, the subsequent award would not have been found to be marital property.
In re Marriage of Burt, 144 Ill. App. 3d had the same facts as DeRosset but Mr. Burt was hurt before the marriage occurred. The court determined that a property interest begins at the time of the actual accident NOT when the final settlement check gets written.
If the lawsuit “accrues” during the marriage, however, it will be deemed marital property.
“Because the lawsuit accrued…during the marriage, it is marital property subject to distribution pursuant to the factors set forth in section 503 of the Dissolution Act.” In re Marriage of Rivera, 2016 IL App (1st) 160552
What If The Personal Injury Case Has Not Been Filed Yet?
Personal injury actions in Illinois must be filed within 2 years of the injury occuring.
“Actions for damages for an injury to the person…shall be commenced within 2 years next after the cause of action accrued” 735 ILCS 5/13-202
A person with an injury claim may want to finalize their divorce before filing a personal injury lawsuit.
A court can deem that “it is too speculative as to whether [a party] will file a personal injury claim within the statute of limitations….While we do not want to encourage parties to delay the filing of a personal injury claim until after their dissolution proceeding is concluded, we cannot say that in this case the trial court abused its discretion by not considering the party’s potential personal injury claim.” In re Marriage of Berberet, 2012 IL App (4th) 110749
The amount of the personal injury settlement is, as of yet, undetermined. The non-injured spouse may want to waive the uncertain personal injury proceeds in exchange for marital assets. This is eagerly adopted by Illinois divorce “courts [as they] should seek a high degree of finality so that parties can plan their future with certainty and are not encouraged to return repeatedly to the courts.” In re Marriage of Hellwig (1981), 100 Ill. App.3d 452, 459, 426 N.E.2d 1087, 1092.
If the settlement ends up being larger than expected, the non-injured spouse will be tempted to challenge their waiver of those proceeds.
“To determine the effect of waiver language in th[e] context [of a personal injury award], a court will consider two factors, the first being whether the disputed asset was specifically listed as a marital asset and awarded to one spouse. The second factor is whether the waiver language specifically states that the parties are waiving any expectancy or beneficial interest.” In re Marriage of Kelly 2022 IL App (1st) 220241 (citations and quotes omitted)
My Personal Injury Settlement Is Marital! What Do I Do?
Recall that marital property in an Illinois divorce case is not divided 50/50. Marital property in Illinois is divided “equitably”
Now recall that Mr. DeRossett’s wife got only 30% of his future settlement award.
Years ago, I represented a gentleman who had a similarly large settlement that was definitely marital property…I had read the DeRossett case. But, I also knew that 50/50 wasn’t the default.
I asked that the matter be set for pretrial. I explained to the judge that my client’s injury was terrible and he has to live with that injury for the rest of his life. Why should his wife get any money from the injury that hurt him and him alone?
The opposing counsel said, “This money is marital!”
I replied, “Even If the personal injury settlement is marital, what is the fair portion to give her?…I think it’s 10 percent”
The judge agreed with me and the opposing counsel accepted the recommendation!
I’m not one to kiss and tell but, in this case, the judge has since retired and the attorney is no longer practicing (that’s another story).
If you don’t ask, you don’t get. So, ask for something minimal. What’s the worst that could happen? 50/50?
I Can’t Work Because Of My Personal Injury. Should My Spouse Support Me?
The Illinois maintenance statute lays out several factors to consider that are very favorable to the injured:
- “The needs of each party.” 750 ILCS 504(a)(2)
- “The realistic present and future earning capacity of each party.” 750 ILCS 504(a)(3)
- “Any impairment of the realistic present or future earning capacity of the party against whom spousal maintenance is sought.” 750 ILCS 504(a)(5)
- “The age, health, station occupation, amount and sources of income, and sources of income, vocational skills, employability, estate liabilities, and the needs of each party.” 750 ILCS 504(a)(9)
But, the statute also does consider that possible personal injury settlement money
- “All sources of public and private income including, without limitation, disability and retirement income.” 750 ILCS 504(a)(10)
Proceed with caution! You may want to trade the temporary spousal maintenance from your spouse for your future personal injury settlement.
Personal Injury Proceeds And Child Support In Illinois
In Illinois, child support is determined by “each parent’s monthly net income.” 750 ILCS 5/505
Personal injury settlements usually occur in a lump-sum or periodic payments. While periodic payments look like income and thus can be easily applied to an Illinois child support payment, it may be tempting to say a lump-sum settlement is not income but, rather, is an asset. Personal injury settlements are net income for the purposes of determining child support.
“[L]ump-sum settlement payment should be included in…net income” In re Marriage of Dodds, 222 Ill. App. 3d 99, 103 (Ill. App. Ct. 1991)
Lump-sum settlements are not considered for child support until all the fees are deducted. Only the money the injured person actually received is considered.
“It is undisputed any portion of a personal injury award used to pay attorney fees, costs of suit, and previously-incurred medical expenses and care is not income for child support purposes.” IN RE MARRIAGE OF PLOWMAN AND LAWSON, 120 NE 3d 161 – Ill: Appellate Court, 4th Dist. 2018
What is left in the settlement to the injured parent will be considered income even if the money was for pain and suffering.
“[T]he net proceeds from a personal injury settlement attributable to damages for pain and suffering and disability is income for child support purposes.” IN RE MARRIAGE OF PLOWMAN AND LAWSON, 120 NE 3d 161 – Ill: Appellate Court, 4th Dist. 2018
But, the non-recurring nature of a lump-sum settlement can be good cause for asking the court to deviate from Illinois’ guidelines child support.
“Recurring or not, the income must be included by the circuit court in the first instance when it computes a parents ‘net income’ and applies the statutory guidelines for determining the minimum amount of support due under section 505(a)(1) of the Act. If, however, the evidence shows that a parent is unlikely to continue receiving certain payments in the future, the circuit court may consider that fact when determining, under section 505(a)(2) of the Act [citation], whether, and to what extent, deviation from the statutory support guidelines is warranted.” In re Marriage of Rogers, 213 Ill. 2d 129 (Ill. November 18, 2004)
“Thus, a one-time payment is income, but its nonrecurring nature may factor into the trial court’s decision on how to allocate it—presumably, under section 505(a)(2)(e), which concerns ‘the financial resources and needs of the non-custodial parent.'” Mayfield v. Mayfield, 2013 IL 114655 (Ill. May 23, 2013)
In conclusion, personal injury and workers compensations settlements are income for child support purposes but they are also a good reason to deviate from the standard guideline’s child support amounts (i.e., ask for a discount).
If you have a personal injury claim and you’re thinking about divorce, please contact my Chicago, Illinois Family Law Firm for a free consultation.