Is personal injury compensation protected during a divorce?

It might seem obvious that personal injury damages for ongoing medical care following a serious injury should be ringfenced in a divorce. This is not always the case.

Wagstaff v Wagstaff, 1992, is the most authoritative on the subject. In that case, Wagstaff stated that the capital was not secure against the application of the spouse who made the attempt to ring-fence divorce damages.

Family Court has great discretion in this area. The’sharing principle’ dictates that marital assets should be split equally. Now it is up to you to decide if the award or any elements thereof can be classified as matrimonial, or non-matrimonial. It will all depend on the specific circumstances.

After an injury, the family home may be renovated or altered. Matrimonial properties are considered matrimonial property. They are treated as joint assets of the parties regardless of their ownership. The sharing principle could be more effective if the damages are “mingled” with matrimonial assets.

Even though an award may be considered non-matrimonial in some cases, the court’s goal is fairness. It has a wide discretion and can make decisions that are not subject to the principle of need. Section 25 of 1973’s Matrimonial Causes Act dictates how to approach the matter and says that the welfare of minor children should be the first consideration.

You may already see how medical needs for an injured spouse can be neglected. Children come first. Children are prioritized when there is not enough money to meet everyone’s needs.

Even if there aren’t children, a spouse who is breadwinner receives a significant amount in damages. This basically becomes the entire monetary pool of a family. If the relationship ends, how will the spouse support themselves after the divorce? To that pot, the court has no other option but to provide for both spouses’ needs.

If a case is being decided on the basis of needs, the needs of the injured person will be considered more important than those of the non-injured party. It is important to consider the context of the Family Court’s discretion, which allows personal injury damages to go raided. Arguments can be made about the treatment of these funds due to the fact that an award like this is meant to address ongoing medical needs and is not non-matrimonial. A court is less likely to interfere with damages that are focused on ongoing medical requirements.

However, this does not mean that the needs of the other party are insignificant. An award that is based on future earnings and not on ongoing medical needs may be more vulnerable to being attacked. This is simply because, even if the spouse was not injured or had earned the income, maintenance on divorce may still be available to them.

There are many ways to minimize the chance of personal injury damages in a divorce. These include consideration of the structure of awards, personal injuries trusts, and other wealth planning tools. These options should be considered at the earliest possible opportunity, and preferably before any separation is contemplated.