Are Insurance Payouts Marital Property?
With only a few exceptions, all of the money that either spouse receives during the marriage is marital property, which means that it is subject to equitable distribution in divorce. If that were not the case, then divorce would leave stay-at-home mothers destitute and they would reenter the workforce after divorce starting from zero, without any of the property that the family acquired during the marriage. If you sign a prenuptial agreement, you can designate certain assets as nonmarital even if you acquire them during the marriage. Even if you don’t have a prenup, a few types of assets acquired during the marriage remain the separate property of the spouse who acquired them. These are inherited assets and money that a court or insurance company authorizes the spouse to receive for a loss unrelated to the marriage. A Birmingham divorce lawyer can answer your questions about assets where there is room for debate about whether they are separate or marital.
Personal Injury Settlements Are Separate Property
To understand why inherited assets and compensation for injuries are separate property, consider that you get to keep your DNA and all other parts of your body after you divorce. You would have been related to your parents, grandparents, or any other relative from whom you inherited money even if you had never married your spouse. Likewise, your body is a separate asset, not a marital one; it would not make sense for your ex-spouse to get money that a court awarded you for purposes of treatment for injuries that you sustained. Money from personal injury settlements and workers’ compensation claims are your separate property if you received them during the marriage.
Most such settlements are only enough to pay for accident-related medical bills. If your injuries rendered you permanently unable to work and your only income comes from the settlement, a lawyer can help you resolve issues of property division.
Life Insurance Payouts Count as Inherited Assets
If you are the beneficiary of a family member’s life insurance policy, the payout you receive also counts as your separate property. Since you received the money as a result of the policyholder’s death, life insurance payouts are similar to inherited money that you receive from a deceased family member’s estate when the estate settles.
Insurance Payouts to Replace Damaged Property
What about insurance payouts to replace a totaled car or motorcycle or a boat that was destroyed in a storm? Furthermore, is the new car, motorcycle, or boat you bought to replace the old one a separate or marital asset? If the original asset was marital, so are the new one and the insurance money. If the original one was a separate asset, there is more of a gray area. If you are in a situation to disagree with your spouse about this, it means that the value of your separate property is considerable, which means that you probably need a high asset divorce lawyer.
Contact Peeples Law About Disputes Over Property Division
A Birmingham family law attorney can help you resolve disagreements about equitable distribution of marital property. Contact Peeples Law today to schedule a consultation.