If you’ve received a personal injury settlement, you might be wondering, Is my spouse entitled to my personal injury settlement? This is a common concern, especially during a divorce or when managing finances in a marriage. The answer isn’t always straightforward—it depends on various factors, including state laws and how the settlement is handled.

At Cannon Law, we help injury victims in Fort Collins, CO, know their rights and guarantee their settlements are protected from unnecessary claims. Let’s take a closer look at what determines whether a personal injury settlement remains separate or becomes shared marital property.

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Understanding Personal Injury Settlements and Marital Property

A personal injury settlement is meant to compensate for damages like medical bills, lost wages, and pain and suffering. But when you’re married, those funds can sometimes get mixed in with shared assets. Whether your settlement remains yours alone or is considered joint property depends on factors such as state laws, how the funds are used, and when the injury occurred.

According to Cornell Law School’s Legal Information Institute (LII), a settlement is a legally binding agreement that resolves a dispute without going to trial. The way a settlement is structured and used will determine whether it stays separate or becomes marital property.

Is a Personal Injury Settlement Considered Marital Property?

The short answer? It depends.

In most cases, personal injury settlements are considered separate property unless they get mixed with shared marital assets. For example:

If the settlement compensates for an injury sustained before the marriage, it’s generally separate property.
If the money is kept in a personal account and not used for shared expenses, it’s more likely to remain separate.
However, if the funds are deposited into a joint account or used for shared expenses like a mortgage or household bills, they may become marital property subject to division in a divorce.

As noted by Halt.org, courts consider factors such as the type of damages awarded (economic vs. non-economic), whether the funds were mixed with joint assets, and state-specific property laws when deciding if a settlement should be divided.

Factors That Determine Whether a Settlement Is Shared

Several factors influence whether a personal injury settlement remains separate or becomes marital property:

Timing of the Settlement – If you received the settlement before getting married, it is likely considered separate property. If it was awarded during the marriage, its classification depends on state laws and how the funds are used.
Nature of the Compensation – Different types of damages may be treated differently in terms of ownership.
Commingling of Funds – If you deposit the settlement into a joint bank account or use it for marital expenses, it could be considered shared property.
State-Specific Laws – Colorado follows equitable distribution laws, meaning property is divided fairly—but not necessarily equally.

Compensation for Pain and Suffering vs. Lost Wages

Not all parts of a settlement are treated the same way.

Pain and suffering damages are usually separate property because they compensate for your personal experience of pain and emotional distress.
Lost wages, on the other hand, may be classified as marital property if they replace income that would have supported both spouses.

The legal definition of pain and suffering includes both physical discomfort and emotional trauma caused by an injury, according to Cornell Law School. Since these damages compensate the injured party directly rather than reimbursing lost income, courts often categorize them as separate property.

State Laws and How They Impact Settlement Division

In Colorado, courts follow equitable distribution laws. This means they consider several factors before deciding if a settlement should be split between spouses, such as:

Whether the funds were mixed with marital assets
If the injured spouse used the settlement money to benefit both parties
If a prenuptial or postnuptial agreement exists that addresses the settlement division

Unlike community property states, where everything is split 50/50, Colorado courts take a more flexible approach. When determining whether a personal injury settlement is separate or marital property, judges consider:

The purpose of the settlement – Medical expenses and lost wages might be considered marital property, while pain and suffering awards are often separate.
Commingling of funds – If the money was placed in a joint account or used for shared expenses, it may be considered marital property.
Contributions of the non-injured spouse – If your spouse helped with your recovery (for example, by quitting their job to care for you), the court may factor this in.
Economic circumstances of both spouses – If one spouse is financially dependent, the court might allocate part of the settlement to ensure fairness.

This case-by-case approach means outcomes can vary depending on the details.

Other states handle things differently:

Community property states (e.g., California, Texas, Arizona): Typically split all marital assets 50/50, including portions of a personal injury settlement received during the marriage.
Equitable distribution states (e.g., Colorado, New York, Illinois): Divide assets fairly, but not necessarily equally.
Hybrid states: Some states apply a mix of rules, treating different portions of the settlement differently based on circumstances.

How Prenuptial and Postnuptial Agreements Affect Settlements

One way to avoid disputes over a personal injury settlement is to have a legally binding agreement in place. A prenuptial or postnuptial agreement can specify that personal injury settlements remain separate property, preventing disagreements later on. If protecting your settlement is a priority, consulting an attorney to draft a clear agreement is a smart move.

Protecting Your Settlement in a Divorce

If you want to make sure your settlement remains yours, here are some proactive steps you can take:

Keep the funds separate – Avoid depositing settlement money into joint bank accounts.
Document your spending – Keep records showing that the settlement was used for individual needs, like medical bills.
Consult an attorney – A lawyer can guide you on protecting your assets before and during divorce proceedings.
Consider a trust – In some cases, placing settlement funds in a trust can help ensure they remain separate property.

When to Consult a Personal Injury Lawyer

If you’re unsure how your personal injury settlement might be divided in a divorce, pursuing legal advice is essential.

At Cannon Law, we assist clients in Fort Collins, CO, with personal injury claims and protect their financial interests. If you need guidance on securing your settlement, contact our firm today for a consultation.

Is My Spouse Entitled to My Personal Injury Settlement?