How a Workers’ Comp Settlement is Divided in Divorce

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Depending on the state, laws around workers’ compensation’s role in divorce settlements will differ. In some cases, workers’ compensation settlements or benefits may count as marital property, which could require the courts to divide them in a divorce. If individuals going through a divorce with workers’ compensation benefits want to determine how this compensation will factor into the divorce, they can speak with a divorce attorney.

State Models for Property Distribution

A majority of states use either the equitable property or community property model of property division throughout the divorce settlement process. In states with the equitable distribution model, anything that’s obtained throughout the marriage is considered marital property, which is divided equitably between both parties as opposed to equally. Meanwhile, in community property distribution states, any assets obtained during the marriage are considered marital property, but they’re evenly distributed between both spouses.

In certain states, courts may use an analytical method of determining whether workers’ compensation benefits or settlements count as marital property that can undergo division. In these cases, the state may consider any income obtained prior to or following a divorce to be separate from marital property. Specifically, the state may not require assets such as compensation for lost wages or medical bills to go through division. On the other hand, the state may require assets to undergo division if they help cover certain marriage-related expenses.

Other states may use a mechanistic approach instead of an analytical approach. The mechanistic approach doesn’t take into consideration the nature of workers’ compensation settlements. Regardless of whether the award covers lost wages or later earnings won’t matter under the mechanistic approach. Instead, the courts will determine whether the assets are marital property by looking at when the worker earned the right to receive payment. If the worker received the payment at some point during their marriage, the award could constitute marital property according to courts using this approach.

Determining Whether Assets Will Count Toward Marital Property

Following a workplace injury, employees may be able to recover workers’ compensation from their employer using a workers’ comp claim. Insurers may then provide compensation for the employee’s injuries, which could include medical expenses, disability, and lost wages. Sometimes, workers’ compensation may also cover certain expenses involved in a marriage.

Depending on the state and the courts involved, this compensation could be treated very differently during the divorce process. The distribution model and approach to determining how workers’ comp factors into a divorce could make a big difference, so it’s important for individuals to determine how the courts will treat and divide workers’ compensation awards.

To better gauge how the courts will handle workers’ compensation, individuals may want to speak with a workers’ compensation attorney. Workers’ comp lawyers could discuss the options available and help determine how the courts may choose to divide these assets.

Knowing how the state handles workers’ comp during a divorce can help individuals more effectively prepare. Otherwise, they may unexpectedly find that their compensation is to be divided equitably or equally between both parties.