Personal injury settlements can play a major role in the outcome of a divorce in Albuquerque, New Mexico.
You see, the timing of your settlement or judgement, and the specific circumstances of the divorce can determine whether the personal injury funds are considered marital property. If so, the funds are community property and subject to division between the spouses.
In some cases, a portion of the personal injury settlement is community property. In other circumstances, a portion – or the whole settlement – may be one spouse’s sole and separate property.
Consequently, it is essential to understand what portion of your personal injury settlement might be considered community property and subject to division upon divorce.
Failing to understand the subtle distinctions in New Mexico’s divorce laws can be the difference between thousands of dollars being misclassified.
Without further ado, let’s unfold how personal injury settlements affect your Albuquerque divorce.
In New Mexico, the portion of a personal injury settlement for pain and suffering is considered one’s separate property.
For example, let’s say that Husband is injured in a car accident. Sometime afterwards, Husband raises a claim for personal injury. Ultimately, the insurance company agrees to provide Husband with a $10,000 settlement.
Out of this $10,000 settlement, $7,500 is allocated for pain and suffering.
Under New Mexico divorce laws, the hypothetical $7,500 for pain and suffering would be the Husband’s separate property.
In other words, in New Mexico the pain and suffering portion of a personal injury settlement is considered a spouse’s separate property.
This means that the pain and suffering portion remains the Husband’s separate property and is not subject to division upon divorce.
Punitive and reputational damages are like pain and suffering. For instance, both portions of the settlement are considered a spouse’s separate property.
Punitive damages are meant to punish the wrongdoer for unlawful or outrageous conduct.
For example, let’s say that a driver was injured in a car accident. In the accident the person at fault was also driving under the influence of drugs or alcohol. Moreover, possibly the person at fault was driving recklessly, or outrageously breaking some other law.
In this case, the injured party has a potential claim for pain and suffering. Moreover, the injured party also has a potential claim for punitive damages.
Any amounts received for either pain and suffering or punitive damages would be considered the injured party’s separate property during divorce.
The same is also true for reputational damage.
For example, let’s say that Movie Star Husband is suing his former Agent for defamation/false statements.
Part of the suit also includes a claim for reputational damages. In this situation, any funds that Movie Star Husband receives for reputational damages would be his sole and separate property.
Unlike pain and suffering, lost earnings and medical expenses are considered community property. In other words, the portion of any personal injury settlement or judgement for lost earnings or medical expenses is community property and subject to division.
Therefore, let’s say that Wife receives $10,000 in for a car accident. $2,500 is for lost earnings. Moreover, $2,500 is for medical expenses. Therefore, $5,000 of the settlement is considered community property.
Under New Mexico’s community property laws, this $5,000 is subject to a 50-50 upon divorce.
So far New Mexico law is clear on how personal injury settlements are divided upon divorce. As we have seen, pain and suffering, punitive damages, and reputational damages are separate property.
Conversely, economic damages such as lost wages or medical expenses are community property.
The curve ball comes when the settlement check or judgement does not clearly state which portion of the settlement is allocated to pain and suffering, punitive damages, or expenses.
You can only use the settlement agreement, or contract, to prove which portion of the personal injury settlement was for a specific claim.
Under New Mexico law, the court can only examine the intent through the settlement or contract. In doing so, no outside evidence can be used. This outside evidence can include the injured party’s understanding of the settlement.
In other words, the settlement contract alone controls what portion of the settlement was for a specific claim or cause.
Does your personal injury settlement establish what portion of the total settlement was for a specific cause or claim? In other words, does your settlement check state that $2,500, or 25% of your total settlement was for pain and suffering?
Moreover, does your judgement or settlement state how much of the total amount was for lost wages or medical expenses?
If not, then your judge has the potential power to decide which portion of the settlement is community, and which portion is separate property.
In New Mexico, property accumulated during the marriage is considered community property. This community property is divided 50-50 upon divorce.
This presumption is a rebuttable presumption.
In other words, the presumption that an asset is community property can be rebutted in certain circumstances.
The law surrounding personal injury settlements – namely pain and suffering, punitive damages, and reputational damages – is one exception.
Another exception to New Mexico’s community property laws surrounds bequests or inheritances.
So, like pain and suffering, money or property inherited during a marriage is also considered a spouse’s separate property.
Finally, it’s essential to consult with a knowledgeable attorney to understand how your personal injury settlement may affect your divorce settlement.
Check out this informative video for more information on New Mexico’s community property laws.
Looking for an affordable divorce lawyer in Albuquerque, New Mexico? If so, Sanchez Legal Team understands that divorce can be a difficult and emotional process.
Also, finding the right lawyer for you and your family can be a harrowing experience.
Our team of experienced Albuquerque divorce attorneys provide affordable and compassionate legal services to help you navigate this challenging time.
Are you facing an uncontested divorce? Alternatively, are you experiencing a hostile and contested divorce that involves domestic violence or a restraining order of protection?
In either scenario, you need an experienced and aggressive attorney to protect your rights.
Contact (505) SANCHEZ today to schedule a consultation and learn more about how we can assist you with your divorce.
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