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How Is My Injury Claim Affected By A Separation Or Divorce?

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You have a personal injury claim arising from an auto accident, a slip and fall on premises, or some other source of bodily injury. Before settling your claim, you go through a separation or divorce proceedings or think soon may have to. Here are some basic considerations to keep in mind.

The division of "matrimonial assets" in the province of Newfoundland and Labrador is defined and governed by the rules set out in the Family Law Act. Generally the Act has the effect of providing for an equal distribution of matrimonial assets upon separation or divorce, allowing some discretion on behalf of the Court to divide the matrimonial assets in non-equal portions if it considers that to do otherwise would be unjust. (You should seek the advice of a lawyer who practices in the area of family law for any questions in this regard.)

A portion of personal injury awards fall under an exception and are excluded from the definition of "matrimonial assets" under Section 18(1)(c) of the Family Law Act. It states:

18(1)(c) "matrimonial assets" includes all real and personal property acquired by either or both spouses during the marriage, with the exception of,

  • (i) gifts, inheritances, trusts or settlements....
  • (ii) personal injury awards, except the portion of the award that represents compensation for economic loss,"
  • (iii) ...

Whether "personal injury awards" in s. 18(1)(c)(ii) is intended to include settlements involving payment of compensation for personal injury has not been interpreted by a court, but it would be a pretty illogical result if it did not. Most lawyers would assume "award" as used in the Family Law Act includes not just monies awarded by a court, but settlements of legal claims too.

Therefore, personal injury awards, including settlements for non-economic loss (e.g., awards for pain and suffering) are not to be included in the calculation of matrimonial assets. However portions of a personal injury claim that are considered to be in respect of economic loss will be included as a matrimonial assets. Meaning, for example, if you are awarded damages under a heading such as a loss of future earning capacity, that would be considered an economic loss and thus would be included as a matrimonial asset, or compensation received for the damage or loss of a vehicle would also be included as a part of the matrimonial assets.

One should be aware that property held under joint names has been considered to be proof of intent to share ownership of the property. This should be considered before one deposits a cheque, received as damages for personal injuries, into a joint bank account.

In Newfoundland and Labrador an excluded asset used to acquire matrimonial assets loses its identity and no longer exists as an excluded asset. Therefore if one takes their personal injury award, which would otherwise be excluded under this section, and decides to purchase a new vehicle out of the funds, prior to separation, the vehicle will likely be considered a matrimonial asset and therefore be divided property in accordance with the Family Law Act. One possible way to protect such property rights would be through the use of a marriage contract or separation agreement.

This summary is intended to be informative but is not legal advice. For that, you need to hire a lawyer. Your injury lawyer can give general advice but if you are involved in separation or divorce proceedings, your matrimonial lawyer is the person to work out the details of who gets what.

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Posted by kaylee on October 26, 2010 at 08:15 AM

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