WILL A PERSONAL INJURY PAYOUT BE INCLUDED IN THE DIVORCE SETTLEMENT?
The answer to this question is not straightforward. It will always depend on the circumstances of each case. The Court will consider the relationship as a whole and the post-separation circumstances of both parties when deciding whether to include it in the division of the property pool.
In a recent case, the Court had to consider this exact issue. One spouse received a $1,4 million personal injury payout. This particular case is a good example of the many factors that the Court will take into account when making a final determination.
- The parties were married for 22 years and had three children together.
- The youngest child was 12 at the time of the hearing and was diagnosed with autism and severe intellectual impairment.
- The wife never worked during the relationship and was the primary carer for the children and the home.
- The husband owned property before the relationship; this property was sold, and the proceeds used to buy another property.
- The husband was employed fulltime during the marriage and earned a high income of about $300,000 at the end of the marriage.
- After the separation, the husband suffered serious brain trauma in a motorcycle accident.
- It was found that he would never be able to work again.
- The wife became the sole carer for the youngest child.
- The child would in all probability never be fully independent and would rely on the wife for the rest of her life.
- The husband received a personal injury payout after the accident of $1,4 million. It was paid into his superannuation account.
How is the personal injury payout treated in the property settlement?
The Court based its decision on the following considerations:
- Contributions during the relationship
Throughout the relationship, the husband made the greater financial contribution, including his initial property contribution and the contribution of his injury payout to the superannuation.
The court determined his contribution to be 75% and the wife’s 25%.
- The future needs of each party
In considering the future needs of each party, the court found that:
- Neither of the parties is likely ever to work again.
- Both parties will have to rely on the amount they receive from the property settlement to support themselves.
- The wife, however, would also be supporting the youngest child, probably for the rest of her life.
- The husband’s legal cost of $150,000 was paid from post-separation income, although this income no longer exists.
- The wife had to pay her legal fees for her property entitlement.
The courts decision
After considering all the relevant circumstances of this case, the Court made an adjustment of 15% in favour of the wife. This meant that the overall pool (including the personal injury payout) was divided 40% to the wife and 60% to the husband.
In summary it should be noted that the lump sum payouts, whether it is for personal injury compensation, redundancy payouts or lotto wins would never be seen in isolation. The court’s decision would always depend on the circumstances of each case, the timing of events and the relationship as a whole.
The outcome of your case can never be predicted. Speak to a lawyer to get professional advice about your specific circumstances.