Personal Injury compensation and relationship separation
When you have received compensation from a personal injury claim, the compensation can become a sticking point if subsequently you divorce or separate from your partner or spouse.
The following brief points outline the current guidelines around what claim or share of compensation awards may be affected.
If you are cohabiting/living with a partner:
- your ex-partner has no claim on your property or income no matter how long the relationship has lasted.
- you should avoid putting property or assets under joint names as a safeguard.
- exceptions arise where children are involved or if your partner can establish a constructive trust.
- it is advisable that you create a Cohabitation Agreement which would create security for your partner in the event of your death, or security of your assets in the event of the breakdown of the relationship. You may want to take existing or future children into consideration.
If you are going to marry/enter into a civil partnership:
- if there has been a brain injury it may be necessary to establish capacity. You must be able to understand the nature of the marriage contract and understand, retain and weigh up the information relevant to decision and be able to communicate this (s. 3 Mental Capacity Act).
- it is advisable that you should create a Pre-nuptial Agreement to ring fence your compensation in the event of divorce.
- in the event of a divorce, however, the court ultimately retains the power to determine the settlement terms.
If you are already married/in a civil partnership:
- in this instant, the starting point of the division of assets is 50/50 in the event of divorce.
- you should be aware that compensation cannot be ring fenced and will therefore be considered a family asset (even where compensation was awarded prior to marriage).
- it would be advisable for you to draw up a post-nuptial agreement, again taking into consideration existing or future children as an attempt to ring fence the compensation.
If you are experiencing a relationship breakdown:
- in this case the starting point is 50/50 split of combined assets in divorce cases.
- in the event of a divorce or dissolution, please be aware that children's needs are of paramount importance and the combined assets will be split accordingly.
- you must be aware, however, that the disabled party's needs have a greater weight than the non-disabled.
- essentially there is no foolproof way of ring fencing compensation in a divorce settlement; however the above mentioned agreements (Cohabitation, Pre-Nuptial, Post-Nuptial) may be effective in some circumstances.
The aforementioned documents will carry greater weight if:
- full disclosure of both party's assets and income.
- both parties obtain legal advice.
- the document does not result in manifest unfairness.
- there is no ambiguity.
- no duress to lead to the agreements made.