When a spouse receives disability insurance, worker’s compensation, or a monetary award for a personal injury suffered during the marriage, the classification of those payments in a subsequent divorce proceeding can be tricky. A trier of fact will have to determine whether a payment for the spouse’s personal injuries represents marital property, or instead the separate property of either spouse, for purposes of equitably dividing the parties’ marital assets. As this article explains, the purpose of the payment dictates the classification of personal injury compensation.
In determining whether a disability insurance payment, worker’s compensation payment, or personal injury award constitutes marital or non-marital property, Georgia courts utilize an “analytical approach.” That approach requires a court to focus on the purpose of the award (i.e., the elements of damages the particular award was intended to remedy).(1)
Under the analytical approach, personal injury awards fall into three categories: 1) compensation for the injured spouse for pain and suffering, disability, and disfigurement; 2) compensation for the injured spouse for lost wages, lost earning capacity, and medical and hospital expenses, and 3) compensation for the uninjured spouse for loss of consortium (i.e., decrease or loss of sexual relationship between spouses).(2)
Of the three categories, only category 2 – compensation for lost wages and medical expenses etc. – qualifies as marital property subject to equitable division on divorce.(3) Such payments represent marital property to the extent they intend to compensate economic loss during the marriage, because all property acquired as a direct result of the labor and investments of the parties during their marriage constitutes marital property.(4)
In contrast, a payment representing compensation for the injured spouse’s pain and suffering is considered peculiarly personal to the spouse receiving the payment. Such a payment will be deemed the separate property of the injured spouse and thus not subject to equitable division.(5)
Similarly, a payment intended as compensation for the uninjured spouse’s loss of consortium will not qualify as an asset of the marriage. It instead will form part of the separate estate of the spouse who suffered the loss of consortium.(6)
The classification of a disability insurance payment, worker’s compensation payment, or personal injury award made without explicit differentiation of its intent generally will create questions of fact requiring trial.(7) If, however, no dispute of fact exists as to a payment’s intended purpose, a trial court can grant summary judgment classifying the payment as a matter of law.(8)
(1) Hardin v. Hardin, 301 Ga. 532, 801 S.E.2d 774, 776 (2017); Dees v. Dees, 259 Ga. 177, 177-178, 377 S.E.2d 845 (1989); Campbell v. Campbell, 255 Ga. 461, 462, 339 S.E.2d 591 (1986); and Dixon v. Dixon, A19A1179 (1) (Ga. Ct. App., October 9, 2019).
(4) Hardin, supra, 801 S.E.2d at 776; Payson v. Payson, 274 Ga. 231, 232(1), 552 S.E.2d 839 (2001); and Dees, supra, 259 Ga. at 177-178.
(5) Hardin, supra, 801 S.E.2d at 776; Dees, supra, 259 Ga. at 178; Campbell, supra, 255 Ga. at 462; and Dixon, supra.
(7) Hardin, supra, 801 S.E.2d at 777.
(8) Id., 801 S.E.2d at 780-781.