People who are preparing to divorce in Texas and who have pending personal injury cases may want to carefully plan in order to best protect any expected settlements or awards. As a community property state, Texas generally presumes personal injury proceeds to be community property unless the spouse is able to show by clear and convincing evidence that the award is separate property.
If a divorce appears likely, it is important for people to talk with their attorney about steps they may take to protect expected settlements. When a settlement is received, a person should deposit it into a separate account instead of a jointly held one. They should also avoid commingling the proceeds from the personal injury award with marital assets.
It may also be possible to allocate different portions of the award as separate property or marital property. For example, if a claim includes various damages for things such as income losses, pain and suffering, loss of consortium and others, allocating those proportionately may help avoid the entire amount being deemed community property in court. However, loss of income awards are considered to be community property in Texas under the law.
Property division in Texas involves a substantial amount of analysis regarding what will be deemed as community property and what will be excluded as separate property. Community property is generally divided evenly between the spouses while separate property remains solely the asset of the spouse who owns it. People who are planning to divorce may want to consult with a family law attorney about how to protect their assets in the divorce.
Source: The Ultimate Property Division Seminar 2011, "Injury settlements are usually community property," Greg Enos, accessed on Feb. 25, 2015