When a person is injured in an accident they may receive a settlement that compensates them for several things including the cost of their future care, lost wages and damages for pain and suffering.
Unfortunately it is not uncommon for a person who has suffered from a serious accident to also become separated from their spouse as a result of the stress their injuries add to the relationship.
Under s. 85(1)(c) of the Family Law Act RSBC the money a person received as a settlement for injury or loss is considered to be that person’s excluded property and they do not have to share it with their spouse on separation.
Any money the person receives for past lost wages is however family property as it compensates the person for income that they would have earned and contributed to the family during the marriage.
If a person is not able to return to work in the future as a result of their injuries any money they receive for future wage loss or the cost of their future care can be considered income and will be taken into account when using the guidelines to calculate child maintenance and spousal maintenance obligations.
A problem arises however when a person receives a lump sum amount to settle their claim from their insurer. Typically this amount is negotiated often in a mediation and there is no breakdown of what the settlement is for. The amount of damages for pain and suffering vs. compensation for past and future wage loss cannot be determined. Family lawyers and judges are left guessing what the settlement was for so that the Family Law Act can be applied.
Ideally Family Law lawyers and Person Injury lawyers would work together and ensure that any settlement stipulates the amount of damages received for each part of the claim and preferably skewing the award towards pain and suffering as much as possible so that these settlement funds are protected as the person’s excluded property in the event of a divorce.
Deborah A. Todd