When a couple gets married in New York, essentially all income and assets acquired during the marriage are considered “marital property” and are therefore subject to division in a divorce, unless there is a prenuptial or postnuptial agreement that says otherwise.
As an equitable distribution state, however, a divorce does not necessarily mean the entire marital estate will be divided “equally” or down the middle. Instead, the property is supposed to be divided in a manner that is equitable or fair given the couple’s unique set of circumstances.
In the context of a New York divorce, property is separated into marital property and separate property. Only marital property is divided in a divorce; separate property remains separate and is not divided. Generally, separate property includes income and assets acquired before the marriage and gifts and inheritances received by one spouse during the marriage. But what about personal injury awards, are those counted as marital or separate property? Read on as we explain this in further detail.
New York’s Approach to Dividing Personal Injury Awards
Each state handles personal injury awards differently. For example, if you live in a community property state like California, your personal injury award will be divided differently than it you lived in an equitable distribution state like New York.
In New York, personal injury awards are treated as separate property, even if they are received during the course of the marriage. So, personal injury awards are treated much like inheritances and gifts.
In contrast, if you lived in California and you received a personal injury award, your entire personal injury award would be treated as “community property” or marital property and your spouse would have a 50 percent interest in it.