How Does A Personal Injury Settlement Affect Equitable Distribution?

The court should take an “analytical approach” to look at the nature of a Worker’s Compensation or personal injury damage award to determine whether property is separate, belonging to one of the spouses, or marital property subject to distribution. Under this approach, the damage award is allocated in accordance with the following:

  1. Separate property of the injured spouse: Includes the non economic compensatory damages for pain, suffering, disability, and loss of ability to lead a normal life and the economic damages which occur subsequent to the termination of the marriage of the parties, including the amount of the award for loss of future wages and future medical expenses;
  1. Separate property of the non injured spouse: Includes loss of consortium;
  1. Marital property subject to distribution: Includes the amount of the award for lost wages or lost earning capacity during the marriage of the parties and medical expenses paid out of the marital funds during the marriage.
  1. Effect of commingling of settlement award.

A non settlement award can become marital through the commingling of assets where it would appear that the award has become a gift. The court looks at specific instances such as the parties’ discussions of their plans for the award, their conduct regarding the funds during the marriage, and the deposit of funds into a joint account where the funds are expended for marital debts and purchases. Those determinations are fact specific and can be rebutted. The court has decided that if the injured spouse places his injury settlement award in a joint account with a spouse, for no other reason than convenience with some of the funds being used for marital expenses but mostly by injured spouse, it does not convert the asset to marital. In this instance, at most, only the portion of funds the wife withdrew for marital use lost their non marital character.

  1. Authority of a court to temporarily modify/abate alimony.

The court has broad authority to temporarily reduce or abate an alimony obligation regardless of the outcome of a supplemental petition for modification.

Step 1:  A reduction in income.

The court has not established a specific percentage or amount decrease automatically warrants the temporary reduction or abatement of an alimony obligation. A 45% decrease in salary has been held as a sufficient change to warrant a temporary reduction in an alimony obligation.

Step 2:  Does the reduction pass the good faith test?

Once it is determined that a reduction of income has occurred, the court must determine if this reduction was intentionally created by the obligor for the purpose of avoiding the alimony obligation and what actions the obligor is taking to return to prior earning levels. The court has defined a “good faith test” to determine the availability to the obligor of temporary relief from the alimony obligation. The “good faith test” requires the court to determine if the reduction and income is deliberately seeking to avoid paying alimony and if the obligor acting in good faith to return to the previous income level. Absent bad faith on the part of the obligor, the court will not define what the obligor’s employment should or should not be.

Step 3:  Review of specific financial circumstances.

The specific final circumstances of the obligor should be reviewed so as to determine how the changed financial circumstances has altered the obligor’s percentage of salary allocated to pay the support obligation. The obligor is not necessarily required to borrow money to be able to maintain a court ordered level of alimony payments. The court has explained that it is not unreasonable to expect the alimony recipient accept a lesser sum temporarily while the payor is establishing a new type of employment, so long as he is acting in good faith, and that the payor not be required to dissipate capital assets to meet the monthly support obligation. 

Step 4:  Reduction and application.

When inability to pay to pay alimony arises, a court must suspend payments until the ability is restored, unless the party’s inability to pay is the result of an unintentional refusal to work or other willfully created inability. Where the change in circumstance is unintentional and not willful, the obligor’s alimony obligation should be reduced to be more commensurate with his current ability to pay. The court has the ability to fully abate the obligation or to reduce the obligation pending the full ability to pay. In determining what the reduced alimony amount should be, the court must set an award in which the payor has the ability to pay, and it is fair to both parties.

A decision by the court not to make a modification retroactive is discretionary, but the reasons for not doing so should be stated on the record. When the court does abate the alimony obligation, the arrearage accumulation should be suspended as well, so as not to put the obligor in a financial situation that he could never better. Basically, you can temporarily reduce or stop alimony. It is absolutely not easy. The practical and biggest hurdle is the court initially will not believe that the income was reduced involuntarily. This is huge. There’s nothing in the law that says this, it is just human nature. Once that hurdle is overcome, it actually is not that difficult. 

Kenny Leigh and Associates is a law firm that exclusively represents men and specializes in all areas of family law all throughout the state of Florida. Go to for more information.

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