Insurance settlement

[excachaco]

After my wife and I signed releases at her lawyers’ offices, we got a settlement for a rear end accident she had while driving a car titled in my name. In May 2008, we deposited the money we received from the other driver’s insurance company in a joint account that I managed for our house expenses (she managed another joint account for her own expenses) and then we purchased a CD from the same bank. A second payment received from my car insurance company thru her lawyers, was deposited in another joint account we opened, at a third bank where we purchased a second CD.

The first CD expired and the balance including interest, went back to the same joint account where it stayed for three more months until as a result of a heated discussion we had on the subject, she categorically stated that the money was hers only. In May 2009, unbeknownst to me she withdrew the money and purchased another CD on her name only, at the bank where we had the second CD. After the expiration of the second CD, she repeated her action by withdrawing the balance and purchasing another CD on her name only. In May 2011, she merged the two CDs and decided to put the money in an annuity plan and told me that under the plan, it would be possible to withdraw certain amount of cash every year without paying any penalty and that it would help cover our regular house expenses, since she was planning on retirement.
Although the settlement apparently was paid to cover medical expenses for a potential neck surgery, she was advised by a couple of her doctors not to have it. This contingency was not evidenced in the release papers. She continued working with some discomfort, has had periodic therapeutic massages, and has received some prescription medications which she has purchased but not used.

I did not want to rock the boat in the hope that eventually we could resolve the issue. Our relation improved markedly, particularly since her retirement two months ago, to the point where ten days ago she intimated plans to celebrate our 50th anniversary with a long trip financed out of the settlement money. At that point I decided to let her know that before that, I wanted her to arrange for my name to be included in all her personal accounts. Her reaction to that suggestion was extremely negative. Our house is titled in both names, but we have no equity.

These discussions on the subject seem out of bounds and I don’t even know whether I am one of the beneficiaries on her accounts. Of course, this situation has created intense conflict in our lives and in preparation for a possible divorce, I want to obtain some professional opinion to clarify if the proceeds from the settlement can be considered marital property or if that is money that belongs only to her.

I appreciate very much the service this board is providing to the many people facing these tough moments in their personal marital relations.

Thank you very much.

[Attorney Howard Iken]

Here is part of a Florida Supreme Court Case where the court discussed how these types of settlements are handled. This is a complex issue and an attorney would have to look at the final agreement in the injury case ......






Mrs. Weisfeld appeals the trial court's final judgment of marriage dissolution awarding Mr. Weisfeld exclusive possession of the parties' marital residence and funds derived from a workers' compensation award. Mr. Weisfeld cross-appeals the restrictions placed upon his exclusive possession. We reverse.

Mr. and Mrs. Weisfeld were married in 1956. Mr. Weisfeld, who practices as a psychologist, was injured in an accident in 1979. His condition deteriorated, and surgery in May 1980 left him paralyzed and confined to a wheelchair. The parties modified their marital residence to accommodate Mr. Weisfeld's condition and to permit him to conduct his practice from the home. In 1981, Mr. Weisfeld received a workers' compensation award of $ 150,000 for his injury. In 1983, Mrs. Weisfeld filed a petition for dissolution of the marriage. The trial court dissolved the marriage. At the time of the final judgment, Mr. Weisfeld was earning $ 990 per [**2] month in disability payments, $ 1,300 per month from his private practice and $ 9,300 per year from investments. Mrs. Weisfeld was earning $ 1,200 per month as a nursery school teacher, and was working towards a master's degree.

In its final judgment, the court awarded Mr. Weisfeld exclusive possession of the marital home to terminate upon his death, remarriage, or cohabitation with a female. [*1280] The court also awarded to Mr. Weisfeld funds derived from the workers' compensation award made to him as compensation for his accident. The trial court awarded Mrs. Weisfeld rehabilitative alimony of $ 100 per week for two years and awarded her $ 5,000 in attorney's fees.

I. Workers' Compensation Award

Mrs. Weisfeld contends that the trial court erred in holding that the funds derived from Mr. Weisfeld's workers' compensation awards are not marital property subject to Equitable distribution. We agree.



1 We acknowledge that a number of the cases cited in this portion of the opinion are from community property states which include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. See Freed & Walker, Family Law in the Fifty States: An Overview, 19 Fam. L.Q. 331, 354-55 (1986) (Table IV). Having carefully considered the essential differences between the doctrines of community property and equitable distribution and the effects of the historical development of each on the way in which they treat personal injury awards, see 2 Valuation and Distribution of Marital Property § 23.07[1][a] (J. McCahey ed. 1985), we are convinced that the distinctions between the two doctrines have little bearing on whether workers' compensation or personal injury awards are to be treated as marital property. Accordingly, we treat authority from community property states as persuasive.


Under the analytical approach, whether the award is marital property does not depend on a formalistic view which looks only to the timing of the acquisition of the award. Instead, the inquiry focuses on the elements of damages the particular award was intended to remedy or, stated another way, the purpose of the award. Queen, 521 A.2d at 324; [**7] Van De Loo, 346 N.W.2d at 176; Johnson, 346 S.E.2d at 430; Brown, 675 P.2d at 1207; see Mead v. Mead, 442 So.2d 870 (La. Ct. App. 1983); Gerlich v. Gerlich, 379 N.W.2d 689, 691 (Minn. Ct. App. 1986); cf. Jurek v. Jurek, 124 Ariz. 596, 606 P.2d 812 (1980) (compensation to injured spouse for personal well-being is his separate property while compensation for lost wages and medical expenses incurred during the marriage is community property); Gloria B.S. v. Richard G.S., 458 A.2d 707 (Del. Fam. Ct. 1982) (undifferentiated workers' compensation award injured spouse's personal property); Cook v. Cook, 102 Idaho 651, 637 P.2d 799 (1981) (same); Hafner, 406 N.W.2d at 590 (burden on injured spouse to prove that workers' compensation award provided compensation for personal injury rather than for lost wages before court would treat award as non-marital property); In re Marriage of Blankenship, 682 P.2d at 1354 (cause remanded for hearing to ascertain the purpose of workers' compensation award and therefore whether it was marital property subject to distribution); Patt, 689 S.W.2d at 505 (injured spouse failed to rebut statutory presumption that award was marital property [**8] rather than compensation for strictly personal damages); Tex. Fam. Code Ann. § 5.01(a)(3) (Vernon 1975) (specifically excepting strictly personal elements of personal injury recovery from definition of marital property). HN2States subscribing to this approach acknowledge that damage awards may be separated into three different components: (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. See, e.g., Johnson, 346 S.E.2d at 436. Compensation paid to a spouse for non-economic and strictly personal loss under (1) and (3) is considered that spouse's personal property, while the portion of damages paid to the injured spouse under (2) as compensation for economic loss during the marriage is marital property. See Campbell, 339 S.E.2d at 593; Queen, 521 A.2d at 327; Van De Loo, 346 N.W.2d at 176; Johnson, 346 S.E.2d at 436.

Our supreme court has not considered this question and consequently has not adopted either the so-called mechanistic or analytical [**9] approach. Because we deem the analytical approach to be the more enlightened view, we follow the reasoning of those states subscribing to it. 2 See Tonkovich v. South Florida Citrus Indus., Inc., 185 So.2d 710 (Fla. 2d DCA 1966), rev'd on other grounds, 196 So.2d 438 (Fla. 1967).




Mr. Weisfeld argues that the workers' compensation award is not marital property because it was intended to provide compensation only for future medical expenses and does not represent recovery for his lost [*1282] income or earning capacity during the marriage or for medical expenses paid for with marital funds. The trial court's categorical statement in the final judgment that the award was not marital property indicates that the trial court did not base its decision on Mr. Weisfeld's assertion that the award covered only future medical expenses but rather on the mistaken belief [**10] that workers' compensation awards are simply not marital property. Accordingly, we reverse the award and remand the case to the trial court to hold hearings to establish, in accordance with the analytical approach described in this opinion, what portion of the award is marital property subject to equitable distribution. See In re Marriage of Blankenship, 682 P.2d at 1354.