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Divorce and compensation: understanding settlements in serious injury claims

• Boyes Turner

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Ever wondered how compensation from a clinical negligence or personal injury claim is impacted by divorce?

Listen in for a compelling discussion with Rachel Makore and Nicola Weeks. They explore how compensation settlements that are meant for financial losses and the cost of meeting the needs that arise from the disability are treated when a marriage dissolves. From the increased likelihood of divorce following serious injuries to the delicate balance courts must strike between individual needs and marital assets, they provide expert insights into a complex issue that affects many. 

Nicola shares her extensive knowledge from the family law perspective, detailing the factors courts consider, such as the needs of children and each spouse's financial responsibilities.

Contact the speakers: 
Nicola Weeks on 0118 402 2557 or nweeks@boyesturner.com
Rachel Makore on 0118 952 7192 or rmakore@boyesturner.com

Episode links:

Rachel Makore: 0:03 

Hello and welcome to the Boys Turner podcast. My name is Rachel Makore and I am a Solicitor in the clinical negligence team. Here with me today is Nicola Weeks, a Solicitor in the family department. How are you doing today Nicola? 

Nicola Weeks: 0:18 

Hi Rachel, I'm good, thank you. How are you? 

Rachel Makore: 0:22 

Yeah, all good thanks. So today we're diving into a topic that unfortunately affects many people but isn't always easy to understand, which is how compensation from a clinical negligence or personal injury claim is treated during a divorce. So I should probably start by explaining what the aim of a clinical negligence claim is. In the UK, compensation that you receive for an injury is usually seen as something meant to make up for your pain, suffering and financial losses. In many cases, it's viewed as personal to you, especially if it's awarded after a serious injury. However, just because the money was intended for you doesn't automatically mean it's off limits during a divorce. Sadly, we do see that the likelihood of divorce increases following certain injuries, such as a brain trauma. Nicola, have you noticed the same in your line of work? 

Nicola Weeks: 1:17 

Yes, unfortunately, this is something that we see. Let me give you an example. Let me give you an example Olympic rower James Cracknell has spoken openly about the breakdown of his marriage following a brain injury in 2010, which led to apparent changes in his personality. 

Rachel Makore: 1:36 

Yeah, that's right. I remember hearing about him too. As well as changes we see to the individual, there's also the issue that those suffering from a serious injury are likely to require significant care and support and we find that having carers coming in and out of your home can be incredibly hard for families to adapt to. 

Nicola Weeks: 1:55 

Yeah, I can imagine that's really tricky for them, and it's another reason I think it's so important that individuals put in place measures to safeguard compensation awards to ensure that they have the financial resources available to meet those care needs if that needs to continue and a divorce does happen in the future. 

Rachel Makore: 2:14 

Yeah, so there is a lot to think about. So it's really great that we have you here today, nicola, to explain how the law works and outline the available routes to safeguard compensation. So, firstly, can you explain how assets are looked at in a divorce? 

Nicola Weeks: 2:31 

Yeah, of course, and the family court has a broad discretion to make financial orders upon divorce. Section 25 of the Matrimonial Causes Act 1973 sets out the various factors that court would take into account on a divorce. First consideration will always be given to the needs of the children of the family who are under 18. The court will also look at each person's income, earning capacity, property and any other financial resources they each have. The court will also consider their financial needs and responsibilities, disabilities and respective contributions. So the fact that capital came by way of compensation does not exclude it from the court's consideration. A compensation award will be treated as a financial resource of a person who's getting divorced be treated as a financial resource of a person who's getting divorced? 

Rachel Makore: 3:29 

Oh, okay, so if compensation is a financial resource of a person, does that mean it will be shared between the parties going through a divorce? 

Nicola Weeks: 3:35 

Unfortunately, the short answer is sometimes yes and sometimes no. Okay, so it's not an easy answer, I'm afraid, and it really does depend on the family circumstances and their needs. Every case is fact specific, so there might be some instances where the needs of the disabled spouse absorb all the available capital, as the compensation was intended to cover their future medical needs, and so in that type of situation, there is a strong argument that it would not be suitable to share the compensation between both the parties to the marriage. However, on the other hand, if the compensation was used during the marriage to pay for things like the party's home, their holidays or general family expenses, it can start to blur the lines. It might be seen in that situation as having contributed to the marital pot and therefore be up for discussion within the divorce. 

Rachel Makore: 4:34 

Right, thank you. That's a really helpful starting point. Are there any real life cases that you can think of to help individuals understand a bit more as to how their compensation might be divided up if they were to get divorced? 

Nicola Weeks: 5:10 

A previous case that we've seen is called Mansfield and Mansfield, in which the husband received £500,000 in compensation for personal injuries that he suffered in 1998, which was before he met his wife. He used that money to purchase two properties, so one was a bungalow adapted for his physical difficulties, and another was an investment flat. 

Nicola Weeks: 5:22 

Mr Mansfield went on to meet his wife, who he married in 2003. And the period of time that they lived together and were married lasted around six years. During that time, they had twin daughters who were four years old at the time they separated in 2008. So, after their divorce, the wife issued financial proceedings seeking enough money to rehouse herself and the children, and in this particular case, the court ultimately prioritised the children while in their minority and ordered a lump sum payment of £285,000 to Mrs Mansfield to enable her to rehouse with the children, and so, in this case, mr Mansfield's compensation was included within the marital pot and shared between the parties. 

Rachel Makore: 6:13 

Okay, so I get that it makes sense that the courts do prioritise the children, but did they also recognise Mr Mansfield's future needs? 

Nicola Weeks: 6:23 

Yeah, that's a good point, Rachel, and they did take that into account and noted that the original assets were built up using his compensation. They also took into account medical evidence noting the increasing needs of Mr Mansfield as he got older, and so what the court did was they decided that a third of the lump sum amount would return to Mr Mansfield when the children reached their maturity, and so that was the court's way of trying to balance all the competing interests all the competing interests, and it is the role of the court to try and ensure that both parties needs are met, with priority given to the needs of any children, and so in really difficult cases where there aren't enough matrimonial assets to meet everyone's needs, any non-matrimonial assets, which can include compensation awarded to one party, could ultimately be used to help meet those needs. 

Rachel Makore: 7:22 

OK, thank you. It's always really helpful to look at what the courts have decided before, and it does definitely show that there is a lot to consider. Can you explain what some of the key factors are that influence whether or not the compensation will get split in a divorce? 

Nicola Weeks: 7:40 

Yeah, sure. So one of the things that can be looked at is the timing of when the compensation is received, and so if the compensation was received either before the marriage or after separation, the court might be more inclined to treat it as separate property. If it was received during the marriage, it's more. Something else which is really important is how the compensation was used. So the court will look at whether the compensation had been kept completely separate and only used for that person's medical or personal needs, or whether the parties used it for family expenses, holidays or buying properties, and so the more intertwined it became with family and married life, the harder it might be to argue that it's someone's separate property. 

Rachel Makore: 8:34 

Yeah, sure, okay. So timing and how the conversation has been used is important. What about other things, such as the length of the marriage and then the financial needs of the parties going forwards after the divorce? 

Nicola Weeks: 8:49 

Yeah, you're absolutely right, Rachel. Those things are also something that would need to be taken into consideration. You know, needs is really the priority and the thing that the courts are going to be most concerned with. So if compensation was for a long-term injury and the party will need that money for future care or to replace lost earnings, then the court will have to factor that into any decision it makes. They also need to look at if the other party has greater financial needs, especially when children are involved, as they might also be entitled to a share to ensure they can maintain a reasonable standard of living. The other thing you mentioned was the length of the marriage, and yes, in longer marriages there might be a stronger likelihood that all assets, including any compensation, will be considered shared and divided between them, whereas in marriages there might be more leeway to keep compensation as a separate asset. 

Rachel Makore: 9:53 

Great, thank you. That's a really, really useful summary for people. So if now we turn to practical steps and look at what individuals can do to protect their compensation, from my viewpoint as a clinical negligence solicitor, you can talk to your solicitor about setting up something called a personal injury trust. However, this will, of course, depend on the circumstances of each case. In short, a personal injury trust is a legally binding arrangement and it might ring fence your compensation, making it easier to argue that the fund should be retained by you rather than being included in any pot of assets to be divided. Nicola, do you have any other practical advice you could give? 

Nicola Weeks: 10:38 

Yeah, I think one of the most important things is to seek legal advice early. So every divorce case is different, so it's important to get legal advice as soon as possible and a family law solicitor can give you a better idea of how compensation might be treated based on your specific circumstances. Something else to think about is keeping records of how your compensation is spent, and so if you want to try and keep that separate from marital assets, you know people really need to think about trying to avoid mixing it with family finances and keeping clear records of how that money is spent, particularly when it's being used for ongoing medical needs. 

Rachel Makore: 11:21 

Yeah, definitely, really, really useful advice. How about? Is it possible for the couple to come to any type of agreement about the compensation and how it could be treated if they were to divorce? 

Nicola Weeks: 11:33 

That's a good point, rachel, and something parties could consider is entering into something called a nuptial agreement, and that covers two different agreements. There's a pre-nuptial agreement, which is entered into before the marriage, and a post-nuptial agreement, which parties enter into when they're already married. Both of those documents set out what the parties want to happen to their assets, which can include any compensation in the case of a later divorce or separation. 

Rachel Makore: 12:03 

Okay, am I right that they're not 100% legally binding? 

Nicola Weeks: 12:09 

Yeah, that's right. So at the moment, nuptial agreements currently aren't legally binding, but they are likely to be persuasive to a court upon divorce, provided that certain recommended steps are followed. So those particular steps can include both parties having independent legal advice, there being a process of financial disclosure, no undue pressure being applied to either party, and making sure the agreement is fair and meets both parties basic needs. 

Rachel Makore: 12:42 

Okay, well, thank you, that's really helpful, and I think you've really had to break down a complex area of law and given some people some, some great advice. Um, so, to summarize what we've spoken about today, uh, compensation from a clinical negligence claim can be a complex issue during divorce, and whether or not it's considered a marital asset depends on many factors, including when you received it and how it's been used during the marriage. Ultimately, I think the main takeaway from today is that, if you find yourself in this situation, don't navigate it alone and make sure to get proper legal advice and protect your rights. How can any of our listeners get in contact with you? 

Nicola Weeks: 13:26 

Thanks, Rachel. So my contact details can be found in the episode show notes. 

Rachel Makore: 13:32 

Brilliant Mine are there too, so thanks so much to everyone for taking the time to listen today. I really do hope this episode helped clarify things a bit and, for anyone who is considering a divorce, I really do hope that everything works out for you. If you found it useful today, please do subscribe, as my colleagues do upload helpful podcasts on a vast range of topics, and please also do let Nicola or I know if there are any topics you would find useful for us to chat about. Thanks again and goodbye.