Trial Magazine

When handling personal injury and wrongful death cases, don’t overlook the implications of family law and estate law matters. A savvy personal injury attorney should know what issues to watch for—and when to reach out to a family law or wills and estates attorney so you can properly advise your clients long before a settlement is reached and make sure nothing goes awry.

At the start of representing a personal injury or wrongful death client, determine your client’s marital status—this information provides the road map for the rest of the case. With 4.5 million domestic relations cases being filed in the United States each year,¹ it’s imperative during intake to ask more than simply whether a client is married, single, or divorced.

Use a detailed intake sheet to determine whether your clients are separated (legally or living apart) and the date of separation; whether they are divorced or amid a divorce; and whether children are involved and if so, what sort of custody arrangement they have (joint legal, sole legal).² The intake sheet also should ask whether divorced clients have a current child support or alimony obligation.

Separation and Divorce

Once you determine whether your client is separated or divorced (or if the client becomes so during the personal injury case), you can assess how the settlement income will be classified. If the income is solely lost wages, then the client should understand that these funds will be considered a marital asset. If the income is a mix of special damages (monetary damages such as lost wages) and general damages (noneconomic damages such as pain and suffering), then the allocation of funds should be included in the settlement agreement.³

Also, for the terms of the settlement agreement to be considered for distribution of assets in any subsequent divorce, be sure that the confidentiality clause of the settlement agreement is worded appropriately.

One Texas case, Sykes v. Sykes, illustrates the importance of how funds are designated and how the language in a settlement agreement may impact the classification of funds as a marital asset.⁴ In that case, the husband received a $448,000 settlement (after attorney fees) from an employment discrimination suit. The settlement agreement articulated that the funds were for general damages—specifically, mental anguish—and not lost wages.⁵

However, the settlement agreement also included a confidentiality clause that provided that the agreement could not be used as evidence in any proceedings not involving the parties.⁶ As a result, in a subsequent divorce proceeding, the wife was able to receive a portion of the settlement funds: The agreement was not admissible as evidence, and therefore the rebuttable presumption regarding the funds being community property could not be overcome.

And in a Georgia case, a client who needed surgery as a result of the incident at issue in the case told her attorney she wanted to delay treatment until after her divorce had been finalized. The client wanted to be sure any subsequent recovery for lost wages associated with the surgery would not run the risk of being classified as a marital asset.

Early in the case, the personal injury attorney consulted a family law attorney to help the client make a strategic decision about treatment. The family law attorney included language in the settlement agreement that specified that lost wages income pre-divorce was a marital asset, but any subsequent lost wages associated with further treatment post-divorce was not a marital asset. The settlement agreement also included that the husband had no valid loss of consortium claim.

Alimony. When handling claims for divorced clients, ask for a copy of the divorce decree during the intake process so that the alimony section can be reviewed and notated for the client’s file. If a personal injury client who owes alimony receives a sizable judgment, first determine whether the alimony order is modifiable.⁷ The ability to modify alimony is a state-specific inquiry—some states preclude modification of alimony, while others allow modification.⁸ Also review the settlement or final orders carefully: Have the parties waived their ability to modify alimony post-divorce? If so, then the settlement proceeds may not impact future alimony payments.

Discovery. In some instances, issues that arise from the personal injury matter become relevant for subsequent family law proceedings. Depositions in personal injury matters may provide useful information related to child custody, child support, and alimony, especially when testimony concerns activities of daily life or post-injury income and earnings.

For example, in one case, the parties—a divorcing couple—were ­coplaintiffs in a personal injury lawsuit that preceded their divorce. The suit alleged claims based on the wife’s injuries. The husband’s divorce attorney used the wife’s deposition testimony in the personal injury matter to counter her claims for alimony in the divorce. The divorce attorney was able to demonstrate that any source of post-marital support for the wife should come from the defendant in the personal injury case, not from the non-injured spouse.

Custody and Child Support

Another main area to consider is the involvement of children. Personal injury plaintiffs may be concerned by how their settlement funds may impact their preexisting child support obligations. And when a child is injured, the family dynamics determine who can act on behalf of the child.

Child support. Generally, these obligations are treated as judgments, meaning that they are enforceable under a personal injury claim. In some instances, there may be a child support lien that needs to be satisfied before the distribution of settlement income. Even without a child support lien, if the funds are considered gross income, this may be used for future child support calculations, insofar as gross income can be used to calculate future child support obligations.⁹

Custody issues. The intake form for a personal injury matter involving small children should include questions to determine the marital status of the parents and whether one or both parents have legal custody. If the parents are unmarried or divorced, obtain a copy of the parenting plan. Finding the answer to custody questions early on will help you to identify which parent can file suit on the child’s behalf and whether to consult a family law attorney if your client does not have full custody and legal rights.

A Maryland personal injury attorney encountered this scenario when she represented a recently divorced father who was involved in a near-fatal motor vehicle collision while returning his children to their mother for a custody exchange. The attorney had to navigate the family dynamics and negotiate the subsequent custody issues that arose because of the already strained relationship between the children’s parents. The parents were recently divorced, and the father’s new wife was tragically killed in the collision. The entire family dynamic changed as a result of the tragedy, and the children’s mother had severe reservations regarding continuation of visitation. This led to an extremely delicate situation when negotiating terms for a structured settlement on behalf of the injured children.

Estate Issues

In wrongful death cases, the recovery belongs to the next of kin. In most states, obtaining the medical records of the deceased party is the most common issue personal injury attorneys face. The most straightforward route is to enlist the services of a wills and estates attorney to have a personal representative appointed. If a personal representative is not named, the next of kin may have a difficult time gaining access to medical records, police reports, and other important documents that may be relevant to the investigation.

By contrast, in survivorship cases, recovery belongs to the estate. In these cases, the personal injury attorney must enlist the services of a wills and estates attorney and have a personal representative appointed to represent the estate in the probate court litigation. The first relevant inquiry is whether the decedent had a will or some trust or estate plan and appointed a personal representative in that document. If not, then the estate would need to appoint a personal representative.

Disinheritance and lifetime gifts. A complicating issue in both survivorship and wrongful death claims is when the deceased has created an estate plan that disinherits one or more heirs. Obtain a copy of the decedent’s will during the intake process. To determine how recovery should be apportioned among the members of the estate, find out whether the heirs received their inheritance during the life of the deceased. This avoids any unnecessary ugliness that may unintentionally show through to the defendant.

If necessary, enlist the help of a disinterested probate attorney to help the family of the decedent agree on settlement proceeds before the suit is filed. All family members should know what the law says about their right to recover and whether they are potential witnesses in the litigation.

Minors. Take extra precautions when the plaintiff entitled to recover in a wrongful death or survivorship matter is a minor. In many states, there is a threshold recovery amount that triggers the creation of a trust, guardianship, or conservatorship for a minor child.

For example, in one Florida case, an insurer reached a presuit settlement of $50,000 for a motor vehicle collision involving a family when three of the passengers were minors. The appellate court set aside the settlement because a guardian ad litem was not appointed to represent the interests of the children; Florida statute requires that a guardian be named when settlements are $50,000 or more.¹⁰

Regardless of any such state requirement, the parent or guardian, as a fiduciary, should invest or otherwise hold the funds for the child. Children are legally entitled to receive the funds when they reach the age specified in the settlement agreement. This is either the age of majority or the age dictated by the relevant state’s Uniform Transfer to Minors Act.¹¹ Generally, the age for transfer is 21 or the age specified in the structured settlement plan.¹²

Recognizing that handing over any sum of money to a young person may be financial folly, parents and guardians are empowered to invest settlement funds for the child to receive beyond 18 by placing the funds in an investment vehicle such as a certificate of deposit, annuity, or some other long-term investment device such as a structured settlement.

When you and your client sit down for the initial case intake, use this time to learn everything that you can about the client’s family structure. This information will be invaluable to your client’s personal injury claim.

Kelli Byers Hooper is the founder of KBH Law in Fayetteville, Ga., and can be reached at kelli@kbhooper.com.

Notes

1. Nat’l Ctr. for State Courts, Family Justice Initiative 3 (2018), https://tinyurl.com/qrhcdgv (citing statistics for 2016).  
2. My sample intake form can be accessed at www.justice.org/HooperIntakeForm. 
3. The majority of jurisdictions make this allocation. See, e.g., Hardin v. Hardin, 801 S.E.2d 774, 779–80 (Ga. 2017) (citing Am. Law Inst., Principles of the Law of Family Dissolution §4.08, cmt. b (2002)); see also Brett R. Turner, Equitable Distribution of Property §§6:55, 6:59 (4th ed. 2019).
4. Sykes v. Sykes, 2018 WL 6836897 (Tex. App. Dec. 27, 2018).
5. Id. at *1.
6. Id. at *3.
7. You may need to consult with a family law attorney to review the final order and relevant state law to determine if the parties can modify alimony. 
8. See, e.g., Conn. Gen. Stat. §46b-86(b) (2018) (Under Connecticut law, when a final judgment incorporates a provision of an agreement between the parties that sets forth circumstances under which alimony will be modified, the court must enforce the provision of the agreement.); 750 Ill. Comp. Stat. 5/504 (2020) (The Illinois Marriage and Dissolution of Marriage Act was reformed on Jan. 1, 2019, to follow the new trend toward strict rules regarding modification of alimony.); Me. Rev. Stat. tit. 19-A, §951-A(4) (2019) (The Maine statute was amended in 2013 and now provides for modification of alimony “when it appears that justice requires.”).
9. See, e.g., N.J. Stat. Ann. §2A:17-56.23b 1.a. (2018) (New Jersey law dictates that a “judgment for child support . . . shall be a lien against the net proceeds of any settlement negotiated prior or subsequent to the filing of a lawsuit, civil judgment, civil arbitration award, inheritance or workers’ compensation award.”).
10. Allen v. Montalvan, 201 So. 3d 705, 709–10 (Fla. Dist. Ct. App. 2016). For another example of a state that requires a guardian to collect and manage settlement proceeds on behalf of minor children, see N.C. Gen. Stat. §33A-12(a) (2013). 
11. Most states have adopted the Uniform Transfer to Minors Act. See, e.g., Ga. Code Ann. §44-5-130 (2018). 
12. Id.