Sustaining a personal injury can be a serious and life-changing event. When an accident or injury occurs, the primary focus is on the person directly affected by the injury, as they require the most immediate care and support. However, the reality is that a serious incident rarely impacts one person alone, as the lives of everyone around them, their spouse, children, parents, friends and carers, can also be deeply affected. In part one of this two-part article, Divorce and Family senior associate Jenny Bowden and Personal Injury associate James Philpott consider personal injury awards in the context of divorce.
The impact of serious injury can ripple through many aspects of an injured person’s life. Serious injury often brings with it financial worries and practical difficulties, while also placing additional pressures on relationships, marital or otherwise.
Research has shown that following a traumatic injury, the strain on a relationship can, for many, prove too difficult to overcome. One UK study, undertaken by brain injury charity Headway, collected responses from more than 1,000 individuals affected by brain injury. While 35% of brain injury survivors felt that their relationship with their partner had strengthened after the injury, the research also found that 38% felt that their relationship with a partner or spouse had broken down, and 28% said that the relationship had categorically ended. Of spouses and partners surveyed, 27% felt that their relationship with the injured survivor had broken down, while 12% reported that their relationship had categorically ended.
These results corroborate research on the rates of divorce and separation post-injury in the US. One study conducted in the USA tracked marriages of 120 patients in the 30 to 96 months following a traumatic brain injury. The research uncovered divorce rates of 17% and separation rates of 8%. At the end of the evaluation, 25% of marriages had broken down in the two to eight years after the traumatic brain injury.
While the research findings do not support contentions that an individual with a brain injury is at greater risk of divorce relative to the general population (the average divorce rate in England and Wales currently stands at 42%), it illustrates just how important it is to understand not only the emotional and physical toll of a serious injury but also the impact on relationships and the financial consequences should a marriage break down.
This first part of the article examines the financial implications of relationship breakdown, the division of assets on divorce and the treatment of personal injury damages. Part two will explore the practical steps you can take to protect personal injury awards to preserve the funds for the injured person’s future needs.
How are a divorcing couple’s assets treated on divorce?
The Matrimonial Causes Act 1973 (MCA 1973) sets out the legislative provisions that govern the distribution of assets between divorcing couples, with priority given to the welfare of any minor children. The court has powers to make financial awards on divorce under the MCA 1973, such as transfers of property, lump-sum payments and maintenance payments. It will strive to achieve a ‘clean break’ where possible to avoid any ongoing financial ties between the couple. In determining the appropriate financial outcome, the court will consider a wide variety of factors as set out in section 25 of the MCA 1973. The ‘section 25 factors’ include: the income and earning capacity of both parties, the parties’ present and future needs, their standard of living during the marriage, the age of the parties, the duration of the marriage, any physical or mental disabilities and each party’s contribution to the family.
As established in the House of Lords in White v White [2000] 2 FLR 981, the court’s overarching objective is to achieve a fair outcome between the parties. A departure from an equal division of assets will only be justified where there is a good reason for doing so. In order to achieve fairness, the court is guided further by the principles of needs, sharing and compensation as set out in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24.
In the majority of cases, the division of assets will be determined on the basis of the parties’ needs (generously interpreted). Where there is a surplus of assets over and above what is required to meet their needs, the principle of sharing will come into play. Sharing will, however, apply to matrimonial property only, ie, property that is a product of the marital endeavour, as opposed to non-matrimonial property, which may only be invaded (ie used) to satisfy the principles of needs and compensation. This was recently confirmed in the Supreme Court case of Standish v Standish [2025] UKSC 26.
Examples of matrimonial property might include the family home and savings that have accrued since the date of marriage. Non-matrimonial property might include inheritance received, assets built up since the couple separated or assets that a spouse owned before marriage and kept entirely separate during the marriage. For the purposes of this article, personal injury damages would likely start from a presumption that they are non-matrimonial. However, as explored in the case of Standish, assets can be ‘matrimonialised’ and there are therefore many scenarios in which the categorisation of those assets is not clear cut.
The principle of compensation is rarely engaged, but would be relevant where it could be shown that there is a relationship-generated disadvantage that should be taken into account (for example, significant career sacrifices made by one spouse to bring up the children). (Note, compensation in this context refers to an adjustment to the financial outcome to reflect that disadvantage and not the damages a party has been awarded following an injury.) In high net worth divorces, the matrimonial property often exceeds what is required to meet needs, in which case the court can determine the extent to which surplus assets should be shared between the parties.
While this article addresses the financial claims that can be made on divorce, it is worth noting that cohabiting couples are the fastest-growing family type according to the Office for National Statistics. When unmarried couples separate, however, the financial claims that can be made are limited to those under Schedule 1 of the Children Act 1989 (financial provision for children) and the Trusts of Land and Appointment of Trustees Act 1996 (for property ownership disputes). An individual in receipt of a damages award may therefore still have some exposure to a financial claim by a former partner even if they were not married.
So, how does a personal injury award fit into this distribution of assets on divorce?
The legal treatment of a personal injury award on a divorce
On divorce, personal injury awards (ie, the compensation that an injured person receives after making a successful personal injury claim) are not automatically ringfenced for the sole benefit of the injured spouse.
As with other assets, damages awarded in a personal injury claim must be disclosed as part of the financial remedy process. This was expressly dealt with in the case of Wagstaff v Wagstaff [1992] 1 FLR 333. Whether the award is reserved solely for the injured spouse or split between the parties will depend on whether the court considers it to be a matrimonial or non-matrimonial resource. That, in turn, may depend on when the award was received and how the award has been used. If the award is deemed to be non-matrimonial, it may nonetheless be invaded if the other assets available are insufficient to meet the uninjured party’s needs. Due to the overarching principle of fairness and the requirement to meet both parties’ needs in financial remedy proceedings, personal injury awards may therefore be considered when meeting the needs of the financially weaker party on divorce.
An award that has been used as a joint resource or intermingled with other matrimonial assets (for example, one that has been invested into a joint asset, such as the family home) is more likely to be treated as matrimonial property. It follows that the court, as part of its discretionary exercise in determining an appropriate division of assets, has the power to make an order in relation to the personal injury award (or property derived from the award) for the benefit of either spouse, even if that outcome is undesirable for the injured party. The personal injury award may therefore be at risk of redistribution.
On the other hand, an award that has been used solely to the benefit of the injured spouse (for example, for their care or rehabilitation) is more likely to be excluded from the matrimonial pot and reserved only for the injured spouse on the divorce, so far as is possible.
The form of the award is also likely to be a relevant factor: whether a simple lump sum, ongoing payments or a hybrid of both.
Given the wide discretion afforded to judges in making financial orders on divorce, and the fact that there is no automatic ringfencing of a personal injury award, it is important to understand the practical and proactive steps you can take to protect your personal injury award on divorce.
In part two of this article, we consider the steps you can take to protect your personal injury award and plan for your future.
As dispute resolution specialists with expertise in both serious and catastrophic personal injury claims and complex high net worth divorce, Stewarts is well-positioned to offer specialist advice while guiding you through the implications of separation post-serious injury. Please refer to our website for further information on how Stewarts can help with a personal injury claim or divorce and separation.
With thanks to paralegals Ellen Watson and Olivia Beauchamp for their assistance with this article.
