Is a Personal Injury Settlement 'Community Property' or 'Separate Property' in a Texas Divorce? (Fam. Code § 3.001(3))
Direct Answer Under Texas Law
Under Texas Family Code § 3.001(3) and Graham v. Franco, 488 S.W.2d 390 (Tex. 1972), the recovery for personal injuries sustained by a spouse during marriage (for physical pain, suffering, mental anguish, disfigurement, and physical impairment) is the injured spouse's SEPARATE PROPERTY—EXCEPT that any recovery for (1) loss of earning capacity during the marriage, and (2) medical expenses paid during the marriage IS COMMUNITY PROPERTY!
Critical Texas Procedural Trap to Watch Out For
THE COMMINGLING TRAP: Under Licata v. Licata, 11 S.W.3d 269 (Tex. App.—Houston [14th Dist.] 1999), if a married couple signs an unallocated lump-sum personal injury settlement release that lumps pain/suffering together with lost wages and deposits the check into a joint checking account, the injured spouse may fail to meet the 'clear and convincing evidence' burden (§ 3.003) to trace their separate property in a later divorce!
Recommended Action Plan for Texas Claimants
If married, ask for explicit allocation language in the settlement agreement distinguishing separate-property bodily injury damages (§ 3.001(3)) from community-property lost wages, and deposit separate-property funds into a dedicated individual account.
Detailed Texas Statutory & Case Law Breakdown
Under Tex. Fam. Code §§ 3.001(3), 3.003; Graham v. Franco Constitutional Rule and controlling Texas appellate precedent in Graham v. Franco, 488 S.W.2d 390 (Tex. 1972); Licata v. Licata, 11 S.W.3d 269 (Tex. App.—Houston [14th Dist.] 1999), Texas trial and appellate courts apply strict statutory rules to this exact issue. Unlike generic multi-state legal summaries, Texas tort procedure under the Civil Practice and Remedies Code (CPRC), Insurance Code, Transportation Code, and Labor Code enforces specific statutory formulas—including the 51% proportionate responsibility bar (CPRC § 33.001), paid-or-incurred medical expense admissibility (CPRC § 41.0105 / Haygood), and mandatory statutory lien caps (Prop. Code Ch. 55 & Ins. Code Ch. 140).
Step-by-Step Texas Procedural Checklist
- Verify the exact statutory text of Tex. Fam. Code §§ 3.001(3), 3.003; Graham v. Franco Constitutional Rule and how Texas courts apply Graham v. Franco, 488 S.W.2d 390 (Tex. 1972); Licata v. Licata, 11 S.W.3d 269 (Tex. App.—Houston [14th Dist.] 1999) in your county's appellate district.
- Beware of the Texas Procedural Trap: THE COMMINGLING TRAP: Under Licata v. Licata, 11 S.W.3d 269 (Tex. App.—Houston [14th Dist.] 1999), if a married couple signs an unallocated lump-sum personal injury settlement release that lumps pain/suffering together with lost wages and deposits the check into a joint checking account, the injured spouse may fail to meet the 'clear and convincing evidence' burden (§ 3.003) to trace their separate property in a later divorce!
- Execute the Texas Action Plan: If married, ask for explicit allocation language in the settlement agreement distinguishing separate-property bodily injury damages (§ 3.001(3)) from community-property lost wages, and deposit separate-property funds into a dedicated individual account.
- Preserve all physical, electronic, and medical billing records early so your CPRC § 18.001 affidavits and TRCP 194.2 Initial Disclosures are complete.
Frequently Asked Questions Under Texas Law
Is a Personal Injury Settlement 'Community Property' or 'Separate Property' in a Texas Divorce? (Fam. Code § 3.001(3))
Under Texas Family Code § 3.001(3) and Graham v. Franco, 488 S.W.2d 390 (Tex. 1972), the recovery for personal injuries sustained by a spouse during marriage (for physical pain, suffering, mental anguish, disfigurement, and physical impairment) is the injured spouse's SEPARATE PROPERTY—EXCEPT that any recovery for (1) loss of earning capacity during the marriage, and (2) medical expenses paid during the marriage IS COMMUNITY PROPERTY! Key Texas Trap to Avoid: THE COMMINGLING TRAP: Under Licata v. Licata, 11 S.W.3d 269 (Tex. App.—Houston [14th Dist.] 1999), if a married couple signs an unallocated lump-sum personal injury settlement release that lumps pain/suffering together with lost wages and deposits the check into a joint checking account, the injured spouse may fail to meet the 'clear and convincing evidence' burden (§ 3.003) to trace their separate property in a later divorce!
What Texas statute and Supreme Court / appellate precedent control injury settlements in a texas divorce (§ 3.001(3))?
This question is governed in Texas by Tex. Fam. Code §§ 3.001(3), 3.003; Graham v. Franco Constitutional Rule and the legal standards articulated in Graham v. Franco, 488 S.W.2d 390 (Tex. 1972); Licata v. Licata, 11 S.W.3d 269 (Tex. App.—Houston [14th Dist.] 1999). Recommended step: If married, ask for explicit allocation language in the settlement agreement distinguishing separate-property bodily injury damages (§ 3.001(3)) from community-property lost wages, and deposit separate-property funds into a dedicated individual account.
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