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The New Hampshire Supreme Court held that an annuity received in settlement of a spouse’s personal injury claim is marital property subject to equitable distribution.
Here, a husband received a personal injury settlement that included an annuity. Later, he and his wife divorced. The trial court ruled that the annuity was a marital asset subject to equitable distribution and awarded each party one-half interest in the annuity.
Affirming, the state high court noted that courts in other jurisdictions have followed one of three approaches to classifying personal injury awards or settlements. One approach always classifies the award or settlement as the separate property of the injured spouse. The second approach– the analytical approach-also classifies the award as separate property if it is intended to compensate for personal losses, such as pain and suffering. If, however, the purpose of the award is to compensate for losses to the marital estate, such as lost wages incurred during the marriage, it is marital property. Under the third approach- the mechanistic approach-the award is deemed marital property as long as it was acquired during the marriage.
Adopting the mechanistic approach, the court found that this approach best comports with the state’s equitable distribution law, N.H. Rev. Stat. Ann. sec 458:16-a. This statute provides that all property belonging to either or both divorcing parties is subject to equitable distribution. Under this approach, the court explained, the annuity was subject to equitable distribution even though it may have been the husband’s separate property. Thus, the court concluded, the trial court did not err in including the annuity as property subject to equitable distribution.
In Preston, the court rejected the husband’s argument that it should adopt the analytical approach, noting that he relied principally on case law from jurisdictions that classify property as marital-which is subject to distribution-and non-marital, which is not. For a case adopting the analytical approach, see Tramel v. Tramel, 740 So. 2d 286 (Miss. 1999), 43 ATLA L. Rep. 17 (Feb. 2000). There, the Mississippi Supreme Court held that a trial court erred in holding that all proceeds from a husband’s personal injury settlement were marital assets, and remanded for the parties to present evidence as to the amount of the settlement allocable to each spouse. Robert H. Broome, Batesville, Miss., represented the husband.
Source: Trial Lawyers of America.

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