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The principle of "tracing" will make property that you purchase with separate assets, also separate (the new asset will retain the same character as the original funds).
I do strongly encourage you to speak with local counsel regarding this transaction, the amount of money involved and the cost involved in extricating yourself from a legal dispute over real property ownership (even if you are entirely "in the right") can be costly, good advance planning can help you avoid these problems and a local attorney can help you come up with a strategy to help you purchase the new property in a timeline that best matches your current divorce proceeding with the least risk to the new asset.
Your question was based on the premise that your worker's compensation was separate property.
I am not certain that this is the case (remember, I have no other information about your case, your settlement, or any ability to provide you a formal opinion as to the classification of your settlement).
But in many cases worker's compensation benefits are termed either marital property, or mixed marital/separate property.
If you are correct and the property really is separate - then yes, you can use tracing and purchase the new home.
If you are wrong and the settlement is marital (or mixed) - then you are going to have issues with the new home (real property) in PA.
This is why working with a local attorney is so important in these matters as they can help ensure you are working from the proper starting point (and they can provide you with a formal legal opinion - as opposed to "general legal information" as we can offer here).
See generally: http://www.nycbar.org/get-legal-help/article/family-law/property-rights/
Excellent. He should also be able to help you with any timing considerations that may impact your divorce strategically.
If there are no strategy issues he is concerned about, the tracing will protect your new property purchase (again, it will retain the same character as the funds used to purchase it). But do make sure you work in conjunction with your attorney especially for large scale purchases (it doesn't have to be anything terribly drawn out or complicated with your lawyer, but do make sure you follow up (I recommend writing - an email exchange is sufficient), to ensure that you are both on the same page, and that you do not unnecessarily complicate your divorce proceeding.
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Thank you again, and again I wish you the best.