Lively's ongoing legal battle with her It Ends With Us director-costar Justin Baldoni expects to head to trial in March 2026.
The actress, who turned 38 on Monday, Aug. 25, has been "having a great summer," a source tells PEOPLE. "It's mostly been about family time."
The actress shares daughters James, Inez and Betty plus son Olin with husband Ryan Reynolds. Before school resumes, "they've also traveled as a family," the source adds.
Lively's birthday comes after Lionsgate announced Aug. 21 that she will produce and star in an action rom-com titled The Survival List. It's the first new project Lively has landed since she sued her It Ends With Us director and costar Justin Baldoni in December 2024. She accused him of sexual harassment and retaliation, which he has denied. Their trial is slated for March 2026.
After promoting her haircare brand earlier this summer, the source continues, Lively "was looking forward to some quiet time with her family." Spending time with Reynolds, 48, and their four kids "unwinds her. She focuses on this."
Another insider tells PEOPLE that Lively's plans for her birthday would include a celebration with family. "She's grateful for Ryan's support over the past year," the insider adds.
Lively spoke out about her legal battle in June, writing on her Instagram Stories, "Like so many others, I've felt the pain of a retaliatory lawsuit, including the manufactured shame that tries to break us."
At that time, Lively wrote that she felt "more resolved than ever to continue to stand for every woman's right to have a voice in protecting themselves, including their safety, their integrity, their dignity and their story."
"With love and gratitude for the many who stood by me, many of you I know. Many of you I don't. But I will never stop appreciating or advocating for you," she added.
Meanwhile, Baldoni's lawyer Bryan Freedman described Baldoni as "a person who wants to be vindicated, and that's all he cares about" during a June 10 interview with TMZ.
"He wants the truth to come out, and he wants to do that in the appropriate way," Freedman said. "He's waiting for his day in court, where he can speak out to tell the truth."
When Lively was a guest on Late Night with Seth Meyers in May, the Another Simple Favor actress acknowledged that she couldn't say much about her legal battle but did address her "intense year," saying it's "been full of the highest highs and the lowest lows of my life."