Divorces in the U.S. have doubled since the ’70s, according to the United Nations.
During divorce, couples often face the complex task of dividing their assets, including property. Many wonder when marital property can become separate property.
Marital property
Marital property encompasses assets acquired during the course of the marriage. This includes real estate, vehicles, bank accounts and other possessions. Even if only one spouse’s name is on the title or deed, if you obtained it during the marriage, it is typically considered marital property.
Separate property
Separate property, on the other hand, is assets that belong to one spouse individually. This can include items acquired before the marriage, gifts, inheritances and certain personal injury settlements. These items are generally not subject to division in the event of a divorce.
When marital property becomes separate
While the lines between marital and separate property may seem clear-cut, there are situations where the distinction can become blurred.
Gifts and inheritances
If one spouse receives a gift or inheritance during the marriage, it is generally considered separate property. However, commingling—mixing separate assets with marital ones—can lead to complications. For instance, if you deposit inherited funds into a joint account, the judge may consider them to be marital property.
Prenuptial or postnuptial agreements
These legal documents can stipulate the classification of certain assets, designating them as separate even if the law would typically consider them marital property. Adherence to these agreements can supersede default property division laws.
Appreciation of separate property
If a separate asset, such as a pre-marital home, appreciates in value during the marriage, the increase is usually considered separate property. However, improvements funded by marital assets can alter this classification.
Transmutations
This occurs when the nature of an asset changes. For example, if you use a pre-marital bank account for joint expenses, the law might view it as marital property.
Co-ownership arrangements
If a spouse adds the other to the title or deed of a separate asset, it may become marital property. This is particularly important to consider when it comes to real estate.
Understanding the nuances of marital and separate property is important for equitable asset division during divorce proceedings. By being aware of these potential scenarios, couples can navigate this process with greater clarity and confidence.
