Property and possessions have names - a house is a house, a car is a car and a couch is a couch, right? We learn these words as children and use them all of our lives. The vocabulary changes a bit when it comes to divorce, though. Suddenly, a house or car may be called separate property, marital property or some other term.
The new names are important because they determine which spouse gets which property when the divorce court decides the property settlement.
State Laws on Dividing Property
The divorce laws of each state vary when it comes to property division, but there are two basic systems of characterization of property that are used in all states:
- In equitable distribution states, property is either non-marital or marital property
- In community property states, there is separate property and community property
Check the laws in your state to see if the equitable distribution or community property rules apply to your divorce.
Separate or Non-Marital Property
Separate or non-marital property is property that belongs to only one spouse. Although in some states this type of property may be divided between the spouses, in most states the courts set aside this property to the owning spouse before making a property division.
Types of Separate or Non-Marital Property
Separate or non-marital property includes items such as:
- Property acquired before marriage by one of the spouses
- Inheritances and gifts given to one spouse
- Property that the spouses agree, usually in writing, belongs to one spouse only
Separate property sometimes includes:
- Jury awards, settlements and other proceeds from personal injury lawsuits
- Property acquired during marriage in exchange for one spouse's separate property
- Increase in the value of separate property, such as increased value in the marital home
- Income from separate property, such as interest or earnings on one spouse's retirement benefits
Community Property or Marital Property
Community or marital property is property that's owned by both spouses. It includes:
- Property that's bought or acquired during marriage by the use of marital funds
- Separate property that the spouses contributed to the marriage, such as household furnishings
- Separate property that has been combined or "commingled" with marital property so that separate and marital property are indistinguishable. A spouse depositing separate money into a joint bank account is a good example
- Separate property that has been used for marital purposes or to benefit the couple or family, such as non-marital funds used to purchase the marital home
- Separate property that has been titled in both spouses' names, such as adding a spouse to the deed of a home originally owned by one spouse
In equitable distribution states, marital property is property that is acquired during the marriage. State laws vary on what the "cut-off" date for acquiring marital property actually is. The cut-off date can be:
- The date of the divorce
- The date of entry of a decree of legal separation
- Either the date of execution of a separation agreement, the date the divorce action was filed or the date agreed upon by the couple
- The date of the spouses' final separation
- The date of valuation of the property
Presumption of Marital or Community Property
In many states, there's a presumption that property acquired during the marriage is marital or community property. In other words, courts automatically assume it's marital or community property. Often, the presumption comes into play when one spouse claims that certain property acquired during marriage was a gift, or was property acquired in exchange for separate property, and so it belongs to that spouse alone.
In cases like these, the spouse who claims that the asset is separate property must prove that the property is in fact separate.
With the exceptions of child custody and visitation matters, property division is often one the biggest sources of argument and frustration in a divorce. With some careful tracking and planning, and the help of a good attorney, you can make the process much easier and protect what is rightfully yours at the same time.
Questions for Your Attorney
- How does separate or non-marital property impact our taxes, before and after the divorce?
- How do we make a legally enforceable agreement over how all of our property will be divided? Do we really need an attorney to do it?
- What kind of proof do I need to show that something is my separate or non-marital property?