In a Divorce, What Property is Your “Separate Property”
March 6, 2019
Your separate property is generally considered property that is pre-marital, such as that you received prior to marriage or that you received during marriage as a gift or inheritance.
Your separate property is not subject to equitable division-
You get to keep it!
Importantly, any appreciation in the value of such property is also generally considered your separate property, as long as the appreciation is solely attributable to market forces.
If you believe you have separate property, take care to avoid inadvertently converting your separate property into marital property. Marital property is subject to equitable division between you and your spouse in the event of a divorce.
For example, suppose you own a house that you purchased prior to the marriage. That house would generally be considered your “separate property” and not subject to division with your spouse (subject, of course, to certain conditions). However, suppose that after you get married, you title the house in your name jointly with your spouse. Titling the house in both of your names is presumed to be your gift of the house to the marriage. The result is a transformation of what was your pre-marital, separate property into marital property subject to division with your spouse in the event of a divorce.
As another example, suppose you inherit $500,000 during the marriage. That money is generally considered your separate property. Any appreciation attributable to market forces on those funds is also generally considered your separate property. However, suppose you deposit that money into a joint account with your spouse. In that case, you are presumed to have gifted your inheritance to the marriage. The result is a transformation of your separate inheritance into a marital asset subject to division with your spouse in the event of a divorce.
You may be able to rebut the presumption that jointly titling an asset (i.e., the house or inherited funds) constitutes a marital gift. To do so, you would need to prove an outside circumstance that proves the transfer should not be considered a gift, such as an agreement between you and your spouse, looming bankruptcy or other legal issues which may justify a transfer of assets for reasons other than a marital gift.
© KF Law, LLC 2019. This article is of a general nature. Nothing in this article is intended to provide legal advice. Every situation is different, and the laws in every jurisdiction are different. This article does not constitute the creation of an attorney/client relationship.