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The Difference Between Separate and Marital Property

posted by admin 4:44 PM
Wednesday, June 8, 2011

Divorce involves dividing the family’s property, and I’m sure you won’t be surprised if I tell you that this process can be extremely complicated and contentious –especially if there are significant assets to be considered, such as houses, rental property, retirement/pension plans, stock options, closely-held businesses, professional practices and licenses, etc.

Because it’s so complex and often emotional, many women find the division of assets quite overwhelming.

But, that doesn’t have to be the case.

Over the years, I have seen that the feeling of being overwhelmed typically stems from a lack of understanding about how assets are divided. Most women aren’t even familiar with the terms used –and why would you be, unless you’ve gone through this process before!

So, let’s start with the basics.  Let’s discuss one of the key factors divorcing women need to understand: 

The difference between separate and marital property.

States differ in some of the details, but typically, separate property is rather limited in scope. Generally speaking, separate property only includes:

• Property that was owned by either spouse prior to the marriage
• An inheritance received by the husband or wife (either before or after the marriage)
• A gift received by the husband or wife from a third party (your mother gave you her diamond ring)
• Payment received for the pain and suffering portion in a personal injury judgment
All other property that is acquired during the marriage is usually considered marital property, regardless of which spouse owns the property or how the property is titled.

As you can see, compared to separate property, marital property is a VERY broad category.

In other words, don’t think you’re not entitled to a specific asset (such as a 401K, stock options, etc.) simply because it is titled only in your husband’s name.  Typically, all property that is acquired during the marriage is considered marital property, even if your spouse “owns” the property or it is titled in his name.

In fact, even separate property can lose its separate property status if it is co-mingled with marital property. For instance, if you re-title the condo you bought when you were single and add your husband as a co-owner, that property will most likely now be considered marital property. Likewise, if you deposited the inheritance from your parents into a joint bank account, it’s likely that those funds would now be considered marital property.

A qualified divorce team can help you sort through all the details of your particular case. As you can see, even a case that seems relatively simple at first can get quite complicated once you start scratching the surface. Keep in mind that understanding the difference between separate and marital property is only Step #1 in approaching the division of family property. You must also recognize that:

• Divorce laws differ greatly from state to state. Do you live in a Community Property state or an Equitable Distribution state? Where you live impacts how your assets and debts will be divided during divorce.
• In many states, if your separately owned property increases in value during the marriage, that increase in value may also be considered marital property. The division of this particular subset of marital property can be further complicated by the differentiation between active and passive appreciation of the assets.
• Debt is also handled in accordance with state laws, and Community Property states and Equitable Distribution states deal with debt quite differently.
But, wait. Take a deep breath. Please don’t let all this information fluster you. I know it can all seem a bit daunting initially –and that’s why I’ll walk you through each of these topics in upcoming blog posts. Understanding the fundamentals of how assets are divided will help you feel less overwhelmed and help you start on your way to a successful settlement.

If you still have questions after reading these blog posts, please call one of our Divorce Financial Strategists™, who will be able to help you with your specific situation.

All articles/blog posts are for informational purposes only, and  do not constitute legal advice. If you require legal advice, retain a  lawyer licensed in your jurisdiction. The opinions expressed are solely  those of the author, who is not an attorney.

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27 Responses to “The Difference Between Separate and Marital Property”

  1. [...] The DOS matters because it draws a very significant line of demarcation. In general, all assets and income acquired from the date of marriage to the date of separation is marital property; anything acquired after the date of separation is separate property.  (For a more detailed discussion, see my earlier post about the differences between marital property and separate property.) [...]

  2. [...] The DOS matters because it draws a very significant line of demarcation. In general, all assets and income acquired from the date of marriage to the date of separation is marital property; anything acquired after the date of separation is separate property.  (For a more detailed discussion, see my earlier post about the differences between marital property and separate property.) [...]

  3. [...] It won’t be an easy task, but there’s no getting around it: Divorce requires the division of all your marital assets. [...]

  4. [...] It won’t be an easy task, but there’s no getting around it: Divorce requires the division of all your marital assets. [...]

  5. [...] It won’t be an easy task, but there’s no getting around it: Divorce requires the division of all your marital assets. [...]

  6. [...] It won’t be an easy task, but there’s no getting around it: Divorce requires the division of all your marital assets. [...]

  7. Divorce Advice For Men…

    [...]The Difference Between Separate and Marital Property | Bedrock Divorce Advisors[...]…

  8. [...] 1. Determine whether the business is separate or marital property. [...]

  9. [...] 1. Determine whether the business is separate or marital property. [...]

  10. [...] 1. Determine whether the business is separate or marital property. [...]

  11. I have realized that online diploma is getting well-liked because obtaining your degree online has developed into popular choice for many people. Many people have definitely not had an opportunity to attend a conventional college or university but seek the raised earning possibilities and career advancement that a Bachelor’s Degree affords. Still people might have a college degree in one discipline but would wish to pursue anything they now develop an interest in.

  12. [...] 1. Consider a prenuptial agreement and/or a Domestic or Foreign Asset Protection Trust. If you’re not married yet, a prenuptial agreement allows you and your fiancé to decide in advance what property will be considered separate property, what property will be considered marital property and how that marital property should be divided. (Read this earlier post for information about the difference between separate and marital property.) [...]

  13. [...] 1. Determine whether the business is separate or marital property. [...]

  14. [...] It won’t be an easy task, but there’s no getting around it: Divorce requires the division of all your marital assets. [...]

  15. [...] The DOS matters because it draws a very significant line of demarcation. In general, all assets and income acquired from the date of marriage to the date of separation is marital property; anything acquired after the date of separation is separate property.  (For a more detailed discussion, see my earlier post about the differences between marital property and separate property.) [...]

  16. [...] vary from state to state. As with many aspects of divorce (see my earlier articles about the division of separate and marital property and the division of debt, e.g.), the regulations governing Financial Affidavits will differ [...]

  17. [...] vary from state to state. As with many aspects of divorce (see my earlier articles about the division of separate and marital property and the division of debt, e.g.), the regulations governing Financial Affidavits will differ [...]

  18. [...] (If you have questions about how assets are divided in divorce, see my earlier article for a detailed discussion about the difference between separate and marital property.) [...]

  19. [...] involves the division of marital property.  From the imported porcelain vase Aunt Martha gave you and your husband on your second [...]

  20. [...] involves the division of marital property.  From the imported porcelain vase Aunt Martha gave you and your husband on your second [...]

  21. [...] in addition to recognizing the difference between separate and marital property, you also must understand the laws that govern your place of [...]

  22. [...] the difference between separate and marital property. This is an area where different state laws apply, but anything you owned before you married [...]

  23. [...] the difference between separate and marital property. This is an area where different state laws apply, but anything you owned before you married [...]

  24. [...] laws in different states (for example, those governing legal separation and those concerning the distinction between separate and marital property). Throw different countries into the mix, and the challenges quickly become even more complex . . . [...]

  25. [...] These days, there are several options available to those who want to preserve their financial independence and keep certain assets as separate property. (See my earlier article for a detailed discussion about the difference between separate and marital property.) [...]

  26. [...] property (premarital, inheritance, etc.) and was accumulated during the marriage, it is still marital property and will be divided [...]

  27. [...] the difference between separate and marital property. This is an area where different state laws apply, but anything you owned before you married [...]