When a couple gets a separation or divorce, it is a common practice to divide the property either through a mutual agreement or through a court proceeding. When taken into court, these disputes are dealt with in terms of property that is shared between the parties and property that is considered “separate property.”
As these determinations are made in court, any property deemed to be separate property is not really relevant to the proceeding. This is because it basically belongs to the person whose separate property it is, and generally won’t be subject to division by the court. Shared property will be classified as belonging to both spouses, and its future owner will be decided by the court.
What Type of Property is Commonly Referred to as Separate Property?
Classifications of property in a divorce context may depend on state laws. However, generally speaking, the following are the most common forms of separate property:
- Inheritances and gifts (such as property received through a will);
- Heirlooms (usually valuable items kept in the family such as jewelry);
- Chattels (property) used wholly or principally for business purposes;
- Property acquired under a trust;
- Property the partners declare to be separate under an agreement;
- Property acquired before the marriage began; and
- Property obtained with the proceeds of separate property and not intended for the use or benefit of both partners.
Perhaps the most clearly defined separate property are those items that are declared to be separate property through an agreement between the parties. Thus, if there are any specific property items or assets that the parties don’t want to be classified as shared property, they should form an agreement and list the property as separate property. This is typically done through a legal document such as a prenuptial agreement.
However, it is important to remember that you must also treat the property as separate property. If you declare a home you owned before marriage as separate property, and you rent it out and receive income that you declare to be separate income, then you cannot commingle that income with community property.
For example, Wife owned a home before marriage and Husband, verbally (not signed), agreed that the house and all assets related to the house belong to her alone. Wife rents out the home and generates rental income. She even puts the rental income in a separate account.
However, Husband has access to the account. While he may not withdraw money from it, they sometimes use that money to fix up broken items around their shared, community property home. Wife even used money from the rental income to take them on a joint vacation and pay bills.
Her behavior might persuade the court that the rental income assets are not separate enough. Even though she and Husband agreed, and the home was clearly hers before she married, she runs the risk of having it be considered community property.
What Property is Commonly Classified as Shared Property?
The following are the most common forms of shared property in a divorce or separation context:
- The home taken in the name of the spouses;
- The family chattels, which include items such as the furniture, fittings, household equipment and appliances, vehicles, and boats, even if they are in one person’s name;
- Any common or jointly-owned property;
- Property acquired before the marriage relationship began, if it was intended for the couple’s common use or benefit;
- All earned income and property bought after the marriage relationship began; and
- The value added during the marriage relationship to superannuation and life insurance policies.
Thus, the timeline of the marriage is a major factor when determining whether to classify property as shared or separate. In most instances, property acquired during the marriage is considered shared property. Property acquired before or after the marriage relationship is generally going to be classified as separate property. There may of course be exceptions to these guidelines based on state laws.
Do Marital Property Laws Differ by State?
Yes. States are generally classified into two different types depending on what types of marital property laws they follow. Some states follow what is called “community property” law. Under community property laws, shared property is to be split equally between the spouses in a 50/50 manner. This may be calculated according to set formulas or rules. The separate property belongs to to acquiring spouse.
States that follow community property laws are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
In non-community property states, courts will likely follow some sort of “equitable distribution” scheme. Under these laws, the property may be divided on a case-by-case manner according to what the court determines to be “fair” or “equitable. This can be determined through an examination of various factors, including:
- How long the marriage arrangement lasted;
- Whether there are any specific property agreements between the spouses that might affect the property distribution (such as a prenuptial or postnuptial agreement);
- The financial background of each individual spouse;
- The overall character and disposition of each person’s estate; and
- Various other factors.
Thus, property division for a divorce in an equitable distribution state might not follow an exact 50/50 split or division of the property. However, this is usually considered acceptable, as the court will seek to arrive at a division of property that is considered most fair through an examination of many different factors and contexts.
Should I Contact an Attorney if I Need Help with Separate and Shared Marriage Property Issues?
If you are going through a divorce and are in a dispute over the division of property, you may find the advice of a divorce lawyer to be extremely helpful. Due to the complicated nature of divorce proceedings, the counsel of an attorney that specializes in these kinds of disputes can be beneficial. They can help provide legal advice according to the specific laws of the state where the divorce is occurring.
