“My” money in Virginia divorce

Posted on Nov 4, 2016 by Katie Carter

I hear all the time, from both sides, that one party or another paid for something with “their” money during the marriage—usually as a justification for why a particular asset shouldn’t be subject to division in the divorce but should, instead, revert back to the one who paid for it.  “Well, it’s my money anyway,” I hear over and over.

Separating what’s “my” money and what’s OUR money

Unfortunately (or maybe fortunately, depending on which side of this issue you’re coming at it from), when it comes to what’s marital and what’s separate, it’s not so easy as just looking to whose name is on the deed, title, mortgage, or other evidence of ownership.

How does this work in the case of a stay at home mom?

Think about it. In fact, let’s think about it in connection with a real life example that is a lot like many of the cases that I see. Annie is married to Brian. She used to work as an architect, but after the couple’s second child, she decided to stay home. Brian, an independent IT consultant, was the breadwinner—and was always on the controlling side. When they bought their house (and their cars and other assets), he put his sole name on the deed and mortgage.
Now, Annie and Brian are getting a divorce. Do you think Annie really doesn’t have an ownership interest in the home and cars purchased during the marriage with money earned during the marriage?  No way. And neither does the court.  No matter what Brian thinks, it’s not his money–it’s their money, together.  “My” money is more or less an imaginary thing.
The trouble is, though, that this works in my client’s favor sometimes and against them in other situations. Though, on the surface, it sounds fair, but it isn’t always. And I know I’m biased because I represent women only, but I see women who wind up on both sides of the law here, and sometimes, it drives me up the wall with its unfairness.
Obviously, Annie deserves a share of the marital assets here. Annie is exactly the kind of person the law is designed to protect.

Is it “my” money if he refused to help at all?

There are other situations, though, where the law doesn’t apply quite as fairly. I have a current client where this is true. For Brenda, she titled the home in her name (because her husband, Mark, couldn’t qualify for financing with his credit and debt to income ratio), and made the payments from her paycheck. Mark, an alcoholic and drug abuser, quit his job part of the way through the marriage, and never went back. She paid for Mark to go through rehab, which he was constantly starting and stopping over the years. She paid for him to attend counseling, and he’d skip his sessions. He made no effort at all to help himself, and indicated to Brenda that he would continue to use—and “Why shouldn’t I?” he’d ask, “You’ll pay the bills!”
In this case, it drives me crazy. It seems unfair to penalize a woman who has gone above and beyond to help her husband—a man who was unwilling to help himself—by forcing her to divide an asset that she tried to get him to help contribute towards. I see cases like these all the time. Again, I may be biased—I’m on the woman’s side—but it seems to me that, whichever side a woman falls on, she’s there for good reason. Either she stayed at home to take care of the children, or she worked herself to the bone to provide for her family—but, either way, the law doesn’t make much of a distinction.  She can’t it “my” money any more than Brian can.
To determine whether an asset is separate, marital, or hybrid (a combination of both separate and marital), you have to look at the origin of the specific asset. It’s marital, regardless of how it is titled, if it was earned, purchased, or acquired during the marriage.
An asset is separate, on the other hand, if you had it before marriage, or if you received it during marriage as a gift (from someone other than your spouse, obviously), or an inheritance from someone else. Another source of separate property? A personal injury settlement, or something of that nature, that came to you, and you alone, and not to you and your husband jointly.
An asset is hybrid if it’s part marital and part separate. We see this a lot of times with assets like houses or retirement accounts. It may have been purchased before marriage, but if subsequent payments were made from marital money, then it’s a hybrid asset. The portion that was yours from before marriage (the down payment or the initial investment) is still yours separately, and it’s not subject to division in the divorce. The portion that was invested during the marriage is marital, and will be divided in the divorce.
A lot of times, there’s not really a question of my money or your money, even if it feels like there is. The way the law is written, you don’t really have the freedom to think of things that way (and imagine what types of unfairness would abound if you could!). The law just doesn’t allow it.
That being said, though, his share may not be as much as you think. When you’re talking about a marital share, it’s usually roughly half of whatever was earned during the marriage. In a shorter marriage, we’re talking about a small portion of a larger asset. Usually, it’s not like the asset will have to be sold, you’ll just have to buy out his interest (or he’d have to buy out yours) in order to keep it. When it comes to an asset like a house, this can be accomplished by refinancing the balance of the mortgage, along with half of the equity, so that you can reimburse him for his share. When it comes to assets like retirement accounts or other investments, this can be accomplished by rolling over his share into another tax deferred account (or, obviously, having your interest rolled over).
For more information about how property is classified in Virginia, including whether you’ll have to give him a share of “your” assets, give our office a call at (757) 425-5200.