It can be confusing understanding how property is divided in Virginia divorce – or even what, exactly, is divided.
In Virginia, there are three classifications for property – hybrid, marital, and separate – and only the marital portions are subject to division. Hybrid is, as its name suggests, part marital and part separate property. So, the parts that are divided are the completely marital property and the marital portion of hybrid assets. The rest is separate.
But what does that mean – and how do you know if specific items of property that you might own are separate and, therefore, NOT subject to division in the divorce?
Easy! Let’s talk.
Marital property is anything that was earned, purchased, or acquired DURING the marriage, regardless of title.
It doesn’t matter if only his name is on the deed or the title of the specific asset; if it was earned during the marriage (and paid for with marital money), the asset itself is marital and subject to division.
So, the things that are NOT marital – and are separate – are things that were earned, purchased or acquired BEFORE marriage or AFTER separation. Separate property can also include things that were given to you, whether before, during, or after your marriage and/or separation, by someone other than your partner.
Hybrid assets are part marital and part separate, so the separate part – the part that was earned prior to the marriage or after separation, or the part that was contributed to by someone other than your spouse – is yours separately.
Let’s talk about some examples.
Your now-husband gave you a diamond necklace before you got married. That’s your separate property, because it was given to you prior to marriage.
Your husband gave you a diamond necklace after you got married. That’s marital property, because he (presumably) used marital money to pay for it, and it was acquired during the marriage.
Your mom gave you $50,000 towards the down payment on your home before you got married. You used it, got married a few months later (but after closing), and then you and your husband lived in the home and made monthly mortgage payments from your paychecks. That’s a hybrid asset. The $50,000 is yours separately (as well as any appreciation from any mortgage payments made BEFORE your marriage), but the rest is marital and subject to division.
Your mom gave you $50,000 towards the down payment on your home after you got married. You used it, and then made monthly mortgage payments from your paychecks. Still a hybrid asset – but you’re still separately entitled to the benefit of the $50,000 (assuming that it was clear it was given to YOU and not to both of you).
You came into the marriage with a trust fund that pays you $10,000 a month. You bought a house using money you had saved up before the marriage and you continued to live there, making mortgage payments from your trust fund, with your husband after marriage. This is a separate asset.
After your wedding, your grandmother dies, leaving you with an inheritance of $100,000. You separate and eventually divorce. That $100,000 is your separate property.
Your husband buys a car, using money from the joint account, and titles it in his sole name. He continues to make payments on it each month from the joint checking account. This is a marital asset and subject to division.
Your husband buys a house after your wedding with $50,000 from the sale of a condo he lived in before the marriage. Afterwards, you and he live there together, making monthly mortgage payments from your joint checking accounts. The rest of the money from the sale of his condo – about $80,000 – is put in the joint checking account, too. You spend from that account freely; your Netflix subscription, your grocery shopping, your car repairs, your pet supplies, kids’ tuition and daycare costs, etc., all come out of that account. When you separate, there’s $80,000 left in the account. This one’s tricky! The $50,000 is still his, separately – but the remaining $80,000 was probably commingled, and, therefore, lost. We can’t assume that the full $80,000 left in the account was HIS $80,000 if so many things have gone in and out of the account since the time it was put in. He likely loses that money.
What is commingling?
Commingling assets happens when you put them into a joint account and we can no longer ‘trace’ the asset back to one party or the other. If – like in the example above – you put money from an inheritance, a trust fund, a personal injury settlement, or another separate asset – into a jointly titled account and then spend freely from that account, we can’t tell anymore whether the money is truly yours or whether it came from some other source. Presumably, you spent that $80,000 before you spent any other money coming into the account, right? I mean, really, it’s hard to say. Dollars are dollars are dollars – and, anyway, these probably aren’t actual, physical dollars – they’re digital dollars in an online bank account. We can’t trace back to the original source, so the separate nature of that asset is lost.
In an ideal world, you’ll keep separate assets separate. A completely separate bank account for those items is nice – but keep in mind, too, that just because only your name is on the account doesn’t automatically mean that all the money in it is separate! If you had money from your work during the marriage deposited into a separate account, it’s still marital money – and subject to division. It only stays separately yours if the asset was separate to begin with. (Remember – it’s not about title, it’s about the origin of the money.)
What is tracing?
When we say we need to be able to trace an asset back to its original source, that means we need to be able to tell where it came from – and, in some cases, where it went. We need to see, for example, a copy of granny’s will, giving you $100k, and then the transfer where it came from her account to yours, and then where it went from yours to the mortgage lender, if you invested it in real estate. That’s tracing.
It’s usually possible to trace an asset as long as you either have it in another separate account (and its clear that no marital money was commingled) or that you invested it in an asset, like an investment account or real estate, that holds value.
When we’re talking about separate property, we’re looking at where the money came from. If the source is separate, then the asset is separate – and not subject to division in the divorce.
For more information about division of property in divorce, visit our site at hoflaw.com or give us a call at 757-425-5200.