What property in a divorce is marital?
In most cases, my clients have been with their husband for a number of years, accumulating a number of possessions – both consequential and inconsequential. Though we don’t often spend much time dividing the sheets and bath towels, other things, especially big ticket items like houses and cars, do occupy a fair amount of time in an action for divorce.
There’s a lot of misconceptions, too, about what’s marital and what’s separate. I can’t tell you how many conversations I’ve had with people where they tell me that they know they’ll want a prenuptial agreement to protect all the assets they’ve saved up prior to their marriages. While I understand the sentiment, the law already protects the property you’ve earned before you get married. It’s separate property already! Though there are sometimes other reasons to enter into a prenuptial agreement, in general I’d advise being very, very careful with these agreements, and to make sure you talk to an attorney before entering into one.
So, what’s marital? What gets divided in a divorce?
Marital property is defined as anything that was earned, purchased, or acquired during the marriage, regardless of title.
Though today my goal is just to illustrate what constitutes marital property, our discussion would be incomplete without at least acknowledging the other types of property and using them in our examples for comparison’s sake.
Property is separate, on the other hand, if it was earned, purchased, or acquired BEFORE the marriage, or if it was a gift or inheritance given to you from someone other than your spouse. (A gift from your husband is marital property!)
Property is hybrid if it combines the two – so, if it’s part marital and part separate. More on this in a minute.
Can you give some examples of marital property?
Absolutely. In fact, I think that examples are some of the most helpful ways to begin identifying what assets are separate, and which are marital or hybrid.
A house that you bought during the marriage is marital, provided that it was paid for with marital money. So, your down payment is marital if it came from money that you earned during the marriage, and then you made regular monthly mortgage payments using marital money, the home is marital even if the mortgage and/or deed are only in your name or only in your husband’s name.
A house can be a hybrid asset, too. If you used money you saved from before the marriage for the down payment, or if you used money from an inheritance or a personal injury award to pay the regular monthly mortgage payments after the home was purchased, it’s a hybrid asset. In a hybrid asset situation, we separate the marital interest from the separate interest.
A house can also, of course, be separate. If it was purchased prior to marriage, and then, after the marriage, was rented out to a tenant, or was paid for from separate funds (or money received from a gift or inheritance from some third party), it’s separate.
What do you mean that title doesn’t matter?
Property is marital because of when it was purchased and how it was paid for. It does not matter whether that property is in one spouse’s name only.
Though other things may make this more complicated – like the fact that the spouse owning the property can then sell the asset without requiring the signature or knowledge of the other spouse – it doesn’t affect the other spouse’s ownership or entitlement to the equity in that asset.
What about gifts? Are they marital or separate?
We’ve touched on this a little bit, but gifts are also a unique category. A gift or inheritance belongs solely to the person to whom it was given. So, if your grandmother died and left you $100,000, that money is not touchable by your husband in your divorce – unless, of course, you’ve used that money to pay regular marital expenses.
It’s important to be able to trace back to the inheritance. If the money was spent on an asset that has appreciated in value, and we can trace that appreciation back to the inheritance, you can recover it in the divorce. If, on the other hand, it’s just spent – like to pay down debt, or to buy groceries and tires and braces for the kids – it’s gone, and probably not recoverable.
A gift from your husband, on the other hand, is marital property. Since marital money was used to purchase it, and it was given to a party of the marriage, the gift is just an asset of the marriage that is subject to division in the divorce.
What about gifts of money – or loans – from parents or grandparents?
A sore subject that we often come across in these cases relates to “gifts” and “loans”. I use quotes here, because I can’t tell you how many times I’ve heard a husband say that he owes some loan to his parents or grandparents for money given to the parties during the marriage to cover something, like a down payment or improvements to real estate, that the wife understood to be a gift.
Since debt is also divided in a divorce, if you received such a gift and your husband lists it as a debt or liability, especially if there’s a promissory note or some other intent that the loan would be repaid (and sometimes, even if there is no promissory note!), it could be included in a division of debt.
“But his parents will NEVER make him repay it!” is something I hear all the time. I hear allegations that he’s using this “loan”, which was never intended to be a loan, to offset the amount of debt he takes in the divorce. It’s a tricky situation to find yourself in, but whether it will work will ultimately depend on the specific facts in your case.
Marital property is deliberately defined this way, so that both spouses have the benefit of the assets earned, purchased, or acquired during the marriage, and share the burden of any debt accumulated in that time. Remember, divorce always divides both the assets AND the liabilities, and we’re going to look to the source of each respective asset and/or liability to determine ownership and entitlement post-divorce.
For more information, or to schedule a one-on-one consultation with one of our experience divorce and custody attorneys, give our office a call at 757-425-5200.