When a married couple decides that it’s time to go their separate ways, one of the first and most important parts of the divorce process is to determine what constitutes the marital estate. This will decide the property that is up for division during the divorce.
Obviously, determining what is in the marital pot can be a major source of contention during the divorce process, as there may be some disagreement.
However, each state will have their own method of classifying assets as either marital or separate property based on whether it meets certain criteria.
Knowing the difference between what is typically considered separate and what is typically considered marital can help you better prepare for your divorce and avoid being caught off guard.
What constitutes marital property
Generally speaking, everything acquired during the marriage is considered marital property and is up for division during a divorce.
This can include money, real estate, vehicles, retirement plans and pensions, investment accounts, shares in a business, possessions — even degrees and professional licenses acquired during the marriage can be considered when calculating the value of the marital estate.
This means you cannot assume that just because you worked and contributed toward a 401K that it will be 100 percent yours when you divorce.
Your spouse more than likely has a claim to a portion of those funds that accumulated during the course of the marriage, even if they were earned or titled solely in your name.
While it may not seem fair in some cases, that is how the courts will view your property so that each side gets their fair share of what was acquired as a married couple.
What constitutes separate property
While most of what you accumulated during the marriage will be up for division, some items can be designated as separate property and left out of the marital pot.
Although the exact criteria for defining something as separate property varies, common exclusions from the marital estate include property owned prior to marriage, inheritances or gifts that are kept separate from communal funds, personal injury awards and property that is designated separate in a pre- or post-nuptial agreement.
If you are trying to prove that a piece of property should be kept out of the asset division portion of divorce, you will need to provide documentation that definitively proves you are the sole owner based on the laws of your state.
This can lead to difficult negotiations when there is disagreement on whether something should or should not be considered separate.
Gray areas for determining property status
There are certain situations where classifying separate and marital property can become more difficult.
For example, inheritances or other funds typically designated as separate can become part of the marital estate if they are comingled with marital funds.
So if that inheritance from your wife’s side is placed into a joint account used to pay marital bills, groceries, etc., a good argument can be made that those funds should no longer be considered separate.
Another commonly source of confusion is when property is brought into marriage that continues to gain value, such as a real estate.
When you purchase a home before marriage, then that home is technically separate. However, your spouse will likely have a stake in the equity of the home that accumulated while you were married.
If you paid off the majority of the mortgage or saw a significant increase in the property’s value during the course of your marriage, this could mean your spouse is entitled to a large share of the current value of the home.
Seek professional guidance
Clearly, determining the assets up for division will be increasingly difficult (and contentious) when there is more wealth up for grabs, which is why you frequently see drawn-out legal battles in high-profile divorces.
However, even in cases where there are not millions of dollars and complex finances to sort out, it can still be a tedious and difficult task to agree on what is up for division and what is kept separate.
Consult with an experienced family law attorney from your jurisdiction to get a better idea of what assets in your situation should be included in the marital estate and how the property division laws for your state will factor into your situation.
Whenever possible, try to resolve these matters outside of court to avoid expensive litigation. But at the same time, you also want to have an experienced advocate on your side to ensure you get what you deserve in the property settlement, which is usually final.