It is a necessary part of any divorce that family property must be divided. For many, this is not an easy process, especially if the divorce is already contentious. This can be made even more complicated if there are a large number of assets, such as houses, other properties, retirement plans, investment accounts, businesses, etc.
It can all be very overwhelming and confusing, especially since, for most people, this is an entirely new experience.
But, there are some basic concepts that will make the process a little easier. We’re going to discuss some of the things you need to know as you approach your divorce.
First, let’s define marital and separate property.
Knowing the basics of how to identify your various properties and assets can help you better understand what the outcome of your divorce settlement might look like.
Marital property is any property acquired during the marriage. For example, if a house was bought during the marriage and paid for out of a joint account, the house, and any associated debt, would be considered marital property.
Separate property is any property that was acquired by either spouse before the marriage. An example might be a car that was purchased by one spouse or the other before the marriage. This would be considered that spouse’s property and not subject to division.
How to Identify Separate Property
The following image gives an overview of what things are generally considered marital vs. separate property.
A general list of marital vs. separate property
In more detailed terms, Bedrock Divorce Advisors listed the following general points about what constitutes separate property:
• Property that was owned by either spouse prior to the marriage
• An inheritance received by the husband or wife (either before or after the marriage)
• A gift received by the husband or wife from a third party (your mother gave you her diamond ring)
• Payment received for the pain and suffering portion in a personal injury judgment
Anything else is generally considered marital property, which makes marital property a broad category.
Sounds simple enough.
But property division can become quite complicated once you begin digging deeper. Separate property and marital property often become co-mingled. If separate property gets mixed in with martial property, it can lose its separate status. In order to discover which is which, a divorce team of professionals is often the best idea.
It is also important to know what laws your state has in place regarding the division of assets. Is it a Community Property or Equitable Distribution state? What are their rules about properties that increased in value during the marriage?
You see how this becomes more complicated the more you dig into it.
Don’t Get Overwhelmed!
Breathe. There are plenty of people out there who are trained and ready to help you navigate the division of property.
It’s important to talk to your attorney and a Divorce Financial Analyst. These professionals can help guide you in making a decision that will be equitable and beneficial to you in the long run.
Please call or email Divorce Financial Solutions to talk with Veralynn Morris, CDFA about your specific concerns. You can also reach out to us on Facebook, LinkedIn, or through this website.
For more information, you can also reference the articles below.