Individuals often decide to get married after falling in love and realizing they have similar values and life goals. But, romantic ideals aside, marriage is at its core a merger of two entities into a single unit, with shared assets and liabilities. And just as a business merger results in the commingling of assets, so too does marriage (to a degree).
But the question of who owns what typically is addressed only when a married couple decides to call it quits and go their separate ways. Marital property is that which is subject to division upon divorce, but what is separate property in a divorce?
Marital Property vs. Separate Property: The Basics
In order to define separate property in the context of a marriage, we also need to cover the meaning of marital property. Most assets (and debts) acquired during the marriage are considered marital property and thus subject to division in divorce. The way in which marital property is divided depends upon the laws of your state, with a handful of states using the "community property" approach (generally, a 50/50 split).
All other property is considered separate property, which means it belongs to just one of the parties in a marriage. When a couple gets divorced, separate property is not subject to division.
Assets Considered Separate Property
Unlike marital property, separate property (sometimes called "individual property") belongs to just one individual before, during, and after the marriage. This mainly consists of that which was acquired before the couple gets married, with a few notable exceptions. Debt also follows these rules; someone who enters a marriage with a heavy debt load typically will be responsible for that debt after the marriage ends.
State laws determine what's considered separate property, but they're fairly consistent with one another. Generally, the following is considered separate property:
- Property owned by one spouse prior to the marriage;
- Gifts or inheritances received by one spouse prior to or during the marriage;
- Property acquired by one spouse (in that individual's name only) during the marriage and not used by the other spouse or for the benefit of the marriage (unless it's a community property state);
- Property/debts designated as separate in a legally enforceable contract, such as a prenuptial agreement;
- Personal injury awards, minus any compensation for lost wages (unless it's a community property state); and
- Any property obtained by one party using their separate property assets (such as inheritance funds) with the clear intention of maintaining the acquired property as separate.
Separate property that's been so commingled with marital property that it's virtually impossible to identify will be considered marital property (and subject to division) in a divorce. For instance, if marital property (shared income) is used to pay off a car originally purchased by one spouse before the marriage, the car (or a portion of its value) will be considered marital property.
Separate Property: Community Property vs. Common Law States
It's important to understand how community property states and common law property states differ in how separate property is distinguished. Common law property states, for the most part, automatically define that which is registered in one spouse's name only as separate property. This isn't the case in community property states (such as California), where an express, written agreement is required for such a determination.
Additionally, common law property states will take into consideration each spouse's separate property when determining how to equitably distribute marital property during a divorce. Since community property states split marital property in half, they don't consider each party's separate property.
Have More Questions About Separate Property? An Attorney Can Help
Don't let property concerns spoil the romance of your budding marriage, although it's a good idea to know the difference between marital and separate property before things go south. If you're concerned about separate property issues or considering a divorce, you may benefit from speaking with an experienced divorce attorney near you.