22 Aug 16

Are assets acquired during a separation deemed marital property?

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There may come a time when a married couple realizes their relationship is not working. Both of them might agree it would be if they legally separated. During a legal separation, life will continue for both marriage partners. They will probably not think about the items obtained during the separation. Either spouse may consider these items not part of the marriage. It’s important a couple understand their rights concerning property and assets they acquire during a separation. This could avoid a difficult situation from developing in the future.

Legal Separation
This occurs when a court issues its judgment on how a couple should manage their property and assets during a separation. It enables a couple to maintain a separate residence and still have the legal status of being married.

Community Or Separate
Determining if assets or property obtained during a couple’s legal separation are community or separate will depend on a number of factors. It will ultimately be determined by the laws in the state where the couple resides, and the type of separation. As a general rule, the property and assets obtained during a legal separation are considered not to be subject to a marital estate. This means the assets and property are considered to be jointly owned. Should the couple reconcile, the status of the items obtained during the couple’s legal separation would remain separate. The legal reasoning is that the assets and property were obtained during a time when the marriage was considered to be suspended.

Status Change
It is possible for property and assets obtained during a legal separation to become part of the marital estate. This often occurs when the property and assets are mixed with the martial property. An example would be if one spouse puts money into a joint bank account. The funds are then used by the other spouse to obtain property during a time of separation. This could also happen if one spouse uses their separate income to enhance property or assets for the other spouse. One spouse pays off a mortgage loan held in the name of the other spouse could cause confusion. It’s also possible to have separate property appreciate because of marital efforts. One spouse purchases an asset for the other spouse that appreciates. The could result because one spouse has a business dedicated to managing such assets.

It’s also possible for separate property and assets to become part of the marital estate with a process known as commingling. This happens when separate property is combined or used to obtain marital property. When it becomes too difficult to determine true ownership of property or assets, they could be determined to have been commingled.

Martial Property Becoming Separate Property
This can happen if both spouses agree to change the status of property or an asset. Should a couple have property or assets as part of the marital estate, and one spouse agrees to remove their name from ownership of the property or asset, it can then become separate. This is determined based on if a couple resides in a community property state or a common law state.

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