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Most people get married when they already own some property, savings, and investments. After marriage, the law classifies them as separate properties. During marriage, you will most likely acquire more money and property. In many states, the property acquired during marriage is categorized as marital property or marital estate. Some people agree to exclude some of their property from marital estate by signing a prenuptial or postnuptial agreement. In the absence of such a document, it is presumed that all properties that are acquired during marriage are marital property.
Marital property can also include:
- Personal property including furniture, cars, airplanes, boats, and any artwork that you and your spouse bought when you were married.
- Bank accounts, cash, retirement accounts, and securities that you obtained during marriage.
- Real property that both of you purchased during marriage. However, this is not inclusive of any contributions by either of you from separate property, for example, paying part or the full down payment using separate property funds.
- Advanced professional degrees and all permits that you acquired to engage in a specialized business during marriage.
Separate property includes:
- All personal properties that you owned before marriage
- Property that you might have acquired through exchanging your separate property while you are married.
- Real property that you purchased before you got married.
- The increase in the value of your separate property. However, in case the value increases due to a contribution from your partner, then the increment will be shared in case of a divorce.
- Any property that you received as an inheritance or as a gift from another person other than your spouse.
- Property that you agreed upon in a written agreement to be listed as separate property.
- Any compensation that you receive for personal injuries that you might have sustained.
In case you or your spouse have filed for divorce or a legal separation, you can both agree on the division of separate and marital property. However, if you cannot agree, you will have to face trial in a court of law, and the court will decide on which property should be categorized as either separate or marital property. The court also takes over the decision process of deciding what would be equitable and fair to both of you. However, it is not always equal depending on the circumstances.
The Division Process Followed by the Court
In many states, courts follow a four-step process that determines how property is divided among different individuals.
- Identification of all assets: The first step is to identify all the properties regardless of whether they are separate or marital. Therefore, you will have to come up with a list of all the assets and also debts that belong to either or both of you.
- Classifying the assets: The second step is the classification of the identified property. The court decides on which properties will be classified as separate or marital. Many people presume that any property that they acquire during marriage is considered as marital property which is not always the case.
- Valuation process: The third step is the valuation of the property. The court attaches the fairest market value of marital property during the date of separation and then the net value of the property is determined after the taxes are taken into consideration.
- Distribution of the assets: The final step is the distribution of the assets equally. Most people also presume that marital property is divided equally after divorce. However, such presumptions can be refuted if there are reasons that warrant for an unequal division of the property.
The Date of Separation
Courts in different states determine the date of separation as the date when both spouses agree to terminate their marriage. In other states, this is the date when a spouse leaves the marital home. The date of separation is a very important date since it marks the end of property being categorized as marital property. Unfortunately, this date is often open to debate. The court will require you to have some evidence of a final breakdown, for example, the date when you or your spouse left the matrimonial home.