What’s The Marital Estate?

One of the most common questions I receive from clients who are divorcing is, what are we dividing? The answer has more to do with when you received an asset rather than who has title to it.

Say that you were married in 1995 and decided to divorce in 2015. While you were married, you bought a house, a couple of new cars, started a retirement fund, and opened up several bank accounts. The house was put into joint names. Each of you has separate title(s) to your car(s) and the retirement fund(s) are in your individual name(s). The bank accounts are in joint names. All of these items noted here which were obtained throughout your 20 year marriage are considered marital property and subject to equitable distribution.

How can this be, you ask? Why should my soon-to-be-ex get half of my retirement account, which I worked years to build up? You agreed that one of you would stay home to raise the children and the other would work outside the home. The court considers each spouse’s contributions to the marriage, which includes obtaining and building the assets, raising the children or working full time while allowing the other spouse to obtain additional education which would increase that spouse’s career opportunities and earning power.

Well, you say ok, but my spouse started a business while we were married, a store that sells widgets. We both put funds into it but my spouse works there full time. What would we consider it? The business is marital, because it was started while you were married. Although the one spouse has put his or her labor into building the business, the other contributed with funds or time.

Wait a minute, you say. You inherited the sum of $500,000 from your deceased father. Inheritances themselves are not considered marital property, they are non-marital; however, any increase in value would be considered marital property. If that $500,000 was placed into a separate account in your name only and increased to $510,000, only the $10,000 is considered marital property. Warning: if you put the inheritance into a joint account, you have just made a gift to your marriage. The inheritance has become marital property and the entire $500,000 is subject to equitable distribution.

What about gifts? You say that your mother gave you a large valuable collection of gadgets and you want to keep them. Individual gifts are non-marital, unless they somehow become joint gifts (i.e. by selling the collection and placing the proceeds in a joint account). Again, if the collection increases in value, the amount of the increase in value is considered marital property.

Courts are not overly concerned about non-marital (also known as separate) property, unless that separate property is large enough to make a difference. Regarding the inheritance of $500,000 noted above – that much could mean that the court would deviate from its usual means of dividing up property. For example, if the total amount of joint assets that you and your spouse own is $400,000, and you have the separate inheritance of $500,000, the court may decide that it is equitable to give your spouse 55% or 60% of the marital assets, because you will have the inheritance and your spouse does not. Be sure to ask your family law attorney if you have questions about other marital assets.

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