Defining separate property vs marital property in a divorce can get very tricky. In basic terms, separate property is property that you own and that your spouse cannot lay claim to. Marital property, on the other hand, is property that you both own. Here is a detailed breakdown of the laws relating to property division during a divorce:
When you’re single, almost everything you accumulate is your property unless you agree to purchase property with someone else, such as a roommate. When you’re married, your property is only considered separate if one of the following is true:
- You owned it before you were married
- You received it as an inheritance
- You received it as a gift
- You received it as a court settlement for your personal pain and suffering
When you get married, any property you previously owned is considered your separate property. As long as you take steps to keep your property separate from the marriage, your spouse will not have a right to it if you do get divorced and have to divide assets.
Virtually everything you accumulate during a marriage that does not meet the above criteria is considered marital property even if it is titled in one person’s name. If you have a 401k at work in your name, it is marital property. If you purchase a business while married, it is marital property. Basically, almost everything you acquire after getting married falls into the category of marital property.
Can Property Change Status During a Marriage?
It’s possible for separate property to change into marital property in the eyes of the law. For this reason, you have to be very careful to protect your separate property if you don’t want to lose it in a divorce. There are three main ways property can change status during a marriage:
If your property appreciates in value, it can become marital property if you use marital assets to improve the property or increase its value. It all comes down to whether it’s considered passive appreciation or active appreciation. If your property passively appreciates, that is if you do nothing and it increases in value, it will remain separate property. If you invest in an account or make improvements to real estate with marital money, some or all of that real estate may be considered marital property.
The court may decide that certain actions taken during a marriage transmutes separate property into marital property. For example, if you own a home before you get married but choose to build a life with your spouse in said house, it may become marital property.
Commingling happens when you mingle marital funds with separate funds. If you have a savings account with a balance when you get married, it may be considered marital property if your spouse deposits into it.
During a divorce, it’s important to have a divorce attorney help you determine what property you can rightfully declare as separate. If some assets have changed status during the marriage, your attorney and/or an accountant can help you figure out if all or only a portion of a certain asset should be considered marital property.
How Texas Views Separate Vs. Marital Property
As a community property state, Texas requires that in a divorce all marital property be divided in a just and right manner. This does not always mean that property will be divided 50/50, however. Each person’s contribution, current financial means, and future obligations – such as paying for a child’s college education – will be taken into consideration. The court may also consider who’s at fault for the divorce when dividing property.
Sorting out property ownership during a divorce can be a daunting task. An experienced divorce attorney can help you navigate this complicated process to help you retain the property that belongs to you. Contact Alison Grant, Attorney at Law to learn more about how property may be divided in your unique circumstance.