What is Marital Property?

Marital property is property obtained during the marriage, regardless of who paid for it. The exception to this general rule is property received by one spouse as a gift, inheritance from a third party, or excluded by a valid agreement.

Marital property can encompass real estate, bank accounts, stock, furniture, pensions and retirement assets, cars, and other personal property.

Furthermore, most states are common law property states. The term “common law” is simply a term used to determine the ownership of marital property. The common law system states that property acquired by one member of a married couple is owned completely and solely by that person.

Moreover, when one spouse passes away, their separate property is distributed according to their will, or according to probate. The distribution of marital property varies on how the spouses share ownership. If they own property in “joint tenancy with the right of survivorship” or “tenancy by the entirety,” the property goes to the surviving spouse. This right is independent of what the deceased spouse’s will writes.

However, if the property was owned as “tenancy in common,” then the property can go to someone other than the surviving spouse, per the deceased spouse’s will. Not all property has a title or deed. In this scenario, generally, whoever paid for the property or received it as a gift owns it.

If the couple divorces or obtains a legal separation, the court will determine how the marital property will be divided. The couple can agree to the marriage, explaining how to distribute the marital property upon divorce. The states having community property are Louisiana, Arizona, California, Texas, Washington, Idaho, Nevada, New Mexico, and Wisconsin. Community property states follow the rule that all assets acquired during the marriage are considered “community property.”

Marital property in community property states is owned by both spouses equally (50/50). This marital property encompasses earnings, all property bought with those earnings, and all debts accrued during the marriage. Community property starts at the marriage and ends when the couple physically separates with the intention of not continuing the marriage. Therefore, any earnings or debts originating after this time will be considered separate property.

Any assets acquired before the marriage are considered separate property and are owned only by that original owner. A spouse can, however, transfer the title of any of their separate property to the other spouse (gift) or the community property (making a spouse an account holder on a bank account). Spouses can also co-mingle their separate property with community property, for instance, by adding funds from before the marriage to the community property funds.

Lastly, spouses may not transfer, alter, or eliminate any whole piece of community property without the other spouse’s permission, but can manage their half. However, the whole piece includes the other spouse’s one-half interest. It means that spouses cannot alienate the one half that belongs to them.

Can Separate Property Become Marital Property?

Separate property can become marital property if it is mixed with marital property. For instance, if one of the spouses utilizes money they had before the marriage to purchase a house for the couple, that money may transform into marital property.

If the value of the separate property goes up only by luck (for example, random alterations in the market) then the rise in value is still considered separate property. If the value of the property goes up because your spouse assisted in improving the property, then the rise in value may be considered marital property.

On another note, pension plans, IRAs, 401ks, and other retirement plans are considered marital property. The portion of these plans that a spouse earned during the marriage will be divided by the court.

How Does the Court Determine What is Equitable?

There are several factors courts consider when applying the principles of equitable distribution. These include:

• Nonmarital Property: If one spouse has significantly more nonmarital property than the other, the court may award more marital property to the less-wealthy spouse;
• Earning Power: If one spouse has more earning power than the other, the court may award more marital property to the spouse with less earning power;
• Who Earned the Property: When awarding property, often courts will favor the party who worked hard to acquire or maintain the property;
• Services as a Homemaker: Courts recognize that keeping a home and raising children is challenging and that homemaking services often enable the spouse to work outside the home to earn more money. Thus, homemaking services may weigh in favor of the homemaker;
• Waste and Dissipation: If one spouse wasted money during the marriage, it could count against him or her when the court divides the property. Examples include excessive spending and money spent on an addiction;
• Fault: Some states will take into consideration fault, as in the case of spousal abuse or marital infidelity, but most do not consider such things when it comes to property division;
• Duration of Marriage: A longer marriage may weigh in favor of a larger property award to the spouse with less wealth or earning power; and
• Age and Health of the Parties: If one spouse is in poor health or is much older than the other, the court may award a larger amount to the sicker or older spouse.

Marital or community property usually consists of property and income acquired during the marriage. Wages earned during the marriage generally would be considered marital property, as would a home or furniture purchased during the marriage with marital earnings or assets. It is important to research the local laws to understand how the states divide marital property.

A few states, such as California, take a rather simple approach. For instance, they believe that property should be divided equally. In these states, the net value of all marital property and debts will be divided 50/50, unless a premarital agreement states otherwise.

However, most states apply a concept known as equitable distribution. Equitable distribution does not mean equal distribution. This implies that the court will divide marital property in a way that it thinks is fair. The division of property may be 50/50, 60/40, 70/30, or whatever the court deems fair. In some situations, one spouse may even receive all of the property, with nothing awarded to the other, though such situations are
rare.

In cases in which a court is applying equitable distribution, the court will examine a variety of factors and will not necessarily weigh all of them equally. This provides the judge with more leeway and allows more consideration of the financial situation of both spouses after the divorce. However, it also makes the division of property less predictable.

When Do I Need to Contact a Marital Property Lawyer?

If you are contemplating divorce, division of property will arise as an issue. Therefore, if you need to learn more about the marital property it is recommended you contact a local family law attorney to assist you with the process.

A family law attorney in your area can assist you with marital property issues and can provide legal advice and guidance for your case. They can also keep you informed of any changes in family laws that might affect the outcome of your claim.