The laws of dividing property vary from state to state. However, most states allow parties to keep their own separate or non-marital property as a starting point. Non-marital property includes property that a spouse brought into the marriage and kept separate during the marriage. It also includes inheritances received during the marriage and kept separate during the marriage. Also, non-marital or separate property may include gifts received by just one spouse during the marriage. A few states permit the division of separate and marital property when parties divorce, but the property’s origin is considered when deciding who receives the property.
The right of a spouse to keep his or her separate or non-marital property may depend on the degree to which the property was, in fact, kept separate. For example, if a wife came into a marriage with a $20,000 money market account and wanted to keep it as non-marital property, she should keep the account in her own name and not deposit any funds earned during the marriage into the account. For instance, she should not deposit her paychecks directly into the money market account because the paychecks are marital funds and could turn the whole account into marital property. The process of changing a non-marital property into marital property and vice versa sometimes is called transmutation.
Another example: If a husband inherits some stock from his mother during the marriage and wants to keep it as non-marital property, he should open his own investment account and not use the account for any investments that he and his wife own together. If a husband or wife decides to use some non-marital funds for a common purpose, such as purchasing a home in joint tenancy, that money normally will become marital property. The courts of most states will view the non-marital property as a gift to the marriage.
Similarly, if a wife or husband takes non-marital funds and places them in a joint checking account, the funds generally will become marital property. In some states, the presumption that funds placed in a joint account are marital property can be overcome by specific proof that the spouse depositing the funds did not intend to have the funds used for a marital purpose. Nonetheless, if a husband or wife does not want non-marital property converted into marital property, it is best to keep the non-marital property separate. Always.
Property distribution laws have many intricacies and variations between states; understanding them usually requires a lawyer’s help. For example, in many states, the increase in the non-marital property value (such as an investment account or a house that is the name of only one party) would also like marital property. In some states, however, the increase in value would be marital property.
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