When a marriage comes to an end, one of the most difficult issues that must be addressed is the division of marital property. This process can be complicated and emotional, as both parties may have strong feelings about who gets what.
In this article, we’ll take a closer look at matrimonial assets in a divorce and answer the question: Who gets what?
What is Marital Property?
A matrimonial asset is any property, including all assets and debts that were acquired by either spouse during the marriage.
Examples of Marital Property
What is considered marital property? The specific laws regarding what constitutes matrimonial assets can vary by jurisdiction, but in general, any property or assets that were acquired by either spouse during the marriage are considered matrimonial assets. Here are some examples of matrimonial assets:
- Real estate, such as the family home
- Vehicles, including cars, boats, and motorcycles
- Bank accounts, investments, and retirement accounts
- Personal property, such as furniture, electronics, and jewelry
Marital property does not include any property that was acquired before the marriage or after the date of separation. Additionally, any property that was inherited or received as a gift from a third party is generally considered separate property and is not subject to division.
Marital Property Laws
Marital property laws vary by state, but most states follow either a community property or equitable distribution system.
In community property states, all property acquired during the marriage is considered equally owned by both spouses. This means that property is divided equally between spouses in a divorce.
In equitable distribution states, the property is divided in a way that is fair and just, but not necessarily equal. Factors such as each spouse’s income, the length of the marriage, and each spouse’s contributions to the marriage are taken into consideration when dividing property.
How is Marital Property Divided?
When it comes to dividing marital property in a divorce, there are two main approaches: equitable distribution and community property.
1. Equitable Distribution
Equitable distribution is the most common approach in the United States. Under this approach, marital property is divided fairly, but not necessarily equally. The court will take a variety of factors into account when making decisions about how to divide assets, including:
- The length of the marriage
- The age and health of each spouse
- The income and earning potential of each spouse
- The contributions each spouse made to the marriage
- The standard of living during the marriage
In some cases, a prenuptial agreement may dictate how property is divided.
Equitable Distribution States
The following states in the United States practice equitable distribution as a method of dividing marital property in a divorce:
- New York
- New Jersey
- West Virginia
- North Carolina
- South Carolina
- North Dakota
- South Dakota
- New Mexico
2. Community Property Distribution
Community property is a less common approach, but it is used in some states. Under community property laws, all property acquired during the marriage is considered equally owned by both spouses. In other words, each spouse is entitled to 50% of all marital property.
Community Property States
The following states in the United States are community property states, where marital property is generally divided equally in a divorce:
- New Mexico
Note that some community property states allow for deviations from an equal division of property under certain circumstances, and laws can vary by jurisdiction, so it is important to consult with a qualified attorney for guidance in your specific situation.
Factors That Affect The Division
As we mentioned earlier, there are a variety of factors that can affect how marital property is divided in a divorce. Some of the most common factors include:
- Length of the marriage: The longer a marriage lasts, the more likely it is that property will be divided equally.
- Age and health of each spouse: If one spouse is significantly older or in poor health, they may be entitled to a larger portion of the matrimonial assets to ensure they have financial security.
- Income and earning potential: If one spouse earns significantly more than the other or has greater earning potential, they may be entitled to a smaller portion of the marital property.
- Contributions to the marriage: The court will consider each spouse’s contributions to the marriage, including both financial contributions and non-financial contributions like childcare and homemaking.
- Standard of living: The court will also consider the standard of living established during the marriage and attempt to divide property in a way that allows both parties to maintain a similar standard of living after the divorce.
- Valuation of Property: This can be a complex process, especially for assets such as real estate or investments. Having an accurate valuation ensures that each spouse receives a fair share of the property.
- Tax Implications: The division of certain assets, such as retirement accounts or investment properties, can have significant tax implications.
- Debts and Liabilities: Marital property division also includes debts and liabilities.
- Future Needs: When dividing property, it is important to consider the future needs of both spouses. This includes their income potential, health, and any dependents they may have.
Who Decides How It’s Divided?
If you and your spouse are able to come to an agreement about how to divide marital property, you can create a divorce settlement agreement that outlines the terms of the division. However, if you are not able to agree, a judge will make the decision for you.
During the divorce process, each spouse will typically submit a list of assets they believe are matrimonial assets. The court will then review these lists and make a determination about which assets are marital property and how they should be divided.
Marital Property Agreement
A marital property agreement, also known as a prenuptial agreement or a postnuptial agreement, is a legal document that outlines how property will be divided in the event of a divorce. These agreements typically identify separate property that belongs to each spouse and specify how matrimonial assets, which is property acquired during the marriage, will be divided.
Marital property agreements can also address other issues, such as spousal support and estate planning. Such agreements are governed by state law, and it is important to consult with a qualified attorney when drafting or reviewing a matrimonial assets agreement to ensure that it is enforceable and in compliance with applicable laws.
Removing Marital Property Before a Divorce is Finalized
If one spouse tries to remove or hide marital property without the knowledge or consent of the other spouse, this may be considered a breach of their legal obligations and can result in penalties or sanctions. Once a divorce is filed, both parties are generally prohibited from transferring or disposing of matrimonial assets without the other party’s consent or court approval.
If you suspect that your spouse is attempting to remove marital property before a divorce, it is important to consult with a qualified attorney to protect your rights and ensure that your interests are properly represented.
Non-marital property, also known as separate property, refers to assets that are not subject to division in a divorce because they are considered the sole and separate property of one spouse.
Examples of non-marital property can include assets that were owned by a spouse before the marriage, gifts or inheritances received by a spouse during the marriage that was intended for that spouse alone, and certain types of property that are specifically designated as separate under state law.
Separate Property vs. Marital Property
As I mentioned earlier, not all property acquired during the marriage is considered marital property. In some cases, property may be considered separate property if it was owned by one spouse prior to the marriage or was received as a gift or inheritance during the marriage.
In general, separate property is not subject to division during a divorce. However, there are some exceptions. For example, if the separate property was commingled with marital property (e.g. a separate bank account was used to make joint purchases), it may be subject to division.
It is important to understand the laws in your state regarding the equitable distribution of community property and to consider all the factors when making decisions about property division. By working together, spouses can ensure that the property division process is fair and just for both parties.
How does separate property become marital property?
Separate property can become marital property through a process called commingling, where it is mixed with marital assets or funds. For example, if separate property funds are deposited into a joint bank account and used for marital expenses, they may be considered matrimonial assets. Additionally, if separate property is used to purchase marital assets, such as a family home, it may also be considered matrimonial assets.
When does an inheritance become marital property?
An inheritance may become marital property if it is commingled with marital assets, or if it is used to benefit the marriage. In some cases, the inheritance may also be considered a matrimonial asset if it is used to pay for marital debts or expenses. However, if the inheritance is kept separate from marital assets and is not used for the benefit of the marriage, it may remain separate property.
Is inheritance marital property?
In general, if the inheritance is kept separate from marital assets and is not used for the benefit of the marriage, it is considered separate property and will not be subject to division in a divorce. However, if the inheritance is commingled with marital assets, used to purchase marital property, or used for marital expenses, it may be considered matrimonial assets and subject to division in a divorce.
Is a house owned before marriage marital property?
If the house is kept separate from marital assets and is not used for the benefit of the marriage, it is considered separate property and will not be subject to division in a divorce. However, if the house is used for marital purposes, such as being the family home, or is commingled with marital assets, it may be considered marital property and subject to division in a divorce.
Are trusts considered marital property?
If the trust is modified during the marriage to include marital assets, or if the trust is established during the marriage using marital funds, it may be considered matrimonial assets and subject to division in a divorce.
Are life insurance proceeds marital property?
If the policy is taken out by one spouse and designates the other spouse as the sole beneficiary, the proceeds are considered separate property and will not be subject to division in a divorce. However, if the policy is taken out using marital funds, or if the policy designates both spouses or the marital estate as beneficiaries, the proceeds may be considered marital property and subject to division in a divorce.