Non-Marital Property

by:

Non-marital property is any real or personal property that was owned by either spouse before the marriage. During a divorce, non-marital property is often referred to as “separate property,” and is not subject to distribution between the spouses, but remains the sole property of the spouse who owned it prior to the marriage. There are other instances in which property may be deemed non-marital property, these circumstances varying by state. To explore this concept, consider the following non-marital property definition.

Definition of Non-Marital Property

Noun

  1. Any property not included in the marital estate and not subject to division by a court upon dissolution of the marriage.

Types of Property

When two people marry, they begin acquiring property jointly, and there may be property brought into the marriage that was owned by one spouse or the other before the relationship occurred. If the couple decides to divorce, the issue of dividing up the property, assets, and debts becomes an issue that is not always cut and dry. Most marriages contain both marital and non-marital property. Whether the marital property is divided equally, or distributed “equitably,” varies by state.

The court becomes involved in distribution of marital assets only if the couple cannot reach an agreement on their own. In this case, the parties are each required to provide the court with a list of property owned by the couple, as well as their financial assets and debts. They also list non-marital property. The parties assign a value to each item of marital personal and real property, and detail the value of financial assets and debts. A hearing will be held in which the judge will determine which items are indeed non-marital property, and how the marital property is to be distributed.

Community Property States

Some states use community property laws rather than a system of equitable distribution. In community property states, the law specifies that any property or assets acquired during the marriage are subject to equal distribution during a divorce. This means that all of the marital assets and debts are to be divided 50/50 between the parties. Because it is impossible to actually divide everything in half, each party is awarded 50 percent of the total monetary value of the assets. For example, if Rob and Jenny divorce in Idaho, a community property state. The court may grant Jenny the house, valued at $120,000, and grant Rob the joint savings account, which contains $119,987. The rest of the property will be distributed similarly.

Equitable Distribution

In states that use an equitable distribution system, property is divided according to what the court deems to be fair. This does not always constitute awarding each spouse 50 percent of the property and assets, but what a judge believes is fair after considering many things such as:

  • The length of the marriage
  • The earning potential of each spouse
  • Who was at fault for the divorce
  • If children are involved, who will have custody
  • The age and physical condition of each spouse
  • The total value of marital property involved

For example, if Jenny files for divorce after 8 years because Rob is physically abusive, and Rob has a considerably larger income, the judge may award Jenny 60 percent of the total marital property and assets, in addition to awarding spousal support to be paid by Rob. Such an equitable distribution may be what the judge determines is fair.

On the other hand, if Jenny files for divorce after 8 years simply because the couple cannot get along, and the parties’ incomes are substantially the same, the judge may distribute the marital assets as close to 50/50 as possible.

Marital Property vs. Non-Marital Property

Marital property is real or personal property that the couple acquires during the course of their marriage regardless of who paid for it, or in whose name the title is held. This can include many things such as appliances, furniture, vehicles, art, jewelry, and houses. It also includes bank accounts, savings accounts, stocks, and bonds if the couple uses them in a joint manner. In many states, even a spouse’s pension is marital property, though only that portion gained during the marriage is subject to division.

If some item is acquired during the marriage that one spouse wants to ensure is counted as non-marital property, the couple must have a contract drawn up stating that fact. Marital property is subject to the debts of both parties. For example, if the couple purchased their home after the marriage, but the husband is subject to a tax obligation from before the marriage, a lien may be put on the couple’s house. This is a complex issue for which legal advice of an experienced attorney should be sought.

Though the term non-marital property often refers to any personal or real property owned prior to, and brought into the marriage, it can also refer to things such as inheritances and gifts made to only one spouse. In most states, property obtained by one spouse after a legal separation is considered non-marital property, even if divorce has not been filed. However, each state has specific laws and, upon divorce, the spouse claiming an item as non-marital property may be required to show proof of such ownership. Non-marital property is also protected from the other spouse’s debt.

Both Marital and Non-Marital Property

Sometimes, an item can be both marital and non-marital property. For example, the couple’s home was owned by one spouse before the marriage, and so is considered non-marital property. However, if both parties use their incomes to pay the mortgage after they marry, that portion of the home’s value becomes a marital asset. Similar to the issue of the tax lien above, dealing with an asset that is both marital and non-marital property is complex.

Inheritance as Non-Marital Property

Most commonly, any asset acquired by a spouse as an inheritance is considered non-marital property. An inheritance may become marital property in certain situations, however, including:

  1. The asset is used to support the marriage – a such as a rental property from which the income pays the couple’s bills
  2. The asset is used in a manner that shows the couple intended it to be marital property – such as a vehicle that is used daily as the family car
  3. The asset becomes commingled – such as a cash inheritance that is placed into the couple’s joint bank account, and used to support the couple

For example, Jim received a $10,000 inheritance from his parents three years after his marriage to Mary. The couple used most of the money to landscape their back yard, adding a hot tub. By using the inheritance on the marital home, the court can determine that Jim intended to commingle the inheritance.

Gifts and Non-Marital Property

In most jurisdictions, an asset gifted to one spouse by someone other than the other spouse is considered non-marital property. Gifts that may remain non-marital property might include such items as jewelry, clothing, cash, a car, and just about anything else, however the spouse claiming a gift as non-marital property is likely to be required to prove the fact in court.

In the 2007 case of Bloomfield v Bloomfield, the Georgia Supreme Court ruled on the subject of gifts as non-marital property. In this case, the wife had been gifted a sum of money by her father while the couple was married. Because her husband would not allow her to have a separate bank account, the money was placed into a joint checking account. When the couple filed for divorce, the husband claimed the money was a marital asset. His reasoning was that, by placing the money into the couple’s joint account, it became commingled. The Court disagreed, ruling that, because the prevented the wife from having her own account, she had no choice but to put it into the joint account, and the money therefore remained non-marital property.

Protecting Non-Marital Property

One way of protecting non-marital property is with the use of a prenuptial agreement. Such an agreement is drawn up before the marriage, spelling out the property rights of each spouse, how property is to be distributed, and the parties’ rights to financial support in the event of divorce. Prenuptial agreements are legally binding contracts enforceable in court.

Prenuptial agreements are commonly used to protect the non-marital property of one spouse who is significantly wealthier than the other. Such agreements may also be used to ensure children from another marriage are awarded family property or specific assets if the parent spouse dies, and to protect a spouse from the other spouse’s debt.

Prenuptial agreements were not always an accepted method of protecting non-marital property in the U.S. As divorce rates soared, however, most states began accepting them. Each state has specific statutes outlining what can, and what cannot, be included in a prenuptial agreement. In order to ensure a prenuptial agreement is valid and enforceable, the parties should ensure it adheres to the laws of their state.

Exclusive Use and Possession

Along with the concept of marital and non-marital property, courts in some jurisdictions use the term “family use personal property” to refer to any property used for the good of the family. Commonly, this includes household furnishings, the family car, and even the family home. Regardless of who paid for such property, and regardless of whose name appears on the title, the court has the authority to grant exclusive use and possession of it to one spouse or the other. An order for exclusive use and possession is a temporary order, which may in effect anywhere from 30 days to 5 years, the term specifically stated in the court order.

For example, John and Paula have filed for divorce, and Paula granted temporary custody of the couple’s two children. There is a great deal of conflict over the divorce, and the couple cannot communicate directly or agree on anything. Because she is caring for the children, Paula requests that the court grant her exclusive use and possession of the family home, and the family van for three years. The judge agrees to grant Paula’s request, and even though John’s name is on both titles, he cannot take or use either property.

After the three-year term, both items will be distributed, or divided, between the parties according to the laws of their state. Exclusive use and possession of the family home is usually intended to ensure the spouse and children have privacy and normalcy during an otherwise difficult time.

Related Legal Terms and Issues

  • Asset – Any valuable thing or property owned by a person or entity, regarded as being of value.
  • Authority – The right or power to make decisions, to give orders, or to control something or someone.
  • Commingle – To blend funds or property.
  • Contract – An agreement between two or more parties in which a promise is made to do or provide something in return for a valuable benefit.
  • Custody – The protective care of something, or someone.
  • Divorce – The legal termination of a marriage.
  • Hearing – A proceeding before the court at which an issue of fact or law is heard, evidence presented, and a decision made.
  • Jurisdiction – The legal authority to hear legal cases and make judgments; the geographical region of authority to enforce justice.
  • Personal Property – Any item that is moveable and not fixed to real property.
  • Real Property – Land and property attached or fixed directly to the land, including buildings and structures.