Marital Property

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Any property that is acquired during the period a couple is married is considered marital property, belonging to both spouses equally, regardless of which spouse paid for it, or how it is titled. This may include such things as houses, furniture, appliances, and other types of personal or real property. Financial assets and debts acquired during the period of the marriage are also considered to be joint, each spouse benefiting from, or being responsible for, such things as bank accounts, stocks, bonds, mortgages, and loans.

The issue of who owns what does not usually come up during the marriage, but when a couple separates, determining how marital property will be divided often causes conflict that hinders the divorce process. The marital property laws in each state specify how marital assets are to be distributed during a divorce. To explore this concept, consider the following marital property definition.

Definition of Marital Property

Noun

  1. All property and financial assets acquired by a couple during their marriage, regardless of how it is titled.

Non-Marital Property

Non-marital property, also referred to as “separate property,” is property that belonged to one spouse before the marriage. Other property that is not considered marital is property is anything gifted to one spouse, and property inherited by a spouse. In the event a couple divorces, a spouse may claim certain items as separate property, but it may be necessary to prove that he or she owned it prior to the marriage, or that it was clearly a gift or inheritance.

Methods of Property Distribution

The way marital property is distributed in a divorce is specified by each state’s marital property laws. These laws specify how property is to be categorized, whether joint or separate, and whether division of marital property is to be made equally or equitably.

Equitable Property Distribution States

The “equitable distribution” of marital assets does not necessarily mean an equal division. In equitable property distribution jurisdictions, the judge divides the marital property in a manner he or she deems to be fair. This is done by taking into consideration such issues as the length of the marriage, the future earning potential of each spouse, who was at fault for the divorce, and whether one spouse will be the primary caretaker of the couple’s children.

If Belinda filed for a divorce as a result of being abused by her husband, John, and the children will remain with Belinda full time, the judge may see fit to award her a larger percentage of the total property and assets. If John earns substantially more than Belinda, and his future employment prospects are greater, the judge may consider awarding her an even higher percentage of property. This type of equitable property distribution is seen as fair, if not equal.

Community Property States

Some states, such as California, observe community property laws, which means that the marital property, financial assets, and debt are divided equally during a divorce, without consideration for who may have been at fault. To attain an equal division, the current value of all marital assets is determined, then divided in half. Each party is then assigned certain items to total their half of the marital estate.

For example, if Bob and Mary file for divorce in a community property state, the court may grant Mary the couple’s house, which is currently valued at $130,000, and grant Bob the couple’s savings and stocks, which currently hold a total value of $130,000. The couple’s furnishings, yard equipment, automobiles, kitchen equipment, and other belongings will be assigned a “yard sale” value, which is also divided in half. As with any other divorce, any assets owned by one spouse prior to the marriage remain that spouse’s sole and separate property, rather than community property.

Exclusive Use and Possession

When a couple files for divorce, the parties do not simply get to keep whatever marital property they are in physical possession of at the time the documents are filed in court. Such a policy would create an unfair advantage for a spouse planning and filing for divorce. During the divorce proceedings, it may be necessary for the court to determine which spouse gets to remain in the family home, drive one or more of the family vehicles, or use certain other marital property.

When the parties cannot reach a marital property agreement, either or both may request that the court grant them sole and exclusive use and possession of certain marital property. Such an order is temporary, made to ensure both spouses, as well as any children, are provided for until the divorce and division of marital property can be finalized. For example, a mother who continues to be the primary care provider for the children may be awarded exclusive use and possession of the home, while the father, who commutes to work, may be awarded exclusive use and possession of the family’s newest, most gas-friendly vehicle.

While an award of exclusive use and possession of certain marital property, it does not give that spouse the right to sell or otherwise dispose of the property. For example, should Mark be awarded exclusive and possession of the couple’s Ford F-250 pickup truck, he could not sell the truck and pocket the money without being subject to serious repercussions handed down by the court. By the same token, should Mark be awarded exclusive use and possession of the home, his estranged wife could not come and go from the home as she pleases.

Prenuptial Agreement

A prenuptial agreement is a contract made between two people before they legalize their marriage. The contract is made in order to protect each spouse’s property rights in the event that the marriage dissolves. This type of marital property agreement, often referred to as a “prenup,” details who will retain what property or assets in the event of a divorce, as well as what support obligations will apply. A prenuptial agreement is often used to protect the assets of an individual who is significantly more wealthy than the person he or she intends to marry. There are, however, many other reasons an individual may ask a significant other to sign a prenuptial agreement, including:

  • Ensuring children from a previous marriage are granted specific property or assets if the individual dies. Without a prenuptial agreement, the surviving spouse may have a greater entitlement than the children.
  • Avoiding conflict in the event of a divorce by specifying before the marriage how the property, assets, and debt will be divided upon dissolution.
  • Protecting the individual from the other party’s debts.

Validity of a Prenuptial Agreement

Traditionally, prenuptial agreements were highly scrutinized by the courts, as the idea alone could cause hardship in a marriage. However, as divorce become more commonplace in the United States, prenuptial agreements became widely accepted in all states. There are, however, certain elements that must be included in order for the validity of a prenuptial agreement to hold up in court. These may vary by jurisdictions.

Landmark Cases

Since division of marital property in divorce has been the source of much conflict for many years, it comes as no surprise that the courts have seen their fair share of cases concerning marital property. Some of these cases have even set precedents concerning future classification and division of marital and non-marital property.

Gifted Money – Bloomfield v Bloomfield

In 2007, the Georgia Supreme Court heard the case of Bloomfield v Bloomfield, which involved a gift of $10,000 to the wife by her father. The husband claimed that, because the money was placed into a joint bank account, it became joint marital property. The wife argued that, at the time the gift was made, the husband would not allow her to open or hold a separate bank account, and she had no other account in which to place the funds. The trial court ruled that the gifted money, even though placed into a join bank account, was not considered marital property, and awarded full ownership of it to the wife.

Non-Marital Property – Eggemeyer v Eggemeyer

In the 1970s, Virginia and Homer Eggemeyer divorced. The trial court awarded custody of the couple’s four children to Virginia, and ordered Homer to pay $100 per child, per month, as child support. The court also awarded the family’s farm, which was subject to two separate liens amounting to approximately $26,000, to Virginia. However, Homer owned a one-third interest in the farm, which was gifted to him by his grandmother. Homer appealed this decision, claiming this separate property could not be divided as marital property.

The appeals court acknowledged that the law allows rents, revenues, and income from a spouse’s separate property to be set aside or ordered to be used for support of minor children. The trial court did not do this, however, but stripped Homer of his title to the property. This effectively denied the husband, not only of any income generated by the property until the children reached the age of majority, but of his interests in the property permanently. The case was sent back to the trial court to consider an arrangement that would ensure Homer Eggemeyer provided support for the minor children without taking title of his separate, non-marital property.

Related Legal Terms and Issues

  • Asset – Any valuable thing or property owned by a person or entity, regarded as being of value.
  • 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.
  • Jurisdiction – The legal authority to hear legal cases and make judgments; the geographical region of authority to enforce justice.
  • Real Property – Land and property attached or fixed directly to the land, including buildings and structures.