Division of assets and debts in a divorce is usually a central issue for any couple. Any property acquired by the parties before the marriage is typically separate property while anything acquired during the marriage is marital property (also referred to as “community property”) with a few exceptions.
For example, property received by devise typically is not marital property. This means that if one spouse receives real property, money, or personal property through inheritance—whether by a last will and testament, life insurance proceeds, etc.– those assets are not part of the marital estate. However, as with any separate property, these assets can become marital property.
For instance, if your spouse inherits a sum of money and then deposits that money into a joint account—thus “commingling” funds from the inheritance and the marital community (pay checks, etc.)–the nature of the inherited funds could, over a short or long period, “convert” from separate property to community property.
Similarly, gifts from a person outside the marriage also are typically separate property. For example, if your spouse receives an expensive watch from a family member for his/her birthday, then in all likelihood that watch is separate property, and its value will not be included in the marital estate. This should not be confused with gifts given between spouses. These gifts may be community property and their value considered in the marital estate.
Some awards from certain lawsuits may also be separate property. If one spouse receives a settlement or court judgment in a personal injury suit for pain and suffering, that award (or part of that award) might be considered separate property. This is true even if the incident that lead to the lawsuit and the lawsuit itself happened during the marriage. If the funds from the personal injury award are commingled with marital funds, though, it may become community property. If the settlement was to compensate for property damage, the settlement funds generally will be community property. This is because the property itself would have been community property.
As noted above, even if a particular asset starts out as separate property, the way the parties treat the asset during marriage will help determine whether that asset remains separate property.
Adding further complication to the “separate v. community property” analysis is whether the spouses had a “committed intimate relationship” prior to getting married. If they did, then it is quite possible that much of what otherwise would be considered separate property will be viewed as community property.
We have vast experience with all aspects of property, including but not limited to the following: 1) ensuring that your separate property remains your separate property; 2) determining whether an asset or debt is separate or community property (or partially separate and partially community); 3) determining the value of the asset or debt, including–for property that is partially separate and partially community in nature–the value of each component; and 4) determining the extent to which your spouse and you had a committed intimate relationship prior to marriage. Call us today at (253) 272-9459 to discuss your divorce.