Definition:
Marital property is the property and assets acquired by at least one spouse during the marriage, with usual exceptions for gifts and inheritance.
How does marital property work?
Marital property is simply the property that the spouses acquire together after marriage. At the same time, any assets or property that belonged to either spouse before the marriage is considered separate or individual property. Typically, any inheritance or gifts received by one of the spouses after marriage is also considered separate property.
Marital property in the United States
In the United States, there are nine states that follow community property principles for distributing marital property, which are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In other states, couples can decide whether they want to adhere to community property rules or not.
Distribution of marital property
Most states use equitable distribution to divide marital property. This means that the court tries to split the property fairly between the spouses based on certain factors or criteria, but the marital property may not be divided equally. The court considers a variety of factors, including each spouse’s income, their health status, and any contributions made during the marriage. For example, if one spouse takes on all child-rearing responsibilities or works so that the other spouse can go to school, this may affect how the marital property is divided.
Example of marital property
In New York, for example, marital property includes:
- The real estate purchased by you and your spouse during the marriage, excluding any contributions made from your separate property towards this property, such as paying part or all of the down payment using your separate property funds.
- Personal property like cars, boats, airplanes, furniture, and artwork acquired by you and your spouse during the marriage.
- Cash, securities, bank accounts, retirement accounts, and pensions obtained during the marriage.
- Advanced degrees and licenses for specialized professions obtained during the marriage.
- Gifts exchanged between spouses.
Separate property
Separate property includes real estate or personal property acquired before marriage, as well as inheritances and gifts from third parties. It also includes compensation for personal injuries unrelated to lost wages, and exchanges of property with consideration for individual property. Separate property also includes property that the spouses acknowledge as existing separately in a written agreement.
Marital property vs. separate property
If you live in a state that adheres to community property rules, it is important to understand how separate property can become community property. This can happen when separate property is commingled with community property. It can also work the other way around if community property is retitled as separate property for one spouse only.
Marital debts
For example, if your spouse had student loan debt before the marriage and asked you to co-sign a refinancing loan, you agreed on the condition that he would repay the debt himself. According to community property rules, you are legally and financially responsible for the debt. Therefore, it is possible you could be ordered to pay half the debt if you divorce your spouse because it is now considered a marital debt.
Assets in marriage
Assets in a marriage include but are not limited to your car, home, bank account, and any investments. Retirement accounts, business interests, insurance, and even intellectual property can be considered assets. Essentially, anything you own that can bring you money or has value can be considered an asset. Whether these assets are marital property depends on whether they were a gift or inheritance, whether you acquired them before or during the marriage, and whether you have an agreement with your spouse regarding who owns the property.
How to
Keeping Assets Separate in Marriage
If you want to ensure that some of your assets are kept as separate property during your marriage, you may want to obtain a prenuptial agreement or postnuptial agreement to ensure that. However, you can also keep your assets separate if you avoid commingling or converting them. For example, if you enter the marriage with your own bank account or your own house, you will want to make sure that your spouse’s name is not put on any of these assets. Otherwise, they will become marital property instead of separate assets.
Assets in Marriage and Debts
It is important to talk to a professional divorce attorney or financial advisor to help you understand the laws regarding the division of marital property in your state. They will be able to clarify the laws concerning the division of marital property and debts in your state.
Frequently Asked Questions
What assets are considered marital in marriage?
How can assets be kept separate in marriage?
Sources:
Legal Information Institute. “Marital Property.”
Internal Revenue Service. “Publication 555, Community Property.”
New York City Bar. “Divorce & Property Rights.”
HG.org Legal Resources. “Can Personal Injury Awards Become Part of Marital Property?”
Internal Revenue Service. “25.18.1 Basic Principles of Community Property Law.”
Source: https://www.thebalancemoney.com/what-is-marital-property-5207497
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