A concern for anyone going through a separation or divorce is how the property, bank accounts, and other assets you have will be divided when you separate. The first step in the process is figuring out whether the property you have is marital property or separate property.
Marital property usually includes the assets and debts you acquire during your marriage — It does not matter how something is titled.
If it accumulated during your marriage, it is marital property.
If it is a debt that accumulated during the marriage, it will be considered marital debt. An example of marital property that surprises many people is a retirement account that is separately titled. The portion of the retirement funds that accumulated during the marriage will be considered marital property. How the account is titled does not matter as long as the funds were acquired during the marriage.
Property is separate if one of you owned it prior to your marriage or you inherited it during your marriage.
Funds received as a gift during the marriage may also be considered separate property. However, separate property can lose its separate nature if it is co-mingled with marital property.
A common example of this is when one person owns a house or a condo prior to their marriage and then adds their husband or wife to the deed after marriage.
Another example is when one person receives money as a gift or inheritance during the marriage but deposits the money into a joint account. In these situations, the separate property may be treated as marital property when you divorce.
The next step is determining who should receive which assets.
Sometimes one person may receive the house or condo and the other receives cash or stocks in exchange. Sometimes the house is sold and the proceeds of the sale are divided along with the savings and retirement accounts.
There are many ways to divide your assets and debts when you separate. If you can settle these issues, a Separation and Property Settlement Agreement will be prepared that documents exactly who will receive which property and who will be responsible for which debt.
This area of the law is complex. To protect yourself, it is best to discuss this with a divorce attorney so you know what your rights and obligations are concerning your property.