Equitable property division rules can make divorce proceedings feel unpredictable. The goal of equitable property division proceedings is to ensure a fair divorce outcome. The need to interpret unique family circumstances when dividing property can leave people unsure of what to expect. Unless they have a prenuptial agreement in place, spouses have very little set in stone regarding the outcome of property division proceedings.
Any marital assets or debts could be subject to division. However, each spouse can theoretically retain their separate property. Separate assets can help people rebuild after divorce. Do ownership records for physical property and financial accounts determine what is separate and what is marital?
Technical ownership isn’t the deciding factor
Many people in the initial stages of preparing for divorce vastly overestimate what resources they can protect as separate property. Quite a few people assume that financial accounts held in their names and assets titled in their names, such as the vehicles they drive, are separate property for the purposes of asset distribution during a divorce.
What they fail to consider is that they likely used marital property to acquire those assets or fund those accounts. Many people add to accounts in their own names using marital income or purchase assets they claim to own solely with money earned during the marriage.
When establishing what is separate or marital for the purposes of a divorce, the nature of the funds used to acquire the property is a key consideration. Most of the time, all income earned during marriage is marital, and therefore, any property acquired with that income is also marital.
Contributions to savings accounts and retirement funds during marriage are typically marital property, even though only one spouse has their name on the account. Even a bank account opened due to an imminent divorce filing and funded with one spouse’s income is typically marital property. Spouses must ensure that they disclose all of their separate and marital property accurately, as the failure to do so could cause complications during property division proceedings.
Learning more about equitable property division can help people preserve resources and negotiate more effectively as they prepare for divorce. Much of what people initially believe may be separate property could actually be marital property that they have to address in the event of divorce.