Nolo's Essential Guide to Divorce - Emily Doskow [101]
What Do You Owe?
You also need to inventory everything that you owe to any person, business, or other entity. Again, make a note on your list next to any obligation that you believe may be solely your responsibility or solely your spouse's. If you're not sure, and the information below doesn't help you, you may need to ask an attorney to help you figure out whether certain things are joint or separate.
What Property Gets Divided
When you get divorced, everything you own or owe falls into one of two categories: marital property or separate property.
In a few states, both kinds of property are subject to division at divorce. These states are sometimes known as "kitchen sink" or "allproperty" states. They're listed below.
In most states, however, only marital property is divided at divorce. You get to keep your separate property. For this reason, what is marital and what is separate can become a contentious issue.
Kitchen Sink States
All property owned by either spouse is subject to division at divorce in these states:
Marital Property
Generally, marital property is everything that either of you earned or acquired during your marriage. So, for example, money you earned at work, put in your own checking account, and used to pay household bills is marital property when you get divorced. So is the car you bought and made payments on from that account.
There are some important exceptions to that rule-for example, money that only one of you inherited is not marital property. These exceptions are discussed in "Separate Property," below.
Sometimes separate property is turned into marital property by how you treat it. In some states, the only way property can be changed from separate to marital is if the spouses agree in writing. But in other states, there may be room for argument if one of you:
• placed property that was originally separate into both spouses' names
• placed property that was originally separate into accounts that already included marital property (this is called commingling), or
• devoted significant amounts of time to increasing the value of the property or asset, as opposed to simply allowing it to appreciate as a passive asset. For example, if you own a brokerage account that's your separate property and you spend lots of time buying and selling stocks, your spouse might acquire some interest in the asset because your time is basically considered a marital asset itself. However, your spouse's interest will be only in the appreciation during your marriage-your efforts don't turn the entire asset into marital property. And "routine" attention to investments doesn't count.
In community property states, the terms "marital property" and "community property" are interchangeable.
Separate Property
Separate property belongs only to you or only to your spouse. There are some differences in how separate property is defined in different states, but the same general rules apply. The most common forms of separate property are:
• property one spouse owned before the marriage
• gifts received by one spouse before or during the marriage
• property acquired during the marriage in one spouse's name and never used for the benefit of the other spouse or the marriage
• inheritances received by one spouse before or during the marriage
• property that the spouses agree in writing is separate
• property acquired by one spouse using separate property assets with the intention of keeping it separate, and
• some personal injury awards (in general, the portion of the award that repays you for lost earnings is marital property, while any award for pain and suffering is separate).
But My Mother Gave Me That!
It's often difficult to divide property that has sentimental value-especially gifts that were given to the couple, or one member of the couple, by friends or family