Marital Property Versus Non-Marital Property

by Obermayer Rebmann Maxwell & Hippel LLP
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Absent a prenuptial agreement, the definition of marital property is an item acquired by either spouse during the course of the marriage. Therefore, any property that was purchased and/or owned by a spouse prior to the parties’ date of marriage would constitute pre-marital property and any property that was purchased after the parties’ date of separation would constitute post-separation property.  Both pre-marital and post-separation property are considered non-marital property and are not subject to equitable distribution in a divorce proceeding.

Please note that the timing of the purchase is what denotes whether the property will be viewed as marital or non-marital, not who purchased it or in whose name it is titled. However, as with every rule, there are exceptions.  Here are a few:

  1. Gifts:  If one spouse provides his/her spouse with a diamond tennis bracelet at Christmas, that bracelet becomes part of the marital estate and is subject to equitable distribution in a divorce proceeding, regardless of the fact that it was given as a gift.  Conversely, if a spouse receives the same diamond tennis bracelet from a third party, for example a parent or grandparent, that same gift, solely by the virtue of it being transferred to a spouse from a third party, transforms the bracelet into non-marital property and is not subject to equitable distribution.
  2. Inheritances:  If one spouse receives an inheritance, for example the family farmhouse and surrounding acreage from a parent, that inheritance is considered non-marital property and is not subject to equitable distribution.  This remains true for so long as the inheriting spouse maintains the land in his/her sole name.  Once the inheriting spouse adds the other spouse’s name to the inherited property’s deed, the exception is lost and the real property would be considered a “gift” to the marriage and becomes subject to equitable distribution.
  3. Social Security Benefits:  Social security benefits are not considered a marital asset and are never subject to equitable distribution.

Just to make the exception rule for gifts and inheritances a bit more complex, if an increase in value occurs on the gifted item or the inherited property from the date it was received until the date of the parties’ separation/divorce, that increase in value is marital property and subject to equitable distribution in a divorce proceeding.  For example, if the diamond tennis bracelet was purchased as a gift for Wife by her mother at a cost of $8,000.00, but at the time of the parties’ separation it appraised for $10,000.00, the $2,000.00 increase in value would be considered part of the marital estate, while the bracelet itself would remain Wife’s personal property.

As many exceptions, and exceptions to exceptions, exist when determining what is marital property be sure to consult with an attorney before entering into any settlement negotiations or signing any Marital Settlement Agreements.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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