Last Updated May 13, 2022
Many questions exist when you decide to divorce. One that is important to understand is whether you can keep your nonmarital property when you divorce. Nonmarital property includes property acquired before a marriage and a few other categories such as gifts or inheritance. The rules that decide whether property is a person’s sole property (nonmarital) or joint (marital) property are pretty complex and getting a divorce consultation is usually the best way to ensure your rights to property are safeguarded. First, you need to know what nonmarital property is and what makes it not subject to division.
Marital Property vs. Nonmarital Property
The first thing to understand is whether the property you are thinking about is marital or nonmarital. Now, not all states deal with property the same way. There are a handful of states that call different types of property “community property” – those rules are different and only in a handful of states. The majority of the states follow an equitable division of property method of dividing property during a divorce. And each state follows slightly different ways of categorizing marital vs. nonmarital property.
Marital property is generically defined as all property or assets acquired during the marriage. Acquired is the key word here. For example, if you were hurt in a car accident before you got married and filed a lawsuit that settled during the marriage, that money likely would NOT be marital property because the right to get that money (the car accident) happened before the marriage. Other normal things that count as marital property are anything purchased during the marriage with money earned during the marriage. So, if someone takes their paycheck bonus on Friday, cashes it and buys a used car on Saturday, the car is marital property because the income was marital property.
Nonmarital property is property that is acquired either before the marriage or through a few special circumstances. So, if someone bought a house before the marriage (cash) the house would be nonmarital property. However, if a person only put a down payment down, made a year of payments, and then paid the rest off during a 15-year marriage, that house is very likely marital property because the vast majority of the house was paid off with marital property (income earned during the marriage). Other things can be nonmarital property as well – such as an inheritance (so long as kept in a separate account) or a gift (like a gift from a parent).
Summary – Marital vs. Nonmarital Property
The basic thing to remember is this: if the money used to buy something (car, house, stock, crypto, collectibles, etc.) was earned during the marriage, the property purchased is marital. If the money used to purchase something was earned before the marriage or purchased before the marriage, it is likely nonmarital property.
How Do I Keep My Nonmarital Property?
In certain cases, property considered nonmarital can become joint (marital) property. For example, a business that was started by one party prior to the marriage but sustained by income earned by both parties during the marriage is considered commingled property and must be divided during a divorce. Items purchased or maintained with a combination of nonmarital and marital assets are usually considered marital property in divorce.
An increase in the value of nonmarital property could be considered marital, entitling each spouse to a share of the increase upon divorce. This is particularly true when a conscious effort causes the appreciation in value. For example, painting an inherited property or taking an active role in managing a separate stock portfolio that results in the asset being worth more money might convert the nonmarital property to marital.
To keep your nonmarital property yours, you need to avoid mixing it with marital property and you need to avoid changing the title of nonmarital property (such as putting your spouse on the deed or joint owner of a bank account).
Should I Keep My Nonmarital Property Separate?
Keeping nonmarital property separate requires effort on the part of the party who owns it. Titles and deeds should not be issued in the names of both spouses if one party purchased the item with only his or her nonmarital assets. If one spouse used nonmarital funds to purchase a home and the couple lived in it together but had no children, the purchasing spouse is entitled to retain the property and legally require the other party to vacate following a divorce.
To prevent disputes over property division in divorce, a couple can enter a premarital or prenuptial agreement before getting married. This stipulates which property is nonmarital and not subject to division upon divorce. Premarital agreements can be tricky and need to be drafted by an experienced attorney. Should a premarital agreement attempt to keep property nonmarital incorrectly, it is possible the entire premarital agreement could be thrown out in the event of a divorce.
Keep Track of Nonmarital Property
Accurate recordkeeping can substantiate the separate nature of property considered nonmarital and is particularly useful with money received as a gift or inheritance. Nonmarital property should be kept separate throughout the marriage if the owning spouse wishes to retain all of it upon divorce.
To retain the entire value of nonmarital funds during a divorce, do not use premarital money to repay marital debt or to open a joint bank account. Also, do not deposit income earned during a marriage into a nonmarital bank account – this mixes (commingles) marital funds with nonmarital funds and can cause confusion – and confusion is where a judge just says that it is all marital. Do not assume that property or a business owned prior to a marriage will remain a nonmarital asset. Talk to a divorce attorney to get the correct information and proceed as recommended during your consultation.