What Is Considered Separate Property?
Separate property is property (assets) that is not divided, and remains the sole property of the owner-spouse after marital assets are divided.
There are five types of separate property:
(1) property owned prior to the marriage;
(2) property acquired by inheritance;
(3) property received by gift from a third party;
(4) property received as an award for personal injuries, and
(5) property acquired after the date of commencement of the divorce action or execution of a Separation Agreement.
As a practical matter, separate property does not exist unless it is proved by the owner-spouse. It is not enough to testify at trial how certain property was acquired. There must be documentary proof of the origin of the property from a separate property source to establish a separate property claim. Because the existence of separate property depends upon the ability to prove its existence with documents, there are many cases in which an asset that likely came from a separate property source is nonetheless deemed marital property and shared with the other spouse.
It is not uncommon for separate property claims to fail since there are many ways that an asset received from a separate property source can lose its separate identity during the marriage. The term “comingling” refers to a separate property asset, usually a bank account, becoming a marital asset because the separate asset has been infused with marital funds to the point that the original separate property asset can no longer be identified. For example, a checking account with $50,000 that existed on the date of marriage in the sole name of the one of the spouses could lose its separate property character over time if that spouse paid bills from the account and deposited his/her weekly paycheck into the account.
Separate property can also become marital property if the form of title is changed to joint ownership. Called transmutation, separate property is lost when the other spouse’s name is put on title. This happens when a house or other real property is conveyed from one spouse’s name into joint tenancy. In most cases, the value of the contribution can still be retained by the gifting spouse, provided that he/she proves the value of the house at the time of transfer.
There are many intricacies to separate property claims which an experienced divorce attorney can identify and advise you about. Whether you are claiming or defending a separate property claim, well-informed planning is essential.