Yours, Mine, And Ours: Understanding Marital Property
For those about to undergo a divorce, the term marital property will likely come up often. This term is often misunderstood because what most people consider the property of the marriage is different than the legal definition of marital property. For your own situation, what you and your spouse own or don't own depends on several factors. Read on for a better understanding of this confusing issue.
What Sort of Property Is Marital Property?
Marital property is anything the couple owns, and it can encompass real estate, vehicles, boats, furs, jewelry, artwork, and pets. If the couple began owning the property after the date of the marriage, it's considered marital property. Exempt from marital property, however, are:
- Property owned prior to marriage.
- Property given as a gift to one spouse only (but not if the gift is from spouse to spouse).
- Property that is inherited.
Marital Property Varies By State
Each state deals with marital laws using two different models:
1. Community property states (there are only nine at this writing) view property as belonging to each member of the couple jointly. In other words, the marital community owns all qualifying property equally. For example, Jane buys a BMW sedan for herself. She titles the car in her name, pays the monthly payment using her own money and John, her spouse, never drives the car. The car is community property. It is owned equally by both parties no matter who bought it, whose money was used to buy it, and who used it the most. In a divorce, the car must either be sold and the proceeds divided or traded for other property of equal value. For example, if the BMW is worth about $40,000 at the time of the divorce and Jane wants to keep it, she might offer to give John $20,000 cash in return for keeping the car.
2. Equitable distribution states make up the majority of states when dealing with divorce. In contrast to community property rules, equitable distribution tries to use a more fair approach to dividing marital property. When left up to a judge to decide, a number of factors are used, including:
- Who bought the property.
- Whose money was used to primarily pay for the property.
- The total amount of property in dispute.
- Whether or not the spouse who earned less income during the marriage contributed to the ability of the other spouse to be educated and build a career.
- The health, ages, and education of each spouse.
- The presence or potential for spousal support (alimony)
- and more.
Speak to your divorce attorney to learn more.