Many of the disputes during modern divorces are financial in nature. Spouses who end their marriages have to separate their finances, and that process is often fraught with conflict.
Equitable distribution statutes leave much to the interpretation of the people negotiating the settlement or the judge reviewing a litigated property division case. Spouses may find themselves fighting over how to value their assets or the most appropriate way to divide them.
Occasionally, spouses may even end up fighting over what assets are marital and subject to division. Some property may be separate, which means that spouses do not technically need to include those resources in the pool of marital property. What assets can people generally protect from division when they divorce?
1. Property owned before marriage
State statutes clearly identify resources owned before marriage as separate property. Provided that spouses keep those resources separate from the marital estate, they do not necessarily need to divide them when they divorce.
In fact, spouses can even retain any appreciation in value that occurred during the marriage. They can usually also retain assets they may have acquired during the marriage by liquidating their separate property and using that capital to make new purchases.
2. Gifts and inherited resources
When other people give assets to either spouse, those resources remain the separate property of the recipient spouse when they divorce. There are a few exceptions to this rule.
Gifts made from one spouse to the other may technically be part of the marital estate unless there is a written agreement stating otherwise. Additionally, if spouses commingle gifts and inheritances with the marital estate, they may leave those resources vulnerable to division when they divorce.
3. Assets protected by a contract
Marital contracts are increasingly common. Many couples now begin their marriages with prenuptial agreements.
Already-married couples may negotiate postnuptial agreements when their financial circumstances change or they notice a shift in their marital relationships. The assets specifically designated as separate in prenuptial or postnuptial agreements typically are not at risk of division when spouses divorce.
Identifying separate property is an important component of the property division process when people divorce. Separate assets can serve as the foundation for rebuilding financially after a divorce.