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Are Assets Split During A Separation Considered Separate Property?

July 2, 2018

Understanding the concept of a separate property before, during or after marriage intertwines with the need for martial property knowledge. You need to differentiate the two concepts to understand all the basics of separate property during separation and why the answer to this question is yes on a broad platform.

Separate Property
Separate property is what is owned by one of the spouses before, during and after marriage alone. There is no conjoined ownership. You opt to set it aside when getting into marriage by saving the cash in a separate bank account and not listing your spouse as a co-owner for any real estate or other assets. Separate property includes the following in most states:
• Personal properties owned before marriage
• Real estate property bought before marriage
• Any proceeds from selling private property or your separate real estate during the marriage
• Any property acquired through an exchange with your separate property during the marriage
• Property that you both signed on a written agreement such as a prenuptial or postnuptial to be listed as separate
• Compensation received for personal injuries, accidents or at your workplace
• An increment in the value of your separate property before, during and after marriage.

Active vs. Passive Appreciation of Separate Property
Active appreciation occurs when the other spouse contributes either directly or indirectly to an increase in the value of your separate property during marriage. For example, if your spouse offers some cash from separate property proceeds to help run the business. In such a case, the property will not be considered as separate but marital.
Passive appreciation occurs when external factors such as market forces or individual input lead to an increase in your separate property proceeds or value. In this case, the property is considered separate given that the spouse does not contribute to the increment.

Marital Property
It refers to assets acquired by both parties during marriage regardless of who paid for them. This is an exception to the valuable assets listed in a prenuptial or postnuptial as separate property. Such include real estates, businesses, a home, car, bank account or any other tangible asset that can be liquidated.

Commingling
It refers to a state where both the separate and marital properties are mixed, and there is confusion on how to distinguish the two. Sometimes spouses blend separate and marital property without knowledge of the strain it might bring during the separation process.

Example:
A spouse who had a separate property such as a car may sell it and use part of the proceeds to contribute to the purchase of their new home. According to the state law, those proceeds are considered marital property. It will be regarded as otherwise when the spouse will make it clear in a written agreement that despite the contribution, the profits are separate. Spouses are advised to try not to use proceeds from their separate property to purchase any marital asset to avoid commingling incidences. Consider other alternatives to raise cash to contribute if you know you are likely to claim the proceeds as separate. Lawyers are helpful with commingling issues in case it proves strenuous to settle.

Post-Separation and Importance of the Separation Date
The separation date is a crucial aspect of the process especially when dividing the property. Different states will use alternative ways to determine the separation date. States go by the date when one of the spouses moved out or agreement by both parties on separating. It is important for spouses to note the date of separation. Here are the reasons why:
• Anything acquired by either party after the separation date is considered separate and it will not be divided
• Any proceeds from the separate property after the separation date will not be split
• In case the spouses do not reach an agreement via mediation the court will consider the separation date among other factors when making the property division decisions.
• It may serve as proof in a court when there is a dispute of separate property that was acquired after separation

During separation, it is advisable to carry your separate property, and if one partner feels that the process was unfair, a lawyer should be considered. If the lawyer’s advice does not settle the matter, proceed to court.
In the event of a court proceeding, both spouses will list down marital and separate property. It will them classify the assets as either separate or marital depending with the proof provided such as ownership documentation, written agreements or date of separation. The martial properties are valued and distributed to the parties equitably.

Conclusion
Irrespective of split assets being considered as separate property after separation, paying attention to small details is essential. Consult with a lawyer to avoid getting into commingling disputes because of assumptions. Minor errors may end up affecting your separate property ownership.

Are assets split during a separation considered separate property?

Are assets split during a separation considered separate property?

How to Handle Separate Property During a Divorce

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