Divorce is fraught with every kind of emotion, but one of the major highlights is financial terror. What was once yours, is now ours, and future possession is up for debate. You may be asking, what about the inheritance I got from my grandparents? Or, the summer cottage that has been in my family for years?
Along with 40 other states, Virginia has adopted the “equitable distribution” system of property division. The goal of this system is to divide up the marital assets fairly, considering both monetary and non-monetary contributions to the accumulation of assets. Inheritance and divorce can be complicated as there are certain situations when separate assets cross over the line, and are now legally considered marital assets. If you are wondering whether your wife might be able to take your inheritance, the answer is “maybe.”
Property Division & The Separation Agreement
If you and your wife agree, the two of you can detail the property division in a written separation agreement. An attorney can help with the often complex financial arrangements, and required provisions, to ensure everyone’s rights are fully protected. If you and your spouse are not able to agree, a judge will be required to make the decisions for you.
Virginia Courts Procedural Requirements
Virginia’s system of “equitable distribution” includes all property, real and personal. Jewelry, bank accounts, furniture, the marital residence, other real estate holdings, paintings, automobiles, and business interests all fall into these determinations. Initially, the courts must determine whether the property is marital, separate, or somewhere in between.
1. Marital Property
Marital property usually includes all assets titled in both party’s names, but also includes all property purchased during your marriage, even if it’s not titled with both names. This includes all property obtained during the marriage, which is not classified as separate property.
2. Separate Property
Real or personal property is generally considered separate from the marriage if it was acquired prior to the marriage, after the marriage, or received via inheritance or gift from a third party. Separate property is not subject to division.
3. Part-Marital, Part-Separate Property
When separate property increases in value, or produces income, during the marriage, that increase or income may become marital property if:
- The income gained can be attributed to the personal efforts of either party
- The increase in value of the separate property can be attributed to the contribution of marital property or the significant personal efforts of either party resulting in considerable appreciation
Personal effort can include labor, creativity, physical or intellectual prowess, management, or promotional and marketing efforts. The non-owning spouse must show proof of the personal efforts made, and demonstrate that the separate property increased in value because of that effort. If that burden of proof is met, the owning spouse has the burden of proof to demonstrate that the increase in value, or a portion of it, was not caused by the marital property or personal effort contributions.
Separate Property Immunity – Three Exceptions to the Rule
Transmutation occurs when actions are taken that appear to gift the property to the marriage, transforming it into marital property. The owner of separate property can lose separate interest by retitling separate property to joint ownership as part of a refinancing transaction.
Often, commingling occurs without the spouses even being aware of it. It happens when one or both partners make deposits, or otherwise contribute, to any premarital account during the marriage. Any time separate property is mixed with marital property, the entire asset could potentially become marital property, if you are unable to trace the separate portion’s original value. Some common ways that commingling occurs:
- Inherited money is deposited into a joint account with your spouse
- Inherited money is used to buy or maintain a marital home
- If separate property is used in combination with marital funds to purchase a home, automobile, or any other property
- If inherited funds in a checking or savings account have funds deposited in them by both spouses
3. Retitled Property
If separate property is retitled to the joint names of the couple, it may be considered transmuted to marital property. If the original owner can retrace the separateness of the property, and prove that it wasn’t a gift, the retitled property may retain its separate property status.
Keeping Separate Property Separate
Ideally, when divorce occurs, the spouses have already agreed on the distribution of property and funds. For many, however, it becomes crucial to prove or refute that property is marital property and subject to division. Some of the best ways to protect your separate property are:
- Prenuptial agreements
- Not using inherited money to benefit the marriage, including paying off credit cards or marital home payments
- Keeping property deeds in your name only, and not permitting any monetary contributions from your spouse for property maintenance issues
- Keeping a separate bank account
- Discussing purchases with your spouse to determine ahead if the property will be considered separate or marital
- Documenting purchases and funds used from separate account
Proving Separate Property is Separate
If you are trying to establish that property is separate, and not marital, you must prove it by a preponderance of the evidence. First you must show that the property was initially separate when you received it by inheritance or gift. The assets then need to be traced throughout the marriage lifetime to eliminate any presumption that it was transmuted or converted into marital property. Without proper documentation, property held by a married couple, is generally deemed marital property subject to equitable division.
Consult with Property Division Attorneys
If you have questions about divorce and your inheritance, contact The Firm For Men’s Virginia Beach office at 757-383-9184 to schedule a consultation with one of our property and asset division lawyers. We’ve been serving men only in family law issues for over a decade. Don’t go to court without an advocate in your corner!