What’s mine is yours, and what’s yours is mine… especially in a marriage.
And when it comes to divorce, the biggest mistake I see clients make is they have not preserved their non-marital or separate property. This means that what should be yours, may also be your soon-to-be-former spouse’s.
The key, if you have non-marital or separate property you want to protect, is to keep it separate. And this means you need proof and preservation.
What is Non-Marital or Separate Property?
In general, in divorce, the court divides assets into two categories: (1) marital property, and (2) non-marital property or separate property. Marital property are assets acquired during the marriage that are not non-marital property or separate property. Non-marital property and separate property are assets acquired prior to marriage, by inheritance or by gift from a third party.
While some may use the terms “non-marital property” and “separate property” interchangeably, Maryland uses the term non-marital property, while DC uses the term separate property. In Maryland, non-marital property also includes assets excluded as marital property by a valid agreement between the parties and assets directly traceable to the same or the above-listed sources. In DC, separate property includes assets acquired in exchange for separate property.
What Do You Need To Show to Keep Your Non-Marital or Separate Property in Divorce?
If your spouse agrees or stipulates to what assets are your non-marital or separate property, that is sufficient. If he or she will not agree, then you will need to present testimony or evidence that the assets are your non-marital or separate property, such as where the asset came from, and that the asset has been preserved, such as by not comingling or mixing it with marital property and keeping the title solely in your name.
With certain assets, the necessary information and preservation may become more complicated. For example, marital efforts, which is time and labor expended during the marriage, by either spouse spent towards the preservation of non-marital or separate property may transmute property from non-marital or separate property to marital property.
What Should I Do If I Receive Non-Marital or Separate Property?
Keep the asset in your own name and never add to it. If it’s an account or other monetary assets, put it into a new account in your sole name. Save all of the documentation evidencing how you received the asset, and all documentation from the time of your receipt forward evidencing that you did not add to it with marital property or marital efforts by you or your spouse.
Five Most Common Ways I Find My Clients Have Not Preserved Their Non-Marital or Separate Property
- They title it jointly.
- They spent down their non-marital or separate property, rather than spending marital property.
- They added marital money to their non-marital or separate property, so they’ve comingled it. And sometimes have also then withdrawn money from that comingled account, further comingling it.
- They need access to cash, so they “borrow” money from their non-marital or separate account and pay it back later with marital money. That’s comingling!
- They contributed non-marital or separate property to jointly titled real property, such as a house.
What If I Co-Mingled My Non-Marital or Separate Property?
If you co-mingled or non-marital or separate property, you may not be out of luck! If you titled property jointly in the name of you and your spouse, there is a presumption that the property is marital, however, there is a lot of case law that supports the concept of an unequitable distribution of assets (in DC) or a monetary award (in MD) in such circumstances to account for this, especially as it relates to real property. Also, our courts are still ones of equity, meaning they consider what is equitable given a list of statutory factors, so this may be taken into account.
For more information, contact Erin at 301-347-1261 or [email protected].