Spouses should understand the difference between marital property and non-marital (separate) property. Marital (community) property is assets and debts acquired during the marriage. Other than some exceptions described below, if it was acquired during the marriage, it is community property.
Separate Property Acquired Before Marriage
Most separate or non-marital property consists of assets or debts a spouse had when they got married. If a spouse owns it before marriage, it remains a separate asset or debt in most situations.
For example, a couple gets married on June 5, 2020. Prior to the marriage, Spouse A acquired $25,000 in student loans when they graduated in May 2018. This is non-marital property (debt) because Spouse B wasn’t in the picture when Spouse A took out the student loans. Should the couple divorce, Spouse A will still need to repay the loans; Spouse B is not responsible for the debt at all.
Separate Property Acquired During Marriage
Non-marital property also includes assets one spouse receives through gift, inheritance or personal injury award during marriage. If a spouse inherits a boat from their grandparent, for example, and the title is kept in that one spouse’s name, it is separate property.
Separate Property that Becomes Marital Property
In some instances separate property can become marital property. For example, if Spouse A enters the marriage with $50,000 and places that into a joint checking account or uses it as the down payment on a home bought during marriage by both spouses, those funds become marital funds.
Additionally, if a separate asset increases in value in part because of contributions by the other spouse (either monetarily or through labor), that increase in value of the separate asset becomes a marital asset. For example, if Spouse A owned a rental property before marriage, and during the marriage marital funds are used to pay for the mortgage or upkeep or if Spouse B helps work on the property, the increase in value after the date of marriage will be a marital asset.
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