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Separate & Premarital Property

During a divorce, one of the issues that come up is the division of assets and debts. This blog discusses the topic of premarital property and what this might mean for your divorce.

What is Premarital Property?

Premarital property is property which you brought into the marriage.  This property can be small, like dishes and artwork, or it could be big items like businesses and homes.  Most premarital property is separate property. If you brought the separate property into the marriage, you generally get to keep it afterward.

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How does it work?

Both parties must complete a full financial disclosure.  Relevant here, the parties may also choose to identify various premarital assets and debts in their sworn financial statement. If such claims about premarital property go uncontested, these pieces of property will generally not be subject to division through the divorce. Take note of the term generally, as with many things, there are always caveats to the general rule. 

Appreciation in Value

The first exception is when a premarital asset has appreciated in value throughout the duration of a marriage.  Any increased value in separate property may be marital and subject to division. For example, you own a condo worth $150,000 on the date of marriage.  After 10 years of marriage, you decide to get a divorce. Now for discussion’s sake, let’s assume that your condo is now worth $250,000.  The increased value of $100,000 may be marital property.

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Commingling separate property and marital property can cause separate property to lose its distinction and become marital.  For example, you had $10,000 in your account when you got married.  You deposited your income into the account and paid the family’s bills from it.  The original $10,000 has been so commingled that it’s now considered a gift to the marriage.

Exception to Commingling

What would a good legal rule be without an exception to the exception? There is an exception to when commingled assets will be included in the marital estate, and that concept is known as “tracing”. Tracing seeks to follow commingled assets back to their originating point, such that the assets, or at least a portion of them, do not get lumped into the marital estate. Going back to our example with the condo you owned before your marriage, let’s say that you sold the condo after your marriage and used the proceeds to buy something else. When it comes to your divorce if you are able to demonstrate that your new purchase was funded with premarital, separate assets, this money (or a portion of it) may be excluded when the court determines an equitable distribution of the marital estate.

Need Help?

Separate property is not subject to division in divorce proceedings. For that reason, determining what property is separate from your marital estate can make a world of difference when it comes to dividing assets in your divorce. If you have premarital assets that you need to keep separate from your divorce, or if you’ve perhaps commingled some of your premarital assets with your marital estate, it would be wise to seek the assistance of an attorney. Here at Modern Family Law, our attorneys focus their practice exclusively on domestic relations and family law. So you can rest assured that our attorneys will be able to assist you with any of your divorce needs. If you feel that you might need legal help, get in touch with us today for a free consultation with one of our skilled attorneys.

Modern Family Law

Modern Family Law’s team of experienced family law attorneys takes a compassionate approach to the practice of family law. Using innovative technology to create an effective and efficient process for our clientele, our attorneys approach each case as a collective effort to find the best long-term solutions for each family. Our attorneys currently practice in Colorado, California, and Texas. Click the following link to view all of our family law locations. For more information please give us a call or fill out a short form online to sign up for a free consultation today! Let us make a positive difference in your life.

Posted January 13, 2017
by: MFL Team

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