Lately, I have been receiving questions about whether one spouse can receive any portion of the other spouse’s separate property. The answer is not always clear at first as it requires an investigation into how the property was held throughout the marriage. Clients do not like to wait until after an investigation and analysis to learn whether or not their pre-marital property is protected from the other spouse’s claims. Here are some tips that you can take to maintain the classification of your pre-marital property as separate property not subject to division in a divorce action.
- DO NOT ADD YOUR SPOUSE’S NAME TO YOUR PRE-MARITAL BANK ACCOUNTS, DEEDS OR TITLES. When you add your spouse’s name to accounts, deeds or titles that you had prior to the date of marriage, you change how the property is owned. Once your spouse’s name is added to the property, it becomes owned jointly between the two of you. If you want your spouse to inherit the property upon your death, designate him or her as the beneficiary or the person to whom title will transfer upon your death.
- DO NOT DEPOSIT INHERITED MONIES INTO MARITAL OR JOINT BANK ACCOUNT. If you receive an inheritance, your spouse is not entitled to any portion of those funds unless you commingle the money with funds held jointly or earned during the marriage. If you have a separate bank account and deposit your weekly paycheck into that account, the account is classified as marital as the pay is earned during the marriage. If your bank account was held in your name alone before the marriage, open a new account for your paycheck after the marriage. By preserving the pre-marital bank account’s classification as separate, you are able to deposit the inherited funds directly into this account. However, if you added your spouse’s name or deposited your weekly paycheck into the account, open a new bank account in your name alone to hold these funds.
- DOCUMENT HOW THE MONEY FLOW. When pre-marital property is sold during the marriage, it is key to document where the funds were deposited, what they were spent on, and whose name is on the account. This is called “tracing”. If we can trace the funds used to acquire property during the marriage to separate pre-marital funds, then your spouse may have no claim to the new property acquired during the marriage.
- KEEP CLEAR AND ACCURATE RECORDS. One of the biggest struggles I have discovered is in tracing how property was acquired. A spouse may claim that the property was purchased with funds realized from the sale of separate property or funds gifted from parents. However, there is no clear trail of where the funds were deposited and where the funds came from to purchase the property in question. If you can prove how the funds flowed through the accounts, you can show how to properly classify the property as either pre-marital and separate or marital. If you contributed toward your spouse’s separate property’s maintenance, repair, or improvement, then create the paper trail that shows what the monies were used for and how much.
- SHARE YOUR RECORDS EARLY ON WITH YOUR ATTORNEY. One of my biggest pet peeves is finding out from my client at mediation that the property in question was owned before the marriage. Sometimes, I am learning that my client knew his or her spouse owned the property in question before the marriage. If you know when the property was acquired and it was separate, tell your attorney. If you know the property became commingled with marital property, provide your attorney the documents early on that prove this happened.
- CREATE A PRE-NUPTIAL AGREEMENT. If you are truly worried about your property being seized by your soon-to-be spouse, create a pre-nuptial agreement that clearly states what each spouse owns prior to the wedding day. This agreement should state how the property will be treated upon death as well during a divorce proceeding. Note that if you are presented with a pre-nuptial agreement, take it to an independent attorney to review to ensure that the terms are fair and equitable to you.
It is best to begin using these tips from the first day of marriage. However, if you are just learning them, start compiling the records now. If you need help in analyzing your property or want to learn how to protect a specific piece of property, send us a quick email at firstname.lastname@example.org.