What Is Marital Property?

“Ben and Jocelyn got married on May 23, 2010. On their wedding day, they each had the following assets:

Ben:
• Toyota Camry
• 401(k) with a value of $10,000
• Savings account with a value of $5,000

Jocelyn:
• Honda Civic
• IRA worth $7,500
• Savings account with a value of $6,000

Ben and Jocelyn signed a Pre-Nuptial Agreement stating that their retirement accounts, including any increase in value, would remain their separate property.

In 2010, Ben’s parents gifted him 100 shares of Apple stock, worth $1,000. In 2016, Jocelyn’s grandfather died and left her $50,000.

On January 10, 2017, Ben filed for divorce. His Apple stock is now worth $10,000, his savings account has increased to $9,000, and his retirement account has increased to $20,000. Jocelyn’s savings account has increased to $12,000, and her retirement account has increased to $13,000. They both still own their cars. They are trying to determine what amounts are marital property and can be divided by the court. ”

There are two types of property in the context of divorce: marital property and separate property. The court can only divide marital property. Separate property is automatically retained by the spouse who owns it.

CARS

Because they were owned before the marriage, each car is considered the separate property of the owner.

RETIREMENT ACCOUNTS

Because Ben and Jocelyn signed a Pre-Nuptial Agreement, the entire amount of each of their retirement accounts remains their separate property.

SAVINGS ACCOUNTS

Any increase in value to separate property that occurs during the marriage is marital property. The initial $5,000 of Ben’s savings account remains his separate property, while the $4,000 increase is marital property. In Jocelyn’s savings account, $6,000 is her separate property, and $7,000 is marital property.

APPLE STOCK

Gifts received during the marriage are separate property. However, because the Apple stock increased in value, $9,000 of its value is marital property. The original value of $1,000 is Ben’s separate property.  

JOCELYN’S INHERITANCE

Inheritance is considered separate property, if it is received during the marriage. Because this has not increased in value, the entire $50,000 amount is Jocelyn’s separate property.

As you can see, the rules governing marital and separate property can be counterintuitive and confusing. Call Katelyn to discuss how your property will be classified.