Marital property refers to all assets and belongings spouses obtain during the marriage and is subject to division. However, separate property includes all assets spouses acquire before the marriage or by inheritance or gift during the marriage and is not subject to division.
This blog explores the definition of separate property and its difference from marital property. If you want comprehensive information about separate property, stay with us and read this blog.
How to Shift from Separate to Marital Property?
An important question in many divorces is whether separate properties gradually change into marital ones. The answer usually lies in the actions spouses take after marriage.
If you employ your individual belongings for common purposes—such as using a pre-marriage savings account for home enhancements—that could make it marital property. Is it a good idea to use individual assets for common purposes?
What Factors Do Determine Separate Property?
While the definition of separate property may seem straightforward, the actual determination can be complex. This complexity underscores the need for professional guidance when dealing with separate property.
- Timing: Assets in one spouse’s possession before the marriage are separate property. However, if these assets are blended or changed into shared assets, the classification of the asset can alter.
- Gifts and inheritances: Gifts or inheritances usually count as separate property. This does not include when the assets are acquired. However, if spouses mix assets with marital assets or use them to help the marriage, they may not be separate anymore.
- Prenuptial or postnuptial agreements: Spouses can make legally binding agreements that explain the division of assets if divorce happens. The creation of prenuptial agreements is before the marriage.
- Blending of assets: It can be challenging to determine ownership when separate property becomes mixed with marital property. For example, the ownership of a separate bank account can become unclear if the spouses use it to buy or pay for the marital home.
If a separate property has been so mixed with a marital property that it’s approximately impossible to determine, it will count as marital property. Hence, it will be subject to division if divorce happens. For example, if spouses use a shared account to pay off a car that one spouse buys before the marriage, the car will be a marital property.
What Is a Separate Asset?
Separate Assets refer to the portions of a resource under separate ownership of Seller and one or more Persons.
What Is the Difference Between Marital Property and Separate Property?
Separate property includes any property that either spouse owned before their marriage. This can encompass gifts before the marriage, inheritances before or during the marriage, or any real estate owned before the marriage with no contribution from both spouses after its acquisition.
Separate property may also involve inheritance that one spouse acquired during the marriage. On the other hand, marital property is anything either spouse acquires during their marriage, which is subject to division fairly and equally upon divorce.
This includes assets like bank accounts, investment accounts, and any increases in the value of the separate property if one spouse played a role in the rise of its value.
Practical Tips to Protect Separate Property
Protecting your separate property during a divorce is not only possible but also crucial. By following the right strategies, you can maintain the status of your separate property and enter the divorce process.
1. Make a Prenuptial Agreement
Signing a prenuptial agreement before the marriage is one of the best strategies to maintain separate property and assets. The agreement clearly determines how spouses divide property during a divorce. It also declares which property will stay separate, even if marital assets are used to protect or enhance a separate asset.
For example, the prenuptial agreement may determine that the home you inherited from your family and want to live in with your spouse will stay separate property. The house remains a separate property, even though you and your spouse use your income to pay mortgage payments or maintenance for the home.
2. Maintain Family Business Shares in Your Name
If your family possesses a business, ensure that all shares in the company stay in your name. Before the marriage, check the operating documents for the business. Some operating agreements do not authorize shares of the business to be transferred to individuals who are not related by birth.
A lawyer should assess the documents before the marriage to decide if further steps should be taken to maintain your interest in the business and prevent it from being considered marital property.
3. Do Not Mix Assets If Possible
Avoid commingling separate property during the marriage. Do not deposit funds into a shared account or utilize separate funds to buy joint assets. In addition, avoid using marital assets to protect or improve a separate property.
For instance, it is advisable to avoid using the income earned during the marriage to enhance a home that you possessed before the marriage or inherited during the marriage. In addition, do not spend money from a shared account to pay the taxes on separate property or make improvements to separate property.
4. Maintain Correct Records of Your Property
Keep records and documents to demonstrate that an asset is a separate property. For example, if you use inherited funds to buy assets, maintain records showing that the funds you used to purchase the asset were a part of your inheritance.
Conclusion
Separate property includes all assets and belongings that one spouse has individually rather than jointly with another spouse. Marital property is different from separate property about the division of assets. To protect separate property, some strategies can help you keep your assets during divorce.
Book a consultation at zukermanlaw.ca to take advantage of the inspiring guidance of our professional team regarding the separate property.
FAQs
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1- What is a non-marital asset?
A non-marital asset is usually something you owned before marriage or obtained as an individual gift or inheritance.
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2- What happens to separate property in a divorce?
In general, separate property remains with the spouse who owns it and is not subject to division in a divorce.
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3- Can separate property become marital property?
Yes, separate property can become marital property if mixed with marital property.
