Separate Property May Not Remain Separate

When you are going through a divorce, you may find that the separate property you own might not always remain separate. To understand why this occurs, it is first important to understand just what this term means.

What is Separate Property?

Separate property could be a gift, an inheritance, or it could be money that you’ve earned or assets inherited before marriage. While many people may believe that this is their money that is distinct from other assets, it might not stay this way in a divorce property settlement for several reasons.

For example, if you were to put money from the separate property into something such as a living trust, and your spouse and children are the beneficiaries of the trust, the separate property would not stay separate in the event of a divorce.

What happens if you decide that you want to take the inheritance money or assets and use the money to buy a vacation home? What if you use the money to pay off all of your joint debt, as many people would like to do? It means that the money—the separate property—is now gone. Anything purchased with that money would be considered joint assets.

There are also cases where someone might keep their separate property, such as money, in another account. What happens if you take out a business loan or buy a house? The house would become joint property if you were married and bought it together. What about a business loan? When you start a business, it is community property since it was started during the marriage. If you pledge your separate property as a security interest, you may have created a community interest in the separate property.

Time Can Be a Factor

Typically, the longer you have been married, the greater the likelihood that whatever separate property you brought into the marriage will become community property. There are many ways, including those discussed briefly above, that this can happen. No one wants to suddenly realize that a classic car they inherited from their favorite uncle when they were 16 could suddenly become a part of the divorce settlement because they remodeled the car after they were married. This is exactly the sort of problem that can arise, though. It happens more often than you might think.

What happens if you had a business before you got married, and decided to keep it totally separate after you get married? As you grow that business, or any separate property, it could create a community lien on a portion of the growth. This is because these actions that you took to grow the property happened when you were married.

If you were to inherit a piece of property before you got married, there is a chance that it could be subject to a community lien, as well. If you are later married and then did work to improve or restore that property, then there would be a community lien for community efforts and money that went into restoring that property.

As you can see from the few examples, there are many ways that separate property could easily become community property through marriage. This is just scratching the surface of the potential issues that you might run into when you are facing divorce. This will often come out of the blue for many people when they are getting a divorce. They always believed that when they were married, the things that they took into the marriage were theirs. If the marriage dissolved, they assumed that they would be able to take back the property and assets that they brought into the marriage.

However, the real world doesn’t work like that. It can be tricky. There are countless potential pitfalls that you will need to be aware of when it comes to your property. The best way to handle this situation is with a prenuptial or postnuptial agreement that makes clear what your intentions are. Another option—and one that won’t work for most people—is not to touch the assets that you want to stay separate. This would mean that you are essentially stuck and unable to use those assets for growth. You can’t leverage them or take any actions. If you do, the community could gain interest in the property.

When you are going to be married, or are already married, you need to think about the ways that you can keep that property safe. Even though you may believe that you’ve found “the one”, reality says that about 50% of people will end up divorced. This means that there is essentially a 50% chance that the assets that you brought into the marriage could end up part of the community property. You would then have to split them or give them up during a divorce. You will want to act early to protect those interests.

Get in Touch with an Attorney

Of course, most people do not have vast legal knowledge when it comes to assets, community liens, divorce, and division of property. It’s a lot to understand, and there is a good chance that you could make some mistakes that will come back to haunt you later. The best course of action is to get in touch with an attorney as soon as possible. Let them know the situation and the property that you are bringing into the marriage. The attorney can help you find ways to protect your assets or inheritance, so you don’t have to worry as much in the event of a divorce.

When choosing an attorney, make sure they have knowledge and experience in this area of the law. You always want to work with someone that has a good reputation and that has your best interests in mind. You also want to be sure you are working with an attorney that will be honest with you about your options, so you can proceed with confidence.