When it comes time to splitting assets in a divorce, most people only think of how to divide them. However, the question of what should be split and what is exempt from equitable distribution terms is just as important.
If you decide on your own settlement terms, you can include or disclude anything you and your former partner deem appropriate. However, if the court determines how to split your assets, some assets are protected and won’t be considered in the divorce settlement. Generally, items jointly owned by both spouses will be divided, but property solely owned by only one spouse will remain with that person.
Here are the items typically excluded from consideration in an equitable distribution settlement:
Courts usually exclude from a divorce settlement any property that an individual owns before the marriage. This can apply to anything you or your spouse own before getting married, including real estate, bank accounts, collectibles, jewelry, or businesses. Because you or your spouse obtained these items prior to the wedding, they are not mutually owned by both spouses. Instead, they are considered premarital property. As such, the party who brought them into the marriage retains full ownership when the relationship dissolves.
However, things can get complicated if you use marital funds to maintain the premarital property. For example, if you used money in a joint account to update real estate or pay property taxes on the condo you owned before you got married, that asset may no longer be strictly a premarital asset. If joint funds or the salary of the other spouse were deposited into an old bank account, that account might become a shared asset. These are just some examples of the ways decisions can cause an asset to become commingled, in which case some or all of it may become a shared asset.
Because the issue of separate, premarital property can be complicated, it is best to consult a family law and divorce attorney about assets you or your spouse bring into a marriage. A lawyer can advise you on ways to ensure that premarital assets don’t become shared property or assist you with determining which assets should be excluded from your divorce settlement.
If one spouse is named in an inheritance, the inherited property will belong only to them, exempting it from an asset split. As with premarital property, if the inheritance is used for combined purchases or in ways that blur the lines of ownership, the issue can become complicated.
Additionally, the burden of proof is on the spouse claiming the exclusion. If you are attempting to exclude property from a divorce settlement, you may need to show the deed or will that indicates the property was given only to you, not to you and your spouse as a family.
The court will treat gifts the same as inheritances. If they are given only to one person, that person is the sole owner. This claim can be challenging to prove, however. Unlike inherited property, gifts don’t typically come with ownership documents, making proving that they were given to only one spouse a challenge.
How you use the gift can also influence the outcome. Consider the following two scenarios.
- If your spouse was gifted money, they used to purchase a car they titled in both your names, the gift money has become commingled.
- If they titled the car in their name alone, then sold the vehicle and kept the proceeds separate, that money is likely still separate property.
Assets Agreed Upon Ahead of Time
With a pre or post-nuptial agreement, both spouses agree to terms that may dictate how to divide property in the event of divorce. The parties can agree to exclude specific property from marital assets or divide them based on specified percentages or other terms. These agreements usually pull the agreed-upon assets from regular considerations for a divorce split. Instead, the rules that the parties negotiated will apply.
While these agreements can be challenged and need to follow the rules of the jurisdiction in which they are executed, they are usually enforceable if done correctly.
Property Per Agreement
Both parties may decide to come to a settlement agreement outside the court system, in which case the rules about what is separate property don’t apply. One spouse can receive the vacation property brought into the marriage by the other spouse. The signed baseball your uncle gave you for your birthday can be part of your spouse’s settlement. Joint accounts can go to only one party, and you may split individual accounts. In Utah, a judge does need to review a property settlement agreed upon by the parties, but you are generally free to divide things however you see fit.
The issue of assets protected from being split in a divorce settlement is more complicated than it may seem. That’s because it is so easy for spouses to cause individual assets to become marital property inadvertently. Factors like appreciation shared expenses, and even joint effort spent maintaining an asset can cause lines to become blurred. An experienced divorce attorney can help you understand what assets should be split and which belong solely to you or your spouse. They and their team will know how to unravel complicated finances to trace their history, ensuring you receive and keep the assets to which you are entitled.