Separate property is owned by one spouse and is not divided in a divorce, while marital property is owned by both spouses and must be divided equally. Assets held before marriage are usually considered separate, but income from a business owned by one spouse during the marriage may be community property. Prenuptial agreements can protect separate property.
Separate property is property that is owned by one spouse in a marriage. If the marriage is dissolved, the spouses retain ownership of their separate assets and are not required to share these assets with the division of assets. Conversely, marital or community property is owned by both spouses in kind and must be divided equally in the event of a divorce. It is important to consider the issues of separate versus community property before getting married.
As a general rule, assets held before marriage and kept separate are considered separate assets. However, take the example of a company. If either spouse owns and operates a business, any income from that business earned during the marriage could be considered community property. Your partner may be deemed to have a stake in the business, even if your name is not in the business. Consequently, if the couple is divorced, it may not be treated as a separate property.
Other examples of separate ownership include things like separately held bank accounts, along with other assets. Inheritance and gifts acquired during a marriage can also be extramarital property if held separately, as can exchanges. However, in some regions, income from these assets is considered community property. Anything acquired after the dissolution of the marriage is also separate property; in other words, if a couple gets divorced and one former partner buys a house, the other cannot claim a share in the house.
The line between marital and nonmarital property can sometimes become contentious during divorce proceedings. Even if the property is held wholly in one person’s name, there may be reasons to argue that it has become community property because of the way it has been used. For example, a bank account held by one partner that has been used by both partners is no longer considered separate property.
This issue explains why some couples enter into prenuptial agreements. These agreements clearly define any separate property introduced into the marriage and enforce that this property will not be converted into joint property during the marriage. Property law can get very complicated, and people who are concerned about their possessions may want to protect them with a prenuptial agreement. It should be ensured that some assets are kept separately and cannot be contested so that they can be accessed quickly in the event of a divorce or separation.
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