Divorce isn’t just the end of a marital union, but also the separation of two entire lives, including the property that makes up the couple’s marital estate. The goal of any divorce proceeding is a just and equitable division of all marital property. In many cases, an equitable property division means an equal division of debts and assets. However, a variety of factors can impact what a court may ultimately determine to be an equitable property division. In looking at property division in a dissolution of marriage action, the first step is determining what is considered “martial property” versus what is considered “Non-marital Property”.
All property or debts acquired after the marriage (and before the valuation date) is presumed to be marital property and subject to division at the time of divorce regardless of title. For example, a car or retirement account held in one spouse’s name only will be considered marital property if it was acquired during the marriage. The valuation date is the date upon which the value of each piece of property is determined. The value of an asset or debt as of the valuation date is the value that is divided between the parties. This date is generally the date of the Initial Case Management Conference. It may be possible to claim that certain property is non-marital if it was acquired prior to the marriage or gifted or inherited during the marriage. The spouse seeking to establish that property is non-marital has the burden of proving the asset is non-marital and tracing that asset to a non-marital source.
If a spouse can prove that part of the parties’ estate is non-marital property, that property will normally not be subject to division as part of the marital estate.
Non-marital property is real or personal property acquired before, during or after the marriage, which:
- is acquired as a gift, bequest, devise or inheritance made by a third party to one but not to the other spouse;
- is acquired before the marriage;
- is acquired in exchange for or is the increase in value of property which is described in clauses (1), (2), (3), and (5);
- is acquired by a spouse after the valuation date; or
- is excluded by a valid antenuptial agreement.
In some cases, assets may have both marital and non-marital components. For example, it is not uncommon for 401(k) accounts or even the marital homestead to have pre-marital values. To determine the value of non-marital interests the court may distinguish between active and passive appreciation. In the case of a homestead, the courts apply a formula, which provides that a spouse’s non-marital interest in a homestead purchased prior to the marriage is equal to the proportion the spouse’s net equity at the time of marriage bore to the value of the property at the date of marriage. This is often referred to as the “Schmitz” formula. Depending upon the type of asset and the particular circumstances of each case, non-marital claims may be complex to establish. Non-marital tracing can be a complicated endeavor, and it is crucial that the non-marital interest be traced and defined as fully as possible for the Court to comprehend it and rule appropriately. The attorneys at Arnold, Rodman & Kretchmer PLLC have the background and legal experience to help you examine and analyze your marital estate, and can then skillfully advocate for the fairest division of property possible. Contact us today to schedule a consultation.
Written By: Senior Associate Attorney Kendal K O’Keefe