By David J. Marquardt of Duff & Kronfeld, P.C. posted in Family Law on Tuesday, October 18, 2016.
It is not uncommon, especially in Northern Virginia, for couples to come into their marriage owning certain property, including real estate, bank accounts, investments and more. When it comes to determining what happens to that property during divorce, it doesn’t necessarily follow that the spouse who owned it before the marriage gets to keep all of it.
Virginia Courts are tasked with equitably dividing “marital property” in divorce cases. The Courts do not have jurisdiction to divide “separate property” between the divorcing parties. Generally, marital property is anything that either spouse acquired during the marriage, from the date of marriage to the date of separation. Exceptions include property acquired through an inheritance or gift from a third party, assuming that property is kept separate. Separate property is any property that either spouse acquired before the marriage or after the date of final separation.
The foregoing is good news for the spouse who owned property before the marriage, but it’s not the end of the story. It is possible that, through the actions of the parties during the marriage, the separate property can be partially or entirely transformed into marital property.
There are two main ways separate property can be changed into marital property. First, if either spouse invests marital funds into the property during the marriage, then a portion of the formerly separate property will become marital. For example, if one spouse uses income received during the marriage (marital property) to pay down the mortgage on a home owned before the marriage, then the associated increase in equity will be considered marital. Or if a spouse uses that same income and invests it into a premarital bank or brokerage account, then some or all of that account will become marital.
Second, if the property increases in value due to the personal efforts of either spouse during the marriage, then that increase in value will be considered marital. This often occurs when one spouse causes improvements to the property, such as building a deck or patio on a home. It is also frequently the case when a business owned by one spouse increases in value because that spouse grows the business during the marriage. The increase in value resulting from these personal efforts is marital.
All that being said, even if a Court finds that property owned by one spouse before the marriage has been converted partially or entirely into marital property, the Court still does not have the authority to order that title of the property be transferred to the other spouse. The Court can only order that a monetary payment be made, representing the equitable interest of the non-owning spouse in the property.
Classifying, valuing and dividing marital and separate property can be extraordinarily complicated. If you are going through a divorce, or are considering divorce, you should consult with a knowledgeable attorney about property division. The attorneys at The Duff Law Firm offer a complimentary, 30-minute telephone consultation, and would be pleased to discuss your particular situation.