Separate v. Marital Property: What Happens During Divorce?
When going through a divorce, you and your spouse may have property that must be divided. Before deciding how your property should be divided, you must determine what property should be divided. In doing this, you should know the difference between separate and marital property.
Separate property is generally property acquired by a party prior to the marriage. Marital property is property that is acquired throughout the course of a marriage. While these distinctions seem clear enough, problems arise when separate property is co-mingled with marital property throughout the course of a marriage such that it becomes unclear what each party is entitled to after a divorce. There are different ways the courts have dealt with these problems, and we go to case law for examples.
In Goggin v. Goggin, the court decided that although property acquired during the marriage is generally considered marital property and requires a 50/50 split at the time of a divorce, it is important for courts to consider whether “each party [should] recover the separate property brought into or received during the marriage.”57 So although the property in the case was considered marital property, the divorce court should consider whether one or both of the parties is entitled to a credit or setoff for the separate property she/he contributed to it.
(See Goggin v. Goggin, 2013 UT 16, ¶ 58, 299 P.3d 1079, 1096-97).
In Clarke v. Clarke, the court awarded a Wife 100% of the home equity--some of which was arguably marital equity. However, the court was not simply dividing marital property but was also reimbursing Wife’s separate, nonmarital property. She did not receive the home equity outright; rather it divided the home equity equally between Husband and Wife as marital property and then awarded Husband's share of the equity to Wife to reimburse her for the nonmarital inheritance she had used to pay off the premarital debt on Husband's vehicles. The court explained that it used Husband's share of the home equity to repay Wife her inheritance monies because it was a simple resolution that would result in “the least continuing connection as possible” between Husband and Wife, who were embroiled in a highly contentious divorce.
(See Clarke v. Clarke, 2012 UT App 328, ¶ 12, 292 P.3d 76, 81).
While the court will often times decide the marital property has been commingled, the court has the option to and should consider whether an "offset" of one party’s separate, contributed funds is equitable. However, there is another side to the argument.
In Thomson v. Thomson, a husband contributed premarital funds into a marital residence. The premarital funds came from a home in California, which the court later found the wife had an interest in because of "community property" (so when the "premarital" funds were contributed, they were not necessarily premarital), and the court found that the funds were commingled to the extent that the entire property was marital and a 50/50 division was appropriate.
This case means that the court can decide to split property 50/50 even if some of the funds were originally separate property contributed by one party.
Knowing how a court will go about deciding your case depends greatly on the facts of your situation and the arguments made during court. If you have further questions regarding the division of property and the distinctions between cases as they relate to your situation, feel free to contact us at (801) 784-0529.