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Treatment of Non-Marital Property During a Divorce

A divorce is significant financial transaction that can negatively impact your financial status for years.  In a divorce case, the classification of marital and non-marital property are critical terms.  Marital property is property acquired during the marriage.  Non-marital property is property acquired prior to the marriage.

Classification of Marital or Non-Marital Property

One of the critical decisions in a divorce case is to determine whether property is marital or non-marital property in nature.  One of the factors to determine whether the property is marital property is whether the asset was purchased by one of the spouses during the marriage.  Marital property is essentially any asset that was purchased during the marriage.  An inheritance is non-marital property unless the inheritance was commingled with marital property.

Non-marital property is property that was purchased prior to the marriage such as contributions to a 401(k) or purchase of real estate.  Many people have serious questions about whether their property that they purchased is non-marital or marital property.  Often, there is a mixed classification for the property.  The property may be a mixture of non-marital and marital-property.

For example, Sue Smith purchased her real estate used as her primary residence in 2013 and her and her husband were married in August 2015.  In this example, Sue Smith had non-marital property that was acquired in 2013.  Sue Smith’s property in most cases became marital property in August 2015 when her and her husband got married.  If Sue Smith kept her name only on the title and never allowed her husband to pay the mortgage, real estate taxes, or provide any financial assistance for the house then the house may keep the non-marital status.  In most people’s situations, the spouse will have supplied a lot of financial help with regards to the house and the house likely would have become marital property.  Sue Smith would be eligible to re-capture her initial deposit for the home and keep the equity that she had prior to August 2015.  In this example, an appraisal would be critical to access the value of the marital property in August 2015.  In most people’s cases, they fail to provide an appraisal and the valuation of the house becomes a negotiated issue during a divorce in Yorkville and Kendall County.

Lesson:  Keep good records and prove the value of your non-marital asset at the time or near the time of the marriage.

Another key question is whether your activity was passive or active.  The equitable distribution theory advocates that marital property was your skill and hard-work increased the value of the asset, should be considered “marital property”.  Passive activity is when time and appreciation of the asset increased due to time or appreciation over time.  Passive activity involves using market forces to increase the value of the asset.  Active activity is when skill and hard worked contributed to the increased value of the asset.  Active activities likely will increase the likelihood that the asset is marital property versus non-marital property.

Pre-Nuptial Agreement

A Pre-Nuptial Agreement is a written legal agreement prior to marriage that addresses how non-marital and marital property will be treated during marriage.  One of the critical ways to address marital and non-marital property is to have a valid, written pre-nuptial agreement.  A pre-nuptial agreement is a negotiated agreement prior to marriage where both parties voluntarily, sign and disclose their assets and liabilities.

Call Us Today at 630-882-9117

Call Sean Robertson today to discuss a pre-nuptial agreement or your Yorkville Divorce case.  Sean Robertson is a Yorkville and Kendall County Divorce Attorney with offices in Yorkville, Illinois.  We regularly assist people in Oswego, Yorkville, Plano, Sandwich, Minooka, Bristol, Newark, Aurora, Plainfield, and Joliet with their divorce case in Yorkville and Kendall County.

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