Commingling separate property complicates divorce

Pierre Domercq Divorce

Some California residents who are contemplating divorce may wonder what happens to gifts that were given to one partner during the marriage. That depends on whether or not the gift was commingled with marital funds.
In the absence of a prenuptial agreement that outlines what comprises separate property, certain assets are usually considered separate at divorce. For instance, property that was owned prior to marriage and kept separate during the marriage, awards from a personal injury suit or inheritance given directly to one spouse are considered separate property. The caveat here is that such assets cannot be put in a joint marital account, or they may be considered marital property and subject to division.
A loan made to one partner during marriage may have significantly different meaning at divorce. If the loan was used jointly as marital funds, then it may be seen as a marital liability and subject to joint repayment. However, if the funds were construed to be a gift and placed in a separate account, an ex-spouse has no right to claim half of it.
The way marital property is divided is also important. Depending on whether the marriage is based in a community property state or one that uses equitable distribution will affect the way it is divided. The key in either system is keeping personal property separate and avoiding pitfalls that may deviate from this along the way.
An attorney may assist during divorce negotiations to help a couple reach a fair and reasonable settlement. However, having a prenuptial agreement in place may serve as a viable way of preventing problems in the future. The prenuptial may outline property that is specific to each partner and the way in which marital property will be divided.
Source: Forbes, “Divorcing Women: Here’s How to Protect Your Inheritances And Gifts”, Jeff Landers, August 19, 2014