Creating Marital Property

Creating Marital Property
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So you are thinking about getting married and you are wondering about the effect of marriage on your property. What property remains yours after marriage and what property belongs to both you and your spouse?

Property which you own before marriage is considered your separate property or non-marital property after you get married. In order to keep the property as separate property, you should keep it titled in your name. If the property is a bank account, you should not put funds owned by you and your spouse, which is marital property, into the same account. If the property is a house, you should not spend marital money on the house's upkeep. Conversely, if you want to convert your separate property into marital property, then you should have the property re-titled in both your name and your spouse's name.
State Law and Married Couples' Property

Generally, state law treats the property of married couples in two ways. Some states have separate property and community property, and these states are called community property states or jurisdictions. Other states have non-marital property and marital property, which are known as equitable distribution states or jurisdictions. Of the 50 states, as well as the District of Columbia and Puerto Rico, there are nine community property states and forty-three equitable distribution states.

The differences between community property states and equitable distribution states are important should a couple divorce. The laws vary from state to state, and the differences are sometimes based on whether the state is a community property state or an equitable distribution state. However, all states share some common principles when it comes to property owned by spouses.
Separate Property or Community Property?

Property which you own before your marriage is considered separate property in a community property state and non-marital property in an equitable distribution state. Property purchased by you or your spouse with funds earned during your marriage or through your or your spouse's labor is considered community property or marital property. The classification of separate or non-marital property is important because if there is a divorce, the separate property of each spouse is usually awarded to him or her, and community or marital property is divided between the spouses.
Property Owned before Marriage

If you want to remain the sole owner of your separate property after you get married, you must keep your separate property separate. Remember that the classification of property can change. Whether your property remains classified as separate property depends on how you use and manage it. You should keep the property titled in your name, and you should not use marital money to make payments on the property or to maintain it. You cannot spend your time maintaining the property either, as your labor is marital property and will change the classification of the property. Also, if you use separate property to buy a house for yourself and your spouse, the new property will probably be classified as marital property.

Other assets that you might want to keep as your separate property in case of divorce are bank accounts and investment accounts. These accounts can increase in value with minimal participation by you, and they can be easily kept as separate property. These funds should be titled in your name, and you should not put marital funds into the same account. If you happen to combine your funds with marital funds, you might be able to retain your separate property in case of a divorce if you can trace the origin of the funds. So, keep track of the source of any additions to the accounts.
Other Property

Social Security benefits are considered separate property. State law is preempted or displaced by federal law for marital property distribution of Social Security benefits (Old Age, Survivor, and Disability Insurance).

The monetary award received in a personal injury lawsuit can be considered separate property or marital property, depending on whether you live in a community property state or an equitable distribution state.

Another asset that is considered separate property is an inheritance. If you inherit money or property from a parent, sibling or other relative, that is considered to be your separate property. If you keep a financial account or title to the property in your name, you don't spend marital funds or use your labor in increasing its value and maintaining it, and you don't use the inheritance to do something to benefit you and your spouse as a married couple, such as buying a home and living there, the inheritance will still be separate property if your marriage ends in divorce.
Questions for Your Attorney

* How do I keep my property as separate property after I get married?
* Can I spend my time renovating my property after marriage and keep the property as separate