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What is marital property versus separate property during divorce?

On Behalf of | Jun 12, 2024 | Divorce

Property division matters often require careful planning, as most people want to retain as much of their marital property as they can. What someone receives in the property division decree of a North Carolina divorce can influence their financial stability for years to come.

The law in North Carolina requires a fair or equitable division of marital property. Spouses typically do not have to worry about dividing or sharing their separate property. How do people understand which of their assets are marital property and which ones are separate property?

The timing of the acquisition

One of the most important differences between marital property and separate property is when someone acquires resources. Assets that people purchase and income that they earned before getting married are typically the separate property of that spouse. They generally do not need to share those resources during a divorce. Whatever people earned or accumulated during the marriage could be subject to division even if the ownership paperwork is only in the name of one spouse.

The nature of the acquisition

Any assets directly obtained through purchase or investment during the marriage are likely to be marital property. However, some resources that people acquire during marriage remain their separate property. Gifts received by one spouse and an inheritance left to an individual can remain their separate property after a divorce. Those assets could be vulnerable to division if commingling occurred. Commingling involves giving someone control over separate property or granting them an ownership interest, possibly by adding their name to the deed of an inherited house.

The use of marital resources to enhance or maintain separate property could also constitute commingling in some cases. Depositing gifts or an inheritance into a shared account could also lead to claims of commingling and the vulnerability of those resources. As property division is complex, people typically need to go over their financial records carefully to determine which assets are their separate property and which resources they may need to divide when they divorce.

Learning more about North Carolina’s property division rules can help those in the preparation stages of an upcoming divorce. Spouses who understand what property is subject to division can use that information when planning a strategy.