In a divorce, it is a court’s job to ensure that marital assets are split in the most fair manner possible. When making such a ruling, courts consider factors such as who the property is technically owned by (also known as the property’s title), how the family uses the property, who put most of the funds into the property, and more. However, when it comes to matters like the family usage of the property, sometimes the court can decide that even property owned separately can be transmuted into marital property. This article details how separate property can often become marital property.
Please note: divorce cases have different constraints and regulations depending on the U.S. state in which you’re currently residing. The article below details the particulars of divorce cases under Georgia law. It is always recommended to have an attorney present when dealing with bankruptcy and other legal matters.
What is Marital Property?
Marital property is property that is owned jointly by the spouses involved in a marriage. Marital property includes almost all property acquired during the marriage and may include property acquired beforehand. Marital property includes gifts between spouses, jointly-owned property, property used by the family as a whole, etc. In order for property to be designated non-marital property, it must almost always have been acquired before the marriage and not fallen under the category of possible transmuted property.
Transmutation of Property
Property that was previously owned by the individual spouses can become marital property if owned jointly during the marriage under a process called transmutation. Transmutation can occur many ways:
- Uniting the property with a piece of marital property in some method of practice.
- If your spouse begins working on your old car by giving it an engine upgrade, starts helping to pay off the car loan, or otherwise starts combining it with marital property or infusing it with marital funds, the property can become marital property.
- This is known as commingling property, and it’s the most common way separate property can become marital property.
- Implicitly or explicitly gifting a piece of property to a spouse.
- If you gift your old car to your spouse, even implicitly and even if the car was originally in your name and your name only, it can become marital property. The main issue here is if the property was actually gifted or not, and these cases can become very complicated.
- Re-titling the property from an individual ownership into a joint ownership.
- If you legally change the title of your car from your name to you and your spouse’s name, then it becomes marital property.
- Using the property for family purposes.
- If you or your spouse start using your old car to drive your children to school, then it can become a family car.
Tracing – Financial / Forensic Accounting
If one wished, one could distinguish between marital property and separate property in a divorce case by a process known as “tracing”. Tracing is the act of going through old financial documents (such as receipts, deposits, bills of sale, etc.), usually with a financial expert such as a legal accountant, in order to prove that the property was at least originally separate property. Tracing can be very complicated, and some judges still may not even put importance on the original state of the property.
Source of Funds Ruling
In Thomas v. Thomas (GA. 1989), the husband owned a home pre-maritally that was later contributed to with marital funds. The court implemented the “source of funds” rule, which stated the source of the funds put into the property must be greatly considered when ruling ownership of the property. Therefore, the marital unit was entitled to an interest in the home equitable to the amount of money it had put into the house, including the house’s estimated appreciation. This shows the grand importance of fund contribution over titling in Georgia law.
How can I Avoid my Separate Property from Marital Property?
- Prenuptial Agreements – The easiest way to protect your property from becoming marital property is by signing a prenuptial agreement with your spouse.
- Keep Separate Funds Separated – Only use separate funds or separate property to pay off separate debts. Using separate funds to pay off a home or a family car can result in the separate funds becoming marital funds. Of course, in cases such as bankruptcy, one may need to use separate funds to pay off marital loans.
- Have a Separate Bank Account – Only deposit funds into a joint account if you want the funds to be considered marital funds to be used on marital property.
- Consult with an Attorney – Legal expertise always goes a long way.
- Record Properly – Keeping accurate books and records of all your financial proceedings, especially the chronological information of such proceedings, can help a court from distinguishing what’s yours from what’s the family’s.
Divorce is a tricky, strenuous decision in one’s life; don’t go through it alone. Classification of property is subject to change, and there’s a strong chance that what you may believe to be individual property can actually be considered in the equitable division process. Call us at 770-709-1247 to have a helpful discussion with one of our highly experienced divorce attorneys today. We offer free consultations to qualifying potential clients and offer weekend appointment, so don’t hesitate. Contact >
