How to (Not) Keep A Separate Property Separate for Purposes of Equitable Distribution

Few spouses, while happily married, stop to consider maintaining the proper legal segregation of assets they acquired separately before or during the marriage. This often leads to trouble when a spouse mixes his/her separate assets with marital property and, as a result, causes the law to view that asset as having become marital property as well. One recent decision from the 4th District Court of Appeal, ruling that a real estate interest a wife inherited had converted to marital property, demonstrates the problems a spouse can create when she fails to maintain the required separation.

Before the couple married, the woman and her two sisters inherited a house. While the couple was married, the wife bought out her sisters’ ownership interests in the house. The couple eventually renovated and sold the house. They paid for the renovations from money in a marital account. When they sold the house, they deposited the proceeds into a marital account. What was left over after capital gains taxes remained in that marital account for the next 10 years, where they used to money to make stock trades.

Some time later, the husband filed for divorce. The trial court ruled against the husband’s request to include the wife’s original one-third ownership interest as a marital asset for purposes of equitable distribution.

The appeals court concluded that this ruling was erroneous. The partial ownership in the house was nonmarital when the wife first inherited it. She could have kept it as separate property if she had engaged in conduct that demonstrated that she “intended that the assets remain non-marital.” The way a spouse can show this type of intent is by placing the asset(s) into an account that he/she owns spearately and never mixing the asset(s) with other assets that the couple owns as a marital unit. Once a spouse puts an asset into a marital account or an account that also holds marital assets, to the point that it becomes impossible to delineate the nonmarital from the marital assets, then courts will assume that the owner intended to create a gift to his/her spouse of a one-half interest in the asset and that it has become marital property.

That is exactly what happened in the present case. The wife used marital property to pay for the renovations to the house, she deposited the money received from the sale of the house into a marital financial account, the couple paid the taxes on the sale from that marital account and used money from that account to make stock purchases. This constituted a “commingling” of the assets and, once assets were commingled, the law presumes that all the assets, whether previously marital or nonmarital, are made marital by these actions.

If you inherit, purchase or otherwise obtain separate assets while you are married, or brought an asset into the marriage that you desire to keep separate, you must take meticulous care with handling that asset in order to ensure that it can remain separately yours. If you engage in commingling, you create a difficult-to-overcome legal presumption that you meant to convert the asset to a marital one. For clear and reliable advice, and skilled representation, regarding your equitable distribution issues, contact the South Florida family law attorneys of Sandy T. Fox, P.A.. Our attorneys can help you to keep the assets that rightly belong to you.

More Blog Posts:

Adding Husband to Cemetery Plot Deed Makes Plot Marital Asset, Fort Lauderdale Divorce Lawyer Blog, April 21, 2014
Wife’s Work Improving Husband’s Office Building Converts Property to a Marital Asset, Fort Lauderdale Divorce Lawyer Blog, Dec. 5, 2013