Many people don't give much thought to the state of their premarital property until the possibility of divorce starts looming over their heads. In the ideal case, property that any spouse had before the marriage should still belong to them after the divorce. The other party will have no claim on these properties. However, there are exceptions to this rule, and it's because of these exceptions that many people find themselves losing property that they had for years before getting married.
Appreciation in value of Separate Property
When the property you had before you get married increases in value while you're married, it may be considered marital property. This will depend on whether the appreciation is active or passive.
Active appreciation: This is an increase in the value of the property as a result marital contributions, i.e., sweat equity or money. Therefore, if you use money earned during the marriage to make improvements that raise the value of this property or if your spouse helps in making these improvements, the separate property will be considered marital property in a divorce.
Passive appreciation: When the value of the separate property increases due to factors beyond your control, e.g., due to market conditions and your spouse has never lived in the property, and no marital money has gone into making improvements on the house, the separate property will remain as such.
Transmutation
Transmutation is any action that makes it seem like you are converting your premarital property into marital property. This is when the property/asset is seen to be gifted to the marriage. There are various ways that transmutation can occur, and many people may not be aware that this has happened. For example, if you use money from your separate account to make a purchase or pay for some expense in your marital home, the account is now considered your marital property.
Commingling
This is the mixing of separate property with marital property and doing so may turn the separate account into marital property. For example, adding your marital income or your spouse's income to the separate account may make the account marital property. Therefore, it can be divided too during a divorce.
However, where there is commingling, a forensic accountant can also be hired to provide an accurate estimate of the value of the premarital property. Ask your divorce law attorney if you can use these services during your divorce. Contact a company like Grafton Law Office for more information and assistance.
Share3 March 2018
