What Is Considered Marital Property?

What Is Marital Property?

When you marry, you formally acknowledge that you and your spouse have entered a binding partnership. It’s a lot like starting a business together. Marital property encompasses a lot of things. Anything you buy while you’re married with money you made while you were married is considered marital property. This commonly applies to things like houses and cars.

If spouses invest time or money into something one owned before the marriage, that asset can become marital property. For example, if one spouse pays to repair or improve another spouse’s house or car, they now have a stake in that house or car.

Non-Marital Property

Non-marital property refers to the things you already owned before you were married. If you were a homeowner before marrying your spouse, your spouse has no claim to that property unless you add them to the title.

Things That Count as Marital Property

Marital property is the property that can be divided between spouses if they decide to divorce. This type of property is difficult to protect.

• Assets acquired during the marriage.
• Appreciation of non-marital assets.
• Interspousal gifts
• Property held as tenants by the entireties
• Some retirement benefits

Assets Acquired During Marriage

Anything you buy after getting married is an asset acquired during the marriage. If you purchase a house after you get married, that house is technically marital property even if your spouse didn’t financially contribute to the purchase. It doesn’t matter if your spouse’s name is on the title of the home or not. The same applies to vehicles, land, or other investments.

Non-Marital Assets Appreciation

If something you owned before marriage becomes more valuable after marriage, the asset's appreciation is considered marital property. If you were a business owner before marriage and your spouse worked for your business, the appreciated value of business becomes a marital asset.

If your spouse devoted time or money to renovating or repairing a house you owned before the marriage, the value they added to the house is a marital asset. For example: before getting married, you owned a home worth $400,000. That means that $400,000 is your asset. Then, you use marital funds or the help of your spouse to renovate the property. It increases in value to $600,000. This means that $200,000 is marital property due to non-marital asset appreciation.

Interspousal Gifts

Gifts given from one spouse to another spouse are marital property. If you buy your spouse a $15,000 watch or diamond necklace as an anniversary gift, it’s technically half yours and half theirs. In the event of a divorce, you’re entitled to half the value of that piece of jewelry.

Property Held as Tenants by the Entireties

Tenancy by the entirety is a rare situation that most married couples will never encounter. Married couples with special independent financial interests may choose to pursue tenancy by entirety when they purchase a home together. Both spouses' names are on the title with tenancy by the entirety. Rather than owning the property in a technical 50/50 split, both partners own 100% of the property.

For a property to be held this way, both spouses need to be identical in their standing. They must be married when they purchase the property, have equal stakes in the property, and enter into the purchase of the property in the exact same way at the exact same time.

Some Retirement Benefits

If you start a retirement plan (like a 401k) before you get married, the money you’ve paid into the plan is yours. The additional funds are considered marital property if the retirement plan accumulates more money throughout the marriage.

Things That Count as Non-Marital Property

Non-marital property is any property that belongs exclusively to one spouse. This can be a property that belonged to the spouse before the marriage, an inheritance that was explicitly left to one spouse, income from an asset entirely separate from the marriage, and anything spouses chooses to protect with a prenuptial agreement.

• Assets acquired before marriage.
• Gifts or inheritance (not interspousal)
• Income from non-marital assets.
• Assets and property are excluded by agreement.

Assets Acquired Before Marriage

Whatever you bought with your money before marriage will remain your property during the marriage. It will also remain your property if you become divorced. This includes any real estate or cars you owned before marrying your spouse.

Gifts/Inheritance (Not Interspousal)

If a relative dies and leaves you money or property in their will, your spouse is not entitled to either. If your uncle passes away and leaves you his beach condo, that condo belongs exclusively to you unless you choose to add your spouse to the title.

Assets/Property Excluded by Agreement

You can create a prenuptial agreement before you get married. This agreement will designate what each spouse considers their own personal, untouchable property. If both parties agree, the assets and property listed won’t be regarded as marital property.

If you didn’t get a prenuptial agreement or something significant has changed, you could get a postnuptial agreement. A postnuptial agreement is essentially the same - you simply do it after marriage.

What Is Common Law Property?

Common law property is a system most states use to determine who in a marriage owns what assets. It’s a straightforward system. If one spouse owns a car and the other spouse’s name isn’t on the title, the vehicle is recognized as belonging solely to the spouse who owns it.

Which States Have Common Law Property Laws?

Forty-one states utilize common law property. Unless your state is an exception listed as a community property state below, you live in a common law property state.

What Is Community Property?

In states that utilize community property laws, anything purchased during a marriage belongs to both partners equally. This differs from equitable distribution, where separate property is split based on state-specific factors. It doesn’t matter if both partners are listed on the deeds or titles. All assets that aren’t explicitly protected as exceptions fall under community property.