About a quarter of American states have community property rules in which assets and debts are split 50/50. However, Pennsylvania is an equitable division state, which means that marital assets are divided in an equal manner if not necessarily 50/50. Therefore, it is important to know the difference between what is owned jointly and what is owned separately outside of a marriage.
Assets Owned Prior to Marriage Are Generally Sole Property
If you owned an asset prior to getting married, you will generally get to keep it after the marriage ends. For example, if you owned a furniture set before getting married, that would likely be yours to keep in a divorce. However, exceptions can be made in the event that an asset appreciates during the time two people are married.
Asset Appreciation and Commingling Exceptions
When an asset appreciates in value during a marriage, that appreciation is often considered to be a joint asset. For instance, say you had a 401(k) that was worth $1,000 on your wedding day. That $1,000 would typically be exempt from being divided in a divorce. However, if the account was worth $10,000 when the divorce became official, some or all of that $9,000 in appreciation could be eligible to be split in a divorce settlement.
Commingling of funds takes place when joint money is used to maintain a separate asset, such as if you spent $10,000 to upgrade the home that your new husband owned while you two were dating. While the house started out as separate property, it could now be considered a joint asset since both parties have contributed money to its upkeep.
A Prenuptial Agreement Could Determine How Property Is Labeled
A prenuptial agreement is a customized divorce agreement that is created before a marriage even takes place. It allows both parties to the relationship to determine who keeps the marital home or what happens to a business owned by one person in the marriage. It can also determine if property is to be sold instead of one person keeping it for him or herself.
For a prenuptial agreement to be valid, it should be created and signed several months before the wedding. Each party can have a Jenkintown family lawyer review the agreement before signing it. In addition to property division matters, a prenuptial agreement can also help a couple work out whether either party is entitled to spousal support.
Assets Held in a Trust May Be Treated as Separate Property
If an asset is held in a trust, it is generally considered to be owned by the trust. Therefore, it would likely be considered separate property or an asset that is otherwise not allowed to be divided per the trust’s terms. As a general rule, if creditors and tax authorities can’t get at something owned by a trust, a former spouse likely cannot either.
Just as with a prenuptial agreement, a trust’s terms can be reviewed by a divorce lawyer prior to the wedding. If necessary, edits may be made to help strengthen the protection it provides the asset from a divorce.
Inheritances Are Often Considered Separate Property
If you inherit money from a family member, you are generally allowed to keep it in the event that a marriage ends. However, rules relating to the commingling of assets may come into play as they relate to how the cash is treated when the marriage actually dissolves. If you are planning to inherit money or assets, you can also make arrangements to open separate accounts to better track how they will be handled.
Everything Else Could Be Considered Marital Property
Anything else that is acquired during a marriage may be considered joint property that can be divided in a divorce settlement. This includes everything from a toaster set or artwork gifted to a couple at a wedding to a cat that was adopted during the last months of the union. It is important to note that animals are generally considered property, much like a house or a car. However, some jurisdictions have allowed the creation of legally binding pet custody arrangements.
If you need a Jenkintown divorce lawyer, call (215)-886-1266 to learn more about how Joanne Kleiner & Associates can be of assistance. An online intake form is also available to begin the process of finding legal counsel.