Does commingling make non-marital property become marital property in a Louisville divorce? Property division is one of the areas within a divorce where our clients often have significant concerns. Perhaps, except for child custody and parenting time, the division of marital property may be of the highest concern to many of our clients. How is property characterized and divided in a Kentucky divorce? What is the distinction between “marital” property and “non-marital” property?
Non-marital property is usually an asset or debt held by one of the parties before the date of the marriage or after the date of division (the final order of the Court in the matter). Marital assets and debts include any obligation or valued possession or asset obtained by either of the parties during the term of the marriage itself. In many cases, one or both parties have used non-marital assets, accounts, or property they owned before the marriage to support or benefit them while they were married. A typical example of this occurs when one of the parties owned a house before the marriage, sold it after the wedding and used the proceeds to help to acquire the family home.
What happens if a person had retirement accounts, substantial investments or owned a business or professional practice prior to getting married? Are these assets going to be classified as non-marital assets, and preserved as the separate property of the spouse who owned them?
Let’s return to the example of the spouse who owned a house prior to getting married. If the house is converted to a rental property, that house and all monies collected as rents will remain the non-marital asset of that spouse as long as they keep every financial and labor associated with that property aspect outside of the marriage. This often requires separate accounts, making sure any repairs or painting are done by contract laborers (instead of the spouses working together to keep up the property), as well as paying taxes and other expenses out of the separate funds in the account associated with that property.
However, what happens if that spouse sold the house and used the money to help purchase the marital home? What if the rents and expenses from a rental property were commingled with marital funds and accounts? What happens if the non-owner spouse contributed labor to fixing up the house or helping to find and manage tenants? Now the non-marital asset has become commingled with marital assets. What portion of the marital property is actually traceable to the non-marital interests of one of the spouses? In other words, does the commingling make non-marital property become marital property, subject to equitable division in the divorce?
Let’s consider the example of an inheritance. Presume one of the spouses receives $100,000 as an inheritance upon the death of their grandparent. The inheritance can be preserved as a non-marital asset if it is properly structured, and the money is placed into a separate account under the sole name of the associated spouse. All interest should remain in that account, and proceeds should not be used for the benefit of the married couple if the owner of that inheritance wishes to keep it as a non-marital asset.
What if the couple used this money to make the down payment on the home they shared? How is the otherwise non-marital portion of the inheritance contributed to the purchase of the family home managed during a divorce? The experienced divorce, family law, and tax attorneys at Dodd & Dodd have served the greater Louisville area for decades. Our firm, founded in 1869, is one of the oldest law firms in our state. You can trust and rely upon this experience and the sound counsel we provide during each important issue in your own divorce case, including the division of marital property.
Does commingling make non-marital property become marital property in a Louisville divorce? How will the process of your divorce separate the marital interest in a specific asset or debt, from the non-marital interest? We invite you to review the strong recommendations of our former clients and the legal industry and contact Dodd & Dodd or call 502-584-1108 to schedule an appointment with one of our attorneys.
