Virginia Divorce Law: What is Separate Property

A lot of people contact me asking questions about whether or not certain types of property will be divided during a divorce. The most common examples may include inheritance, businesses and real estate. Some people come into a marriage with a lot of property while others do not have a lot of assets when they get married.

Regardless, when two people get a divorce property will get divided into three separate types of property: Marital, Separate and Hybrid. So what is separate property, and what are some common examples?

What is Separate Property in a Divorce?

Virginia law actually has a legal definition of separate property. Virginia law defines separate property as:

1. All property, real and personal, acquired by either party before the marriage;

2. All property acquired during the marriage by bequest, devise, descent, survivorship, or gift from a source other than the other party;

3. All property acquired during the marriage in exchange for or from the procees of sale of separate property so long as that property was maintained as separate.

4. Income derived from separate property so long as not attributable to labor from during the marriage;

5. Increase in value of separate property unless contributed to during the marriage

These are the five most common types of separate property. This is a lot of legal jargon to say that separate property is essentially those items you bring into a marriage that you keep separate and do not comingle or contribute marital funds or labor to.

What Are Examples of Separate Property?

A good example of separate property is a business that you start prior to marriage. That business starts out as separate property, and would normally not be divided during the marriage. The income from that business would also not be divided, nor would increase in value, unless you make substantial marital contributions to that business.

For example, if your spouse invests in your business after you are married, you add your spouse to the business as a joint owner, or you take out additional financing during the marriage then that may turn the business into joint property that has to be divided.

Another example of separate property is a house that you owned prior to marriage. So long as you do not add your spouse to the house and it is owned outright, you normally would not have to reimburse your spouse anything during the divorce unless there were major renovations or marital investments in the property. If the house is mortgaged and you pay it down during the marriage, then substantial portions of those mortgage payments would get divided since you are investing marital funds into the property.

Why You Need a Divorce Lawyer.

If you are going through a divorce and have substantial assets, then it is important to have a divorce lawyer to help you catalog all of your property and figure out how much of it will be divided and how much the other spouse is entitled to. The divorce lawyer can also make sure you do not waive any interest you may have in the other spouse’s assets as a result of marital contributions to the property. Make sure to hire a lawyer if you are considering a divorce.

Virginia Divorce Law: What is Marital Property

There are three types of property that have to be addressed in a Virginia divorce case: separate property, marital property, and hybrid property. This blog post is dedicated to the second type of property, marital property.

Marital property, generally, is property acquired during the marriage and the entire value gets divided in some form or fashion.

However, many people I talk to don’t understand how broad this category of property is. So what is marital property, and what gets divided in a divorce case?

What is Marital Property in Virginia?

Virginia law has a legal definition for marital property. The legal definition of marital property is:

(i) all property titled in the names of both parties, whether as joint tenants, tenants by the entirety or otherwise,

(ii) that part of any property classified as marital pursuant to subdivision 3, or

(iii) all other property acquired by each party during the marriage which is not separate property as defined above.

In basic terms, most property acquired during the marriage, regardless of whose name it is in, is considered to be “marital property.”

Some common examples of marital property that often surprise people include:

1. If your spouse has a Kohl’s credit card you were entirely unaware of, then you could be responsible for portions of this as “marital debt” even if your name is not on the card.

2. If you purchase a vehicle during the marriage but your spouse’s name is not on the vehicle, then your spouse could be entitled to money if you decide to keep it.

3. If you purchase a house during the marriage but do not add your spouse’s name, then your spouse could still be entitled to reimbursement.

4. If you have a separate bank account without your spouse as a joint account holder, then the money in that account added during the marriage could be divided.

5. If you are self-employed and started a business during the marriage, then your spouse may be entitled to compensation.

There are a lot of exceptions to these categories, which is one of the major reasons to talk to a lawyer.

Why It Matters Whether Property is Marital

Virginia divorce judges have to divide property that is considered marital in some form or fashion. If property is considered marital, then you have to start financial planning to determine what your ideal outcome in a divorce case will be. You may decide that selling marital property as part of the divorce proceedings makes more financial sense than offering your spouse a buy out to keep the property.

All of the marital property combined is what we call the “marital estate,” and understanding the size and make up of the marital estate is important to having a game plan for divorce proceedings.

Why You Need a Divorce Lawyer.

A good divorce lawyer is able to help you look at all the property you have and determine which items are marital property and which are not. They can also help you create a financial game plan for what happens during and after the divorce and to prioritize those property items that matter most to you. Also, a divorce lawyer can connect you with financial planners if you need additional assistance planning for life after divorce.

Make sure you call a divorce lawyer if you are looking at a divorce.

Virginia Divorce Law: Weddings Rings and Engagement Rings

One of the most controversial items that divorce lawyers have to address in a divorce case is what we do about wedding rings and engagement rings. The law on how to handle these two things is quite tricky, and can be a trap for people who do not have an experienced lawyer. These rings are also often worth a lot of money. Therefore, it is important to have a general idea of how the court treats these two items.

So how do Virginia courts handle wedding rings and engagement rings?

How Does a Virginia Court Divide Engagement Rings During a Divorce?

For the most part, the answer to this question is that they do not. There are some factual exceptions that can come into play, but engagement rings are often considered to be separate property in Virginia. Generally, in a Virginia divorce case, the Court is only dividing what we call “marital property,” or property attributable to the marriage.

Engagement rings, however, are usually purchased prior to the marriage and are gifted from one person to another. Most people consider engagement rings to be part of the marriage, but the law mostly disagrees with that.

The Virginia courts have ruled that rings given prior to the marriage are considered pre-marital gifts and belong to the person who received the ring. Therefore, the divorce court does not have the power to force the receiving party to give it back.

How Does a Virginia Court Divide an Engagement Ring if the Marriage Does Not Happen?

Often times, people break up before they get married. That leads many people to asking whether they can get the engagement ring back. The answer to this scenario is a mixed bag and depends on a lot of different factors. If the ring was only given believing they were going to get married, Virginia law considers that a “conditional gift.” In other words, it is a gift that has not happened yet. Therefore, if the marriage does not happen, the engagement ring goes back to the giver.

There are some scenarios where there may be other promises in exchange for the ring. In those scenarios, the ring could go other way depending on what has been agreed to.

How Do Virignia Courts Divide Wedding Rings or Wedding Bands?

Many couples decide to memorialize the wedding by buying wedding rings or wedding bangs in addition to the engagement ring. These types of rings are much more difficult to divide than engagement rings and often turn on a number of different factors. For example, the timing of the wedding rings being exchanged, whether there was a certificate of marriage prior to the ceremony, and where the money for the wedding rings came from.

These same issues can come up if the engagement rings are changed in some way after the marriage has been confirmed.

Why You Need a Lawyer

Every case is unique, and the facts and circumstances behind how the rings were exchanged will often change how the court will view the rings. An experienced lawyer can help walk through how the rings were purchased and give you additional insight on how the court will treatt the rings. Since rings are an expensive commodity, it is best to make sure you get the right answer.

Virginia Divorce Law: Types of Retirement Accounts

If you are going through a divorce case and have retirement accounts of any kind, it is important to know how those retirement accounts will be treated by the Court and common strategies for minimizing the impact on your retirement plans. Retirement accounts come in many different types. Retirement accounts can also be different depending on if you are a government worker or private sector.

So what are the most common types of retirement accounts, and how are they treated by the divorce court?

How Are Defined Contribution Plans Divided in a Divorce?

A defined contribution plan is a type of retirement account that you put money into over the course of your employment. That money is held until retirement age or a number of specific factors are met. There are many different types of defined contribution plans including 403(b) accounts, 401(k) accounts, SEP accounts, VRS accounts and TSP accounts.

Defined contribution plans may even have a match system depending on the employer. If you put so much of your paycheck into a defined contribution plan, your employer may have a matching policy.

Once you put those funds into a defined contribution plan, they get invested by a plan administrator in various types of assets. The type of plan you have will dictate the types of investments available. Different types of defined contribution plans have different rates of return and different tax advantages.

In a divorce case, the Court will look to see how much was contributed to the plan during the marriage. The Court will then divide this “marital share” and add any gains or losses that have happened since the separation based upon the market performance. These gains and losses are only based upon the contributions made during the marriage.

How Are Defined Benefit Plans Divided in a Divorce?

Although they are becomming more rare, many different types of employers are still offering these plans. These are essentially pension plans. Depending on how long you work for your employer, you may be entitled to monthly payments after you retire.

In the private sector, union jobs are largely the only remaining fields that have defined benefit plans. Government workers may still have defined benefit plans in the form of a FERS account.

In a divorce case, Virginia judges will typically use a formula to determine how these pensions will be divided:

PRESENT VALUE X (TIME WORKED DURING MARRIAGE/TOTAL TIME WORKED)

The best way to understand how this calculation works is to contact your plan adminstrator. They can potentially calculate the monthly benefits.

How Can a Divorce Lawyer Can Protect Your Retirement?

There are two very helpful type of people to have on your side if you are planning for retirement and divorce. You should have both a CPA and a divorce lawyer walk you through the types of retirement accounts available, their tax advantages, and whether it is a good idea to diversify your retirement. Even if you are not coontemplating a divorce, make sure to contact your CPA to understand your retirement plan and how to plan for the future.