What is considered separate property in a divorce?

dividing assets in a divorce inheritance in a divorce property division in divorce retirement accounts in divorce separate property
separate property in a divorce

It's common for clients to enter my office with misconceptions regarding separate property in a divorce and how assets should be divided. This confusion often arises from reading online articles without verifying the source. Remember, laws regarding separate property during a divorce can differ greatly depending on the state. Reading advice intended for Texas residents while residing in Florida, for instance, might mislead you—not because the content is incorrect, but because it doesn't pertain to your specific situation.

Although we work with clients nationwide, we rely on attorneys for legal advice. Our role is to conduct financial analyses based on state laws to aid the attorney's case. Sometimes, when individuals opt for alternative dispute resolution methods like mediation, we assist in setting the criteria rather than strictly following the law if that's what the clients choose to do.

Since we're located in Ohio, let's delve into Ohio as an example. Ohio practices equitable division, which means marital assets are divided fairly during a divorce. Yet, fair does not always mean equal. The real challenge lies in discerning what qualifies as a marital asset and what falls under separate property in a divorce before determining how the marital assets will be divided.

Pensions & Divorce

It's a stereotype, but I've observed a recurring theme: women often say, "He can keep his pension, he earned it." In contrast, it's rare to hear men echo a similar sentiment. The pension often represents the largest marital asset. If a pension was earned during the marriage, it’s regarded as marital property. However, if parts of it were acquired before the marriage, that segment would be seen as separate property. Knowing this could greatly influence your negotiation during settlements.

Related post: How to Keep Your Pension in a Divorce

401-K & Divorce

Is a 401-K always separate property because it's under your name? Not quite. If contributions were made during the marriage, they're deemed marital property. But, if you had some of it before getting married, a portion of it might be your separate property—with proper documentation.

Ensuring separate property remains distinct—even in accounts mixed with marital assets—is crucial. Remember, the onus is on the individual claiming the property to be separate. So, documentation is paramount, especially considering corporate changes and mergers.

Related blog post on 401-Ks and divorce: How to Divide a 401K in a Divorce: A Step-by-Step Guide 

Is an Inheritance Separate Property?

Many people think that if you inherit money or property, it's always yours alone, even if you get divorced. But it's not that simple. If you keep the inheritance in its own account and don't mix it with shared money or assets, it's easier to say it's just yours. But if you mix it in with shared money, like joint bank accounts, or use it to buy things together, it can get confusing. Once mixed, proving the inheritance is still just yours can be tough. You'll need good records and maybe even expert help to show it's separate from shared property.

Related blog post on protecting an inheritance: Strategic Approaches to Protecting Inheritance from Divorce 

Assets Before Marriage

Before saying "I do," many individuals bring personal assets into a marriage. These could range from savings and investments to tangible properties like houses, cars, or heirlooms. While it might seem evident that assets acquired before the marriage would automatically be considered separate property, the intricacies of the law can complicate matters. For instance, if you owned a home prior to the marriage and continued to pay its mortgage during the marriage using joint funds, this could blur the lines between separate and marital property.

Another common scenario is when prior assets are intentionally or inadvertently commingled with marital funds, making them challenging to distinguish and trace back. Consequently, understanding and properly documenting the status of these assets, and seeking expert advice when needed, is vital in ensuring that one's rights and properties are protected during a divorce. Depending on the nature of your situation, a prenuptial agreement may be very helpful in clearly identifying what assets are being brought into the marriage.

Gifts in Marriage

Imagine a $10,000 gift from your grandfather. The fate of this money, as separate or marital property, hinges on its usage and documentation. Gifts from third parties are generally separate property, provided they aren’t combined with marital funds.

Tracing Separate Property in a Divorce

You're in luck! Professionals like a Certified Divorce Financial Analyst (CDFA) or a Master Analyst in Financial Forensics (MAFF) can guide you or your attorney in tracing separate property. Leveraging a Financial Neutral during mediation might offer the expertise to trace your property without involving multiple professionals.

Dealing with Debt

Though debt deserves its own dedicated article, in brief, debt can also be classified as marital or non-marital. Yet, complexities persist, which we'll explore another time. 

Please note that divorce laws vary from state to state. Intentional Divorce Solutions does NOT provide legal advice, and nothing on this website should be construed as legal advice. For legal advice, contact an attorney who works in your jurisdiction.


How we're here for you...

We understand that navigating a divorce can be daunting, filled with financial uncertainties and concerns. This understanding is rooted deeply in our foundation. Intentional Divorce Solutions was established by Leah Hadley, who, after her own divorce, grappled with the financial challenges of reshaping her life with three children.

It's our mission to ensure no one feels alone during such trying times.

Whether you're just beginning to understand finances or you're well-versed in investment strategies, we stand by you, offering expert guidance at every stage: before, during, and post-divorce.

Our clients often express gratitude for our expertise, which helps them sidestep financial pitfalls and build a stable foundation for their future.

To see how we can be of service to you, regardless of where you stand in your divorce journey, click here.


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