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Managing Marital Property Dos & Don'ts

The Dos

Do consider entering into a prenuptial or premarital agreement prior to marriage to make it clear which property is not subject to division upon your death or divorce.

Do maintain accurate and complete books and records to establish the separate nature of property you wish to keep separate from the marital estate, such as that held by you prior to marriage or received by you alone as a gift or inheritance during the marriage.

Do continue to keep all separate property separate throughout the marriage if you are concerned about keeping it in your family or as your personal asset upon your death or divorce. That means, very generally, that you should not "commingle" property you owned prior to marriage with property you and your spouse acquire during the marriage, or it may become difficult--if not impossible--to legally determine which is which.

Do be aware that the increase in value of nonmarital property may be considered marital, such that each spouse is entitled to a share upon divorce or the death of the property owner, especially if the appreciation in value is considered "active" rather than "passive." Passive appreciation is, for instance, the increase in value of a bank account as a result of interest earned, or the increase in value of property merely as a result of inflation. Active appreciation, on the other hand, occurs as a result of some form of actual effort, such as by repainting the rental property, actively managing the stock portfolio, or working behind the counter at your spouse's ice cream store.

Do use only your nonmarital property to purchase or in exchange for other property if you want that other property to be nonmarital. In other words, a boat that you pay for with money you had before marriage and kept in a separate account after marriage will be considered nonmarital property, but if your spouse pays for part of it, or even helps maintain it, it could lose that characterization.

Do keep personal injury proceeds you acquire during marriage separate if you want them to retain their nonmarital character. The money you get from a personal injury lawsuit is yours alone, except for any portion that compensates you for your lost income or your spouse for the loss of your services.

The Don'ts

Don't use nonmarital money to pay off a marital debt, or it could lose its nonmarital quality.

Don't make deposits of income earned during the marriage (which is usually considered marital property) into nonmarital accounts or the money in those accounts could lose its nonmarital quality.

Don't open a joint bank account with nonmarital funds, even if you intend to keep track of which portion is nonmarital, or which portion is your nonmarital and which is your spouse's nonmarital money. It is much more prudent to maintain separate accounts if you wish to keep the assets separate.

Don't assume that just because you owned property prior to marriage no portion of it will be deemed marital property. If, for instance, the home you owned before marriage increases in value during the marriage as a result of you and your spouse's efforts to maintain and improve it, your spouse may be entitled to an equitable portion of that increase in value.

Don't assume that your business remains entirely a nonmarital asset after marriage. If your business or professional practice increases in value throughout the marriage due in part to your spouse's contributions, whether they are in the form of doing the bookkeeping, entertaining clients, or taking care of the home and children so that you can put in those long hours, your spouse may be entitled to a share of the increase in value upon divorce or your death.

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This publication and the information included in it are not intended to serve as a substitute for consultation with an attorney. Specific legal issues, concerns and conditions always require the advice of appropriate legal professionals.


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The Law Offices of Michael R. Magaril
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Westfield, NJ 07090
Phone: (908) 389-0100
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