What property remains separate when couples divorce?

On Behalf of | Jan 15, 2025 | Division Of Property

Dividing property is one of the most frustrating elements of any divorce. The longer spouses have remained married and the higher their standard of living, the more difficult it may be to effectively separate their resources during a divorce.

Property division rules apply to all marital assets. Any income earned during the marriage and any property purchased with that income are potentially subject to division. Certain types of resources are not part of the marital estate but can instead remain the separate property of one spouse.

They have to report those assets to the courts and to the other spouse, but they can retain that property without dividing it in most cases. What types of assets are separate during divorce proceedings?

Proceeds from injury lawsuits

Individuals harmed by another person or a business generally have the option of taking legal action. A successful personal injury lawsuit can result in compensation to offset property damage expenses, cover medical costs and defray lost earning potential. The spouse who successfully pursued a personal injury lawsuit can typically protect the compensation granted by the courts as separate property.

Items earned before marriage or after separation

The divorce process can take months or longer than a year in some cases. People can typically exempt resources that they acquire after officially separating from one another from the property division process. They can also protect assets acquired prior to marriage as separate property. Spouses who can show when they acquired certain resources can maintain sole ownership of those assets in many cases.

Resources protected by a prenuptial agreement

A marital agreement is a contract between spouses. Frequently, prenuptial agreements include clear provisions about the division of property should spouses eventually divorce. Prenuptial agreements may also include provisions protecting specific assets as separate property. Spouses might agree that each spouse retains their retirement savings account as separate property in the event of a divorce, for example. Any assets specifically protected by a prenuptial agreement are theoretically exempt from the property division process.

Gifts and inherited property

It is common for people to receive valuable assets from outside parties during a marriage. They might receive gifts from family members or friends. They might also inherit valuable resources when loved ones die. Those resources remain separate property in the event of a divorce so long as people keep those assets separate from the marital estate.

Learning more about property division rules and performing a thorough financial analysis can help people understand what to expect in re: the property division process of an upcoming divorce. Those who can identify and preserve separate property may be empowered to more effectively establish a foundation for rebuilding their finances after they divorce.