Owning an asset prior to your marriage does not necessarily guarantee that the asset will be immune from division in the event of divorce.  Generally, when an asset is brought into a marriage, the asset is exempt from division, however, there are exceptions. For example, if a party uses his or her separate funds to purchase a residence in his or her name shortly before the marriage and the home is later used as the martial home, the purchase may be considered to be “in contemplation of the marriage” and therefore transformed into a marital asset.  This may be the case even if the home was titled in only the owner spouse’s name throughout the marriage. Also, a home purchased prior to marriage may become subject to distribution in the event of divorce if the property is maintained or improved with money or non-monetary contributions during the marriage.

 

Also, when added contributions or improvements made to pre-marital property during the marriage increase the value of the property, the appreciation in value may be considered as having been “acquired” during the marriage and therefore subject to distribution in the event of a divorce.  Similarly, an IRA, brokerage or retirement account acquired prior to the marriage may increase in value over the course of a marriage.  If the increase in value was a result of additional contributions to the IRA or other account, the increase would be considered acquired during the marriage and subject to distribution. However, if an account simply increases because of market conditions it is exempt.  Additionally, if an investment account owned prior to the marriage increases in value during the marriage and the increase is brought about solely through the efforts of the owner spouse, that value is not distributable. However, conversely, if the value was derived in part or whole from the efforts from the non-owner spouse, it may be subject to distribution.

 

Additionally, the commingling of pre-marital assets with joint assets acquired during the marriage may effectively transform an otherwise pre-marital asset into a marital asset subject to distribution.  For example, a spouse deposits pre-marital funds into a joint bank account with marital monies.  The separate funds have been commingled with the joint account monies and are now arguably subject to distribution.

 

A spouse with separate pre-marital property must therefore be cautious as to where the money is going to be deposited, how the funds are going to be used, and who is going to have access.  Otherwise, commingling of such funds can ultimately render it marital property subject to distribution in the event of divorce.   The best way to protect your interest in pre-marital assets is to enter into a pre-nuptial agreement that outlines each party’s right to retain his and her separate property owned prior to the marriage in the event of divorce.  Contact an attorney at Iandoli & Edens, LLC at 908-879-9499 to discuss your rights.

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