Approximately 39% of marriages in the United States end in divorce. Florida currently has the seventh-highest divorce rate in the country. If you and your spouse are considering a divorce, it is important to understand the procedure – especially when it comes to property. Here we explain the differences between separate and community property and how it affects estate planning.
Separate Property Vs. Community Property
Florida is not one of the 10 states in the U.S. that is considered community or marital property states and is instead a separate, or non-marital, property state. This means the spouses will divide property acquired during the marriage and property that belonged to either spouse before marriage will usually return to the original owner.
Community Property
Also known as marital property, community property includes tangible and intangible assets acquired during your marriage. These items may include:
- Tangible:
- Homes
- Vehicles
- Bank accounts
- Intangible:
- Stocks
- Bonds
- Retirement benefits
Other types of community property include:
Assets Jointly Acquired
This includes anything you and your spouse acquired during your marriage. Many often assume they can protect an asset if it is only in their name – that is not the case and will be joint community property.
Value Appreciation Of Separate Assets
If you and your spouse have made upgrades to any assets owned by either party before marriage, the price of the enhancement is now community property.
Retirement Benefits
If you or your spouse have preexisting retirement benefits that increase during the time of your marriage, that difference is now considered community property.
Gifts
Even if you or a spouse paid for a gift with a separate account, that gift is now community property. In most cases, the court will divide the cost of the gift.
Separate Property
Also referred to as non-marital property, this is property a party can prove to be solely theirs and will remain in their possession. Examples of separate property include:
Property Acquired Before Marriage
If you or your spouse can prove without a doubt that you kept ownership of a property or asset before marriage and it has not been jointly enhanced, it will be considered separate property.
Gift Or Inheritance
If you or your spouse received a gift or inheritance from someone other than your spouse before marriage and you can prove the property has not appreciated in value, it is separate property.
Nonmarital Property Income
This includes income, usually from a rental property either spouse owned before the marriage, and the income can be proven to stay in an existing account separate from any joint or marital accounts.
Agreed Excluded Assets
This includes property and assets that both parties agree to exclude as marital property through either prenuptial or postnuptial agreements – even if the state would usually consider the assets as community property.
Other Things To Consider
Divorce is a complicated process, but there are other aspects of separate and community property to consider for both parties to receive the best possible outcome.
Property Commingling
This is the combining of separate and community property, usually adding either spouse to an existing bank account to pay for bills and needs. Both spouses to come to their own agreement on how to separate the accounts or it will be left up to the court to decide.
Liabilities
Debts are also split during divorce procedures. Liabilities are also split into separate and community liabilities and depend on when and how the debt came to be. Separate debt will become the responsibility of the person who acquired the debt while both parties must pay community debt.
Though this is a fairly comprehensive guide to separate and community property, it is important to always seek advice from a trusted estate attorney, such as Gary I. Handin, P.A. If you have questions on how we can help you protect your property during a divorce, call us today at 1-877-815-4560.