The laws of dividing property vary from state to state. As a starting point, however, most states allow parties to keep their own separate or nonmarital property. Nonmarital property includes property that a spouse brought into the marriage and kept separate during the marriage. It also includes inheritances received during the marriage and kept separate during the marriage. In addition, nonmarital or separate property may include gifts received by just one spouse during the marriage. A few states permit division of separate as well as marital property when parties divorce, but the origin of the property is considered when deciding who receives the property.
The right of a spouse to keep his or her separate or nonmarital property may depend on the degree to which the property was, in fact, kept separate. For example, if a wife came into a marriage with a $20,000 money market account and wanted to keep it as nonmarital property, she should keep the account in her own name and not deposit any funds earned during the marriage into the account. She should not, for instance, deposit her paychecks into the money market account, because the paychecks are marital funds and could turn the whole account into marital property. (Marital property will be explained in the next section.) The process of changing nonmarital property into marital property and vice versa sometimes is called transmutation (from Latin words meaning "cross" and "change").
Another example: If a husband inherits some stock from his mother during the marriage and he wants to keep it as nonmarital property, he should open his own investment account and should not use the account for any investments that he and his wife own together. If a husband or wife decides to use some nonmarital funds for a common purpose, such as purchasing a home in joint tenancy, that money normally will become marital property. The nonmarital property will be viewed by the courts of most states as a gift to the marriage.
Similarly, if a wife or husband takes nonmarital funds and places them in a joint checking account, the funds generally will become marital property. In some states, the presumption that funds placed in a joint account are marital property can be overcome by specific proof that the spouse depositing the funds did not intend to have the funds used for a marital purpose. Nonetheless, if a husband or wife does not want nonmarital property converted into marital property, it is best to keep the nonmarital property separate. Always.
Property distribution laws have many intricacies and variations between states; understanding them usually requires a lawyer’s help. For example, in many states, the increase in value of nonmarital property (such as an investment account or a house that is held in the name of only one party) also would be nonmarital property. In some states, however, the increase in value would be marital property.