What is Marital Property

Posted by on 03.28.2018 in Posts | Comments Off on What is Marital Property

When parties get divorced, one of the things they are always most surprised about is what power the court has as to the division of their property. Under the Pennsylvania Divorce Code, the Court has the power to divide what is called “marital” property. Marital property is defined in the Code as all property acquired during marriage except for certain things such as inheritances and gifts from outside persons. It also includes the increase in value of the pre-marital property during the marriage.
An inheritance, when inherited by only one of the parties, is a non-marital asset, not subject to division by the court. The problem comes, however, when the person who inherits property puts the inheritance into joint names. For example, if a stock account is inherited, placing both names on this account now effectively makes it jointly owned. If a check from a non-marital asset is received, depositing the check in a jointly titled bank account has the effect of making the money joint property. The court takes the position that a non-marital asset deposited in joint names is converted into a marital asset that is now part of the marital estate and can be divided between the parties once it is placed into a joint bank account or joint brokerage account. What this means is that the court considers it to be a “gift” to the marital estate.
As a practical matter, the increase in value of an inheritance is, of course, marital anyway. Part of the definition of marital assets is that the increase in value of separate property during the time the parties live together after marriage is considered to be a marital asset. It is the basic inheritance that is a separate asset, unless and until such time as one person deposits it into joint names. Most important is keeping proof of the value of the inherited property as of date of receipt or date of marriage. It is from that date that the increase will occur. Without proof, how would the court know what increase in value is to be attributed.

So, too, with pre-marital assets such as a house or separate bank accounts that were owned before the parties actually married. A part of the definition of marital property includes the increase in value of this asset, as well, if any, up to the date of separation. If those assets are put into joint names, however, they immediately become part of the marital estate subject to division by the court at a divorce. Often, one party will take a house, for example, that they owned before the marriage, or received as part of a prior divorce, and immediately put the new spouse’s name on that property. When this occurs, the equity in the house is immediately made part of the marital estate. If that transfer occurs shortly before the divorce, the court will take that into consideration but, by putting the other parties’ name on it, the asset itself becomes marital.

The biggest surprise for most people is that gifts between husband and wife are also marital. If a husband gives a wife a beautiful bracelet or wife gives a husband a beautiful watch, common sense would make you think that they are separate property. They are not. The legislators, in drafting the Divorce Code, indicated that gifts between spouses are presumed to be for the enjoyment of both and, therefore they are marital. That is not to say that the court will take the watch off husband’s wrist or the bracelet off wife’s arm and give it to the other party. These assets will, however, be valued in the divorce and left on the side of the person who has been enjoying them.

This would not include an engagement ring that was given before the marriage since this would not have been acquired “during” the period of the marriage. However, the increase in value of the diamond or sapphire would be marital up until the date of divorce.
If you have questions about this, feel free to consult with us.. If you intend to keep your property separate, however, please remember that it should stay in your name and not in joint names.

For more information please contact Lynne Gold-Bikin at 610.278.1511 or lgold-bikin@wglaw.com

Disclaimer: The contents of this post are for informational purposes only, are not legal advice and do not create an attorney-client relationship.