Getting married is so exciting, isn’t it?
Sharing your life with someone is one of the most rewarding and thrilling things that can happen to you. It’s so special to meet and fall in love with that remarkable person, it feels like nothing will ever go wrong again.
Well, that may be true for you, but there’s a lot of evidence out there that it could go south one day. Intertwining your entire life with another person’s complicates the hell out of yours. It’s a beautiful thing, but also scary.
Not enough people go into marriage with a proper understanding of marital property rights. Luckily, we’re here to give you a quick education.
It might all seem like roses and rainbows now, but it’s possible that one day you might want to split up and that will complicate things when it comes to who owns what. Here is your guide on marital property.
Marital Property: What Is It?
There are many implications of the legal variety when it comes to marriage. Your stuff isn’t just your stuff anymore. Your money isn’t just your money anymore. And, your debts aren’t just yours anymore. Everything is shared when you are married, depending on state law.
Succinctly put, marital property is a state-level distinction of a married person’s property; assets and money. Anything acquired by either person in the marriage during the course of the marriage is marital property. Anything acquired before the marriage took place, is not.
What all of this means for you in the event of a divorce or death, depends wholly on where you live. States/provinces differ in their laws when it comes to marriage and property. A state is either a common law state or a community property state.
In common law states, which make up the strong majority of areas, a piece of property belongs to whoever’s name is on the deed, title paper, or registration document.
If both names are on the title, which they often would be in many two-income households, then the ownership of the property is split 50-50. Makes sense, right?
When things go awry in a common law marriage, the law protects the property rights of the individual. For example, Mary weds Homer. Five years after they are married, Mary buys a speedboat with her money and she is the sole name on the deed.
Fast-forward another five years when Homer and Mary just aren’t feeling it anymore. They get divorced. Because they co-signed for most of their stuff, they have to split it all up, except for Mary’s speedboat. Since she was the only one that put up the money for the boat, she gets to keep it.
That’s essentially how common law marriages work when it comes to marital property, with some variation. Community property is quite different.
Community property laws are in fewer states, most likely because it complicates things for those involved. If you live in Arizona, California, Idaho, Louisiana, Nevada, Texas, New Mexico, Washington, or Wisconsin, then you’re in a community property state. So, what exactly does this mean?
Community property laws state that any income, debts, and property purchased with income made during the marriage is community property and belongs equally to both spouses. So, if Nancy buys a car a year after she marries Jeff, Jeff owns half of that car.
Property inherited, received as a gift, and anything acquired before marriage is separate property and is not subject to the community property laws. And, married couples don’t necessarily have to abide by the state’s rules.
Prenups, postnups, and other written agreements can be used to turn community property into separate property. There are many other small rules that complicate community property laws to no end.
It’s very important to educate yourself on these matters, regardless of what laws are in place in your state/province. You need to learn your rights so that you don’t lose something that you shouldn’t have.
How To Avoid Problems
You’ve probably heard about couples going through messy divorces on TV or through a friend. The source of this messiness is usually based on some financial disagreement between the aggrieved spouses. The simple fact of all of this is that marital property complicates things once the love fizzles out.
Communication Is Key
While it is true that this sometimes can’t be avoided, depending on how ugly things get between you and your ex, there are precautions the two of you can take to attempt to mitigate this problem ahead of time. It’s not romantic to discuss, but talking about money before you get serious is actually a great idea.
It may feel like you’re laying the groundwork for an easy divorce, but setting clear financial expectations will go a long way in the future. Figure out what is best with regards to expenditures.
Do you have a joint chequing or savings account? Who is the primary earner and what is expected in terms of contributions from both parties? Who’s paying what bills? And, who’s the one balancing the books?
Projecting Into the Future
In addition to talking about this, it’s good to figure out what future expenses might look like. Are you going to move on to a larger house? What about raising kids? It costs a great deal to raise children. Food, school, health checkups, saving for a college education.
Everything that you do together to build your life will cost money, so crunching the numbers and creating expectations now will help you both later in the event of a divorce.
If you live in a common law state, you can avoid the mess of splitting up the property by abiding by an “if you want it, you buy it” kind of philosophy. Since you can’t work this way in community property states, you see more prenup agreements.
Love is grand. Love conquers all. But, love is a battlefield and you don’t want to be a casualty. Have an understanding with your partner that things don’t always have a happy ending will allow you to protect both of you.
Splitting up your marital property should be common sense when you get divorced. Too often, passion and anger get in the way of this. Don’t let that happen to you.
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