Tag Archive for: separate property

Section 3501 of the Divorce Code sets out what property will be considered non-marital property and therefore not subject to equitable distribution in a divorce case. Any property acquired prior to the marriage that has not increased in value during the marriage is non-marital as well as any property acquired after final separation but potentially prior to the entry of a divorce decree as long as marital property was not used in its acquisition. Any inheritance received is treated as a gift and will also be deemed non-marital so long as it is not subsequently commingled with marital funds. The court will also not look at property that was disposed of in good faith while the marriage was intact. An example would be property sold to a family member for its fair market value. Veterans’ benefits cannot be attached, levied or seized except in the case where a portion of the veteran’s retirement pay was waived in exchange for the benefits. Finally, any payment from a cause of action or lawsuit where the underlying claim occurred before the marriage or after separation. Property acquired prior to the marriage or in exchange for said property is not marital as well as property expressly excluded by valid written agreement of the parties at any time.

Property that is generally considered marital would be all property acquired by either party from the date of marriage through the date of separation that doesn’t fall into any of the above categories. There is a presumption all property acquired during the marriage is marital regardless of how title is held (e.g. individually vs. jointly). It will also include the increase of value of any non-marital property during the course of the marriage.

The court may give credit for individual property brought into the marriage depending on the circumstances. Generally, any credit to be received decreases with the length of the marriage. For example, Bucks County will reduce the credit by 5% a year such that there is no longer a credit after 20 years. A prime example of a situation where this rule would be applicable is the purchase of a marital home. Say Spouse A contributed $40,000 of their pre-marital money to the purchase of the house. If the parties separated after 5 years, the amount of Spouse A’s individual contribution is reduced by 25%. Accordingly, Spouse A would argue that 75% of the $40,000 down payment, or $30,000, is their separate property and not subject to equitable distribution in the divorce.

The rules on credit for individual or pre-marital property can vary county to county since it’s not a statute, but more or less a policy used by the respective Masters when looking at the marital estate in a divorce matter. Be careful with the commingling of individual property with marital property. It will be hard to make an argument on the amount of individual property that should be credited to a party if it’s hard to trace the source of the funds. If you encounter a situation in your divorce where it may be necessary to make a distinction between assets that are clearly marital versus those that you can trace back as being pre-marital and/or separate, you should be sure to consult with an attorney with experience in the valuation of these type of assets or risk all of the assets being addressed in equitable distribution and subject to division with your spouse.

Click here to read more on dividing marital property in divorce.