Divorce Lawyer Discusses Division of Assets Owned Prior to Marriage
In most California divorce cases the husband and wife get to keep what they came into the marriage owning. Marriage itself does not entitle a spouse to ownership of assets held by the other spouse that were acquired pre-marriage. However, in some cases, regardless of title, your spouse could acquire an ownership interest in property that you owned coming into the marriage.
Separate Property vs. Community Property
The general rule is that all assets acquired during a marriage are marital assets and all assets owned prior to marriage are separate assets. But what happens when assets owned prior to marriage are not paid off at the time of marriage? Is the asset still a separate asset even if payments are made on the asset after marriage? The answer is yes…..and no.
A mixed asset situation most commonly exists with a house owned by one spouse before the marriage. If the house isn’t yet paid off at the date of marriage, the payments made after the date of marriage must be analyzed to determine whether joint marital funds (community funds) were used to pay down the loan during the marriage. If community funds were used to pay down the mortgage on the property, then the marital community will acquire an equitable interest in the house. The house maintains its characterization as a separate asset, but the community will be entitled to percentage of the equity on the property. This interest is referred to by divorce lawyers as a Moore-Marsden interest. This situation is difficult to avoid when the separately owned property is a primary residence. However, separate investment properties can be protected.
Protecting Separate Property Interests
“In order to avoid a Moore-Marsden apportionment on a separately owned investment property, the mortgage should always be paid with the rental income from the separately owned investment property”, says John Griffith. Just as assets brought into the marriage are generally separate assets, so too is the income derived form those separate assets. If separate income is used to pay down the mortgage on a separate asset, then the asset is generally protected from Moore-Marsden apportionment.
Property division in a California divorce case is a complicated matter. If you have questions regarding your divorce case give GYL a call. 858-345-1720