Marital v. Nonmarital Property

Determining what is marital and what is nonmarital property is not always easy.

In some cases, it is a straightforward, black-and-white process. In others, defining an asset as marital or nonmarital falls into a grey area; this generally happens when property is a mix of both marital and nonmarital assets.

Property Type Marital Property?
Property and/or income produced by a property Possibly. It depends on the amount of active management by either spouse and whether the income is used for family purposes.
Increases in value of property, including business interests Possibly. It depends on the level of active involvement by at least one spouse during the marriage.
Increases and improvements to marital property Yes, unless improvements are paid for by nonmarital investments.
Property ownership that can be linked to marital property Yes
Permanent improvements to mixed or nonmarital property Yes, if the improvements are paid for with marital funds.
Property owned as tenant by the entireties or jointly Possibly. Whether real property held jointly or in the entireties becomes marital property depends on whether at the acquisition of the property or later, one spouse wanted to make a gift to the other. If so, then the property will be considered marital property. Tenants by the entirety becomes marital property in action filed after 1994. Joint property based on intent.
Pensions and retirement benefits Yes, if acquired or earned during marriage and whether or not it is vested.
Disability benefits Yes, even if the injury occurs once divorced.
Military retirement benefits Yes
Military disability pay No
Veterans Administration disability pay Yes
Railroad retirement benefits Yes
Civil service retirement benefits Yes
Foreign service retirement benefits Yes
Disability retirement Possibly, depending on the circumstances.
Personal injury claims No, unless awards are granted to pay for loss of consortium (one spouse cannot provide the other with support, cooperation, aid, or companionship), wages, and medical expenses.
Worker’s compensation claims Yes, if the injury causes a loss of wages and future earning capacity or if medical expenses are paid for using marital assets and there is a loss of consortium. The amount awarded to the non-injured spouse will only be the amount accumulated until the marriage is terminated.
Professional educational degrees and licenses No
Life insurance policies Yes, if premiums are paid with marital assets, resulting in an increase in the policy’s value.
Dissipated marital property Yes
Normal appreciation of marital property Yes
Partnership interest Possibly, depending on the source of funds used to acquire the interest and whether any increase in value was due to the active participation of the spouse during marriage.
Interest in partnership property (i.e., held as tenants in partnership) No
Remuneratory gifts (e.g., stock given to employee for Christmas) Yes. Such a gift is in the form of a bonus and therefore considered income earned during marriage
Unexercised stock options Yes. These are viewed as benefits provided to an employee in their compensation package.
Unexercised preemptive right to purchase stock No
Jewelry Possibly, depending on whether the jewelry was acquired during marriage and how it was acquired.
Future earning capacity No, unless as compensation for an injury.
Reputation of the professional No
Reputation in general No
Goodwill Possibly. Commercial goodwill (i.e., the goodwill of a trade or business) is marital property, while professional goodwill (i.e., goodwill of someone engaged in a professional practice) is not. However, the goodwill of the professional practice itself is marital property if it is independent from the reputation or continued presence of the professional.
Anticipated renewal commission on insurance policies Yes
Accrued holiday and vacation leave No
A gift to both parties Yes
Security deposit Yes
Lottery winnings Possibly. In general, lottery winnings are marital property if acquired while married. Depending on the case, it may not be considered marital property if acquired while separated.
Spendthrift trust Yes
Forgiveness of marital debt Yes
Nonmarital intra-spousal gifts No. Marital property includes real property held as tenants by the entirety, even if they were originally non-marital.
Social security benefits and/or contributions to No
Survivor annuity benefits Yes
Contingent interests Yes
Income generated during the marriage Yes, including any funds used to purchase, or generated from, investments.
Beneficiary’s interests in an irrevocable life insurance trust when the insured is still alive Yes

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