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In the event of divorce, what is matrimonial property compared to separated property?

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They say money doesn’t buy happiness, and the thousands of failed celebrity and CEO marriages seem to prove it. While the same can be true of divorcing couples, millionaire couples face several unique issues when they separate.

The amount of money you walk away with to secure your financial future will depend on several factors, the most important of which is whether the family wealth was earned during the marriage or whether the breadwinner did so before stepping in. alley. State laws are relatively consistent, considering that marital property is subject to partition in divorce and includes all money earned during the marriage, even if it is in an account only in your spouse’s name.

More specifically, any salary, bonus or earnings, pension contributions, houses, businesses or cars purchased during the marriage by either spouse are considered marital property subject to division in the event of divorce. Marital property is usually divided equally (50/50) or fairly, depending on the rules of your state and whether you live in a state of equitable sharing or communal ownership.

Separate property includes all property owned or acquired by either spouse before marriage. If your future ex had a lot of money before you got married, you probably won’t make a dime of it. You are also out of luck if your spouse received money from an inheritance or a gift from another person. Personal injury compensation to compensate for pain and suffering also falls into the bucket of separate property.

Rich people are also much more likely to have a prenuptial agreement. This legal document usually spells out what is separate property if the two of you separate, and often guarantees that the less wealthy spouse comes away with less.

Everything is relatively simple until it is not. In wealthy divorces, the distinction between marital property and separate property is rarely black and white. With more richness, the lines fade. The blending of assets doesn’t happen on purpose and usually happens as you go about your life, not realizing that you are inadvertently creating problems.

Separate assets can quickly become so mixed up with marital assets that it is virtually impossible to identify what should be subject to partition and not. For example, if the income earned during your marriage is used to pay for a house originally purchased by your spouse before marriage, part of its value may be considered marital property. The waters are also cloudy if the wedding money was spent to renovate this separate property or to pay for upkeep and upkeep costs.

Then there is the question of appreciation. As house prices have skyrocketed recently in many parts of the country, real estate gains can be substantial. Now you have to struggle to calculate what percentage of the increase in the value of the house is marital and what is separated, also taking into account the amount of money that was funneled from your marriage to the property. You may have a headache just imagining the calculation.

The same problem arises if your spouse received a gift from their parents and used the proceeds to purchase a vacation home titled in both of your names. The “what’s mine is yours” perspective can cause big financial mistakes. Was the weekend getaway to the Hamptons a gift from your companion… or was it a mistake? Is the beach house married now or separated?

The mix of assets is not relegated to the realm of real estate alone. If you and your spouse share a bank account that was in their only account before you got married, you’ve got another mixed mess. This is also true of the investment and retirement accounts that you brought into the marriage and added to after you said your “yes”.

The longer the marriage, the more likely it is to mix and the more documentation will be needed to support the claim of separate ownership. As a general rule, the longer the period, the greater the number of statements to be produced and analyzed. The person making the separate ownership application will need to check what the account balance was when you got married and detail how much money was paid into it during the wedding.

Each separate property research analysis is unique, based on the couple’s assets, number of years of marriage, length of asset ownership, and many other factors. What all millionaire divorces have in common, however, is the need for a crack team of legal and financial professionals who must unravel complicated finances and make sure you get the assets you are entitled to.

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