In general, separate property or non-marital property is any property, real or personal, acquired before marriage, after divorce (or in some states by separation of the spouses before divorce), by gift or inheritance during marriage, or during marriage with separate property funds. Further, any income made from a spouse’s separate property trust the marriage is also usually considered that spouse’s separate property. However, it is important to note that separate or non-marital property is subject to a slight variance in definition depending on the state, and whether the state uses a community property ownership system or a common law ownership system, otherwise known as an equitable distribution system.
Separate property issues generally arise in two scenarios: the death of a spouse or at divorce. After a spouse dies, a court will categorize the decedent spouse’s property as separate property or marital property for the purposes of distribution to the decedent’s beneficiaries. This distribution will depend on whether the decedent left a valid will or trust and the type and number of living family members the decedent has.
During a divorce proceeding, one of the primary tasks of the court is to categorize all of the spouses’ property as either separate property or marital property. Categorizing this property is very important, as it will affect the distribution of property at divorce. When property is deemed a spouse’s separate property, the spouse will generally get to keep the entire property interest at divorce.