What is the difference between marital and separate property?
The essential difference between marital and separate property is that marital property will be divided and distributed by the court while separate property is not divided.
To illustrate the concept of marital and separate property it helps to look at an example.
Jack and Jill got married on January 1, 2000 and they purchased a home for $200,000. The $20,000 down payment for the home was from an inheritance that Jill had from her grandmother. When Jack filed for divorce in 2011 the parties had $100,000 left on the mortgage. Assuming that the home is still worth $200,000 how would the equity in the home be divided?
Answer: If the house was sold during the divorce Jill would get the first $20,000 (since the $20,000 down payment was from an inheritance, and the law tells us that an inheritance is separate property) the remaining equity would most likely be divided equally between the parties. If Jack wanted to retain the house after the divorce he would have to have the home appraised so the buyout could be calculated. Assuming that the appraisal indicated that the home was worth $200,000, Jack would pay Jill $70,000 ($20,000 for her separate property contribution and $50,000 for one-half of the equity).
What types of property does the law consider marital?
- Property acquired during the marriage (houses, retirement accounts, bank accounts, etc., that were purchased or accrued during the course of the marriage)
- Appreciation on separate property due to labor, monetary or in-kind contribution.
- A participant account (a deferred compensation plan available to some Ohio public employees), and any income derived from the investment of this money that accrued during the course of the marriage
What types of property does the law consider separate?
- An inheritance by one spouse by bequest, devise, or descent during the course of the marriage
- Passive income from separate property
- Property acquired prior to the marriage or after a decree of legal separation
- Property excluded by a valid antinuptial agreement
- Some compensation for personal injury cases
- Gifts acquired during the marriage that can be proven to have only been given to one spouse
Blurring the distinction between marital and separate property
The sections above made it appear that distinguishing between marital and separate property claims is pretty easy. Unfortunately, nothing is ever as easy as it seems. The real problem with separate property is that frequently marital and separate property become commingled. To illustrate this concept and example is helpful.
Example: When Jack and Jill got married and Jill owed a condo free and clear. The fact that she owned the condo prior to the marriage makes it separate property. However, during the course of the marriage Jack and Jill updated the kitchen and bathroom in the condo. Assuming that the renovations were made with marital funds, the issue becomes how much value did the marital contribution make to the property. In a divorce, Jack would be entitled to one-half of the appreciation on condo that resulted from the upgrades.
Does Ohio law require that all marital property be divided equally in a divorce?
There is a common misconception that all property is divided equally during a divorce. While equal distribution may be the most common outcome, it is not the hard and fast rule.
In the State of Ohio, the law governing the division of property in divorce and legal separation cases states that: “…the division of marital property shall be equal. If an equal division of marital property would be inequitable, the court shall not divide the martial property equally but instead shall divide it between the spouses in the manner the court determines equitable.” What this means, is that courts are supposed to do what is fair in each particular case – sometimes this will be an even distribution, and sometimes it will be an uneven distribution.
Can I get a larger share of the marital assets if my spouse engaged in financial misconduct?
Yes. Ohio law permits the court to compensate the offended spouse with a larger share of the marital assets if the other spouse committed financial misconduct. Financial misconduct includes, but is not limited to, the dissipation, destruction, concealment or fraudulent disposition of assets.