Can separate property be converted?

Can separate property be converted?

A question we sometimes receive regarding the difference between marital property and separate property is whether separate property (such as an inheritance) can actually be considered marital property, which would be subject to division in a divorce.

Without giving legal advice, the basic answer to the question is: it could…followed by the qualification: it depends.

Generally, inheritances, like most elements of separate property, are not subject to be considered marital property. As such, it would not be divided according to state law. However, if the separate property is converted to marital property, it would be eligible to be divided.

With an inheritance as an example, it could be converted if it is deposited into a joint account that has a husband and wife as joint owners. It may also be transformed if the funds are used to purchase joint property, such as home or car that is titled in both spouses’ names.

Of course, an argument could be made that only a portion of separate property was actually converted from separate property to marital property depending on how it was used (or how much was used). This could be used to preserve the original nature of the property.

For those concerned about losing separate property (even inadvertently), it could be preserved by creating a prenuptial agreement (or a postnuptial agreement for those who are already married) that will specify what assets will remain separate property despite their use within the marriage. If you have additional questions about converting assets, an experienced family law attorney can help.

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