When Separate Funds are used for Marital Purchases Prior to a Divorce

When Separate Funds are used for Marital Purchases

What happens when separate funds are used for marital purchases prior to a divorce?  This occurs when one of the spouses uses money or assets they had prior to marriage (known as “separate property”) to purchase an asset which is classified as marital property in a divorce such as the family home.  How do you protect separate assets from marital assets and what does “commingling” mean?

Generally speaking, separate property is any money or assets a person has prior to entering into a marriage, as well as specific forms of inheritance during the course of the marriage. These assets and funds should not be divided as part of the marital property settlement in the divorce as they are the “separate” property of the spouse.

The complications set in when “separate” funds are used to acquire or support a marital asset and vice-versa. For example, if one of the spouses uses their separate investment account or borrows against a retirement account established and funded prior to the marriage to use as a down payment on the marital home the money they invested may need to be repaid out of the marital property prior to division.

Likewise, if the spouse owned a home prior to getting married and had converted it to a rental property and the married couple used marital funds to make repairs to the “separate” property of one spouse, the marital property settlement would need to be reimbursed for those expenses and perhaps some of the appreciation on the property itself prior to division of marital assets.

The commingling of funds, or when separate funds are used for marital purchases prior to a divorce can become quite legally complex. This is why it is important to work with the experienced Louisville divorce and family law attorneys at Dodd & Dodd. We have represented Louisville clients before our local Family Court for decades. We help to protect your assets, and work to achieve the best possible outcome in your case.

If you are concerned about “separate property” or the use of marital funds to support separate property we invite you to review the strong recommendations of our former clients and contact us or call 502-584-1108 to schedule an appointment with one of our experienced divorce and family law attorneys.