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Navigating the complexities of property division during divorce can be challenging, particularly when distinguishing between separate and marital property. Different states have varying laws regarding the classification of earnings after separation and how they relate to contributions made to marital property investment funds or pensions.

Post-Separation Earnings as Separate Property

In states like Missouri and Texas, earnings accrued after separation are generally regarded as separate property. This means that any income generated by either spouse after they have physically separated is typically not considered part of the marital estate. This classification is significant, as it allows the higher-earning spouse to retain their individual income and avoid dividing it during divorce proceedings.

Marital Contributions to Investment Funds

Conversely, contributions made to marital property investment funds or pensions during the marriage are typically classified as marital property. In states like California and New York, any growth or earnings from these contributions during the marriage, including until the trial or dissolution of the marriage, will be divided equitably between both spouses. Thus, the increase in value due to marital efforts is shared.

Legal Separation vs. Physical Separation

Defining separation correctly is crucial in understanding property rights. In states such as Washington and Illinois, legal separation is a formal legal status that may impact property classification. While a couple is legally separated, the court can establish clear guidelines regarding the management and division of assets, influencing whether earnings and contributions are considered separate or marital property.

The Impact of Legal Separation

Legal separation can create a distinct legal framework for asset division. For instance, during a legal separation, both spouses may maintain their separate property rights on income but still manage marital debts and obligations. Therefore, any income earned during this time may be treated differently than in a simple physical separation.  It may also reclassify investment contributions and their increase in value as separate property upon a court ordered legal separation rather than upon the final order of dissolution.

Conclusion

Understanding the distinction between legal separation and physical separation is vital in states that attribute post-separation earnings as separate property while recognizing contributions to marital assets. Given the discrepancies in state laws, seeking legal counsel can help clarify specific rights and obligations, ensuring both parties navigate these complex waters effectively.

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Spooky goblins, howling wolves and haunted houses don't compare with the scary decisions couples face when deciding terms of a divorce settlement agreement.  These terms include matters affecting their future, family and money.  What could be scarier? 

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"What doesn't kill you...makes you stronger, wiser, and more capable.  But first you must learn to lose."

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You're going to get a lot of advice about what to do and when.  But, what about what not to do? 

  1. Letting go of being a "spouse"
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