Marital and Separate Property

What determines whether property owned by a party to a divorce is marital property (available for division with the other spouse) or separate property (not available for division)? The Alabama Court of Civil Appeals shed some light on the question in Kaufman v Kaufman, Case No. 2040100 and 2040276 (Ala. Civ. App. December 30, 2005).

The parties had been married for 33 years but had no children together. At the time of the divorce, the husband was 87 and the wife 66. The wife testified at trial that neither spouse had significant assets at the time of their marriage, and the husband offered no evidence that her statement was incorrect. The couple separated in 2003, and soon thereafter the husband withdrew more than $50,000 from their joint checking account and gave it to his adult daughter.

The trial court awarded to the wile assets worth approximately 23% of the value of the marital estate and to the husband assets worth approximately 77%. As rationale for doing so, the trial court indicated that it was aware the husband had made “a very reasonable” offer to the wife “and she turned it down.” The trial court ordered the husband to pay the wife alimony of $500 per month for five years.

The appeals court rebuked the trial court for considering the parties’ settlement negotiations in its award.

Any evidence pertaining to offers of compromise between the parties is not admissible. Super Valu Stores, Inc. v. Peterson, supra. Our supreme court has explained that “the rationale and public policy underlying the privileged nature of settlement negotiations is the encouragement of extrajudicial settlement of disputes.” Super Valu Stores, Inc. v. Peterson, 506 So. 2d at 324. It is axiomatic that the trial court may not obtain information on its own that would be inadmissable if presented to it by the parties. Therefore, the trial court’s consideration of the parties’ settlement negotiations in reaching those portions of its judgment pertaining to the property division and alimony award was improper.

The appeals court also took issue with the trial court’s method for deciding what was marital property and what was the husband’s “separate estate.” Here’s the appeals court’s statement of the law about marital and separate property, from Nichols v. Nichols, 824 So. 2d 797, 802 (Ala. Civ. App. 2001):

A party’s ‘”separate estate” is that property over which [he or] she exercises exclusive control and from which the [spouse] … derives no benefit by reason of the marital relationship.’ Gartman v. Gartman, 376 So. 2d 711, 713 (Ala. Civ. App. 1978). The separate estate of the parties in a divorce proceeding includes property owned prior to the marriage and property received by gift or inheritance during the marriage. § 30-2-51(a), Ala. Code 1975. Although marital property generally includes property purchased or otherwise accumulated by the parties during the marriage, it may also include the property acquired before the marriage or received by gift or inheritance during the marriage when it is used, or income from it is used, regularly for the common benefit of the parties during their marriage. See § 30-2-51(a), Ala. Code 1975.

The appeals court quoted the trial court’s statement in open court that “I’ll consider any joint account as far as division of property,” “if [the wife] is claiming [an interest in one of the accounts], then she needs to show whether or not she made any contributions to it,” and “I am getting a feeling that he contributed most of the money during the marriage.”

Then the appeals court summarized the mistakes the trial court made:

In this case, the parties were married for 33 years. They are both at or nearing retirement age and are receiving retirement income. The trial court’s comments made during the course of the hearing indicate that it considered primarily the husband’s financial contributions to the marriage and placed little value on the wife’s contributions, both monetary or otherwise, to the marriage. The trial court appears to have improperly determined that the assets listed [the exhibit relied on by the parties] were not all marital assets. In addition, we note that the trial court improperly considered the parties’ settlement negotiations in reaching its division of the parties’ marital property and in its alimony award. The trial court’s property award disproportionately favors the husband, and, given the foregoing and the length of the parties’ marriage, we must conclude that the trial court abused its discretion in reaching its property division and alimony award. We reverse and remand for the trial court to enter a judgment fashioning an equitable property division and alimony award.

9 comments

  1. Curious says:

    I have a question for you. If a couple is legally “divorced” what would be a reason that they would file taxes together? They do not own any property together (ie: home, cars, etc) but they are filing an income tax together. Is this mandated in thier divorce decree? Also: if they are on the same medical insurance and car insurance (listed as “married”), would this be a reason they would have to file together? I heard that some people are required to keep thier spouse on thier policies on occassion for a specified timespan required in thier decree? Is this true? If so, do you know the time span or is it different for each situation?

  2. leeborden says:

    I’m not aware of any provision that permits taxpayers who were divorced on December 31 of a year to file joint tax returns for that year.

    Some divorce decrees contain prvisions requiring one spouse to maintain insurance coverage for the other spouse after the divorce is effective. It is quite rare, however, for an employer to permit coverage of a divorced spouse as part of group insurance.

  3. Curious says:

    thank you….I figured as much. are the laws different in each state regarding this? (you helped me out alot with this, thanks again!)

  4. Regina says:

    Ok I have been married to my husband for 10 years but been together for 15 years. I worked up till 3 years ago now I stay at home, he brang nothing into the marriage, and now in the past five years we have accumilated 5 horses and 3 vehicals and i am afraid he is going to take my three horses because he seems to think he has done it all, but i beg the differ, I am the one that cleans the stalls give the horses baths including his, i feed in the morning and evening and he does nothing with them he is always working, give me ur oppion, how would this work in a divorce and what would i need to prove myself? I live in alabama

  5. Suzi Perry says:

    I am being sued for a common-law divorce. There was no marriage which is what is before the court presently. However, should the worst happen I am trying to understand what is separate and what is community property.

    I had checking accounts prior to the date he said we married. He was never put on these accounts and did not put his money in them. We had no joint checking accounts. I then used these prior accounts and bought properties. He is claiming these properties as joint. I also used inherited money funneled into one of these checking accounts to write some of the purchase checks. Are these properties community even if I paid for them from accounts I previously had and they had none of his money in them. These accounts did receive my paychecks and rents. Does that contaminated the accounts?

    I think these accounts existed prior to the so-called marriage. So they would be separate assets and would stay that way. The income I earned and interest and dividends would fall into community even though deposited into these separate accounts.

    Please let me know what you think.

    Thanks so much.

  6. DSG says:

    My husband and I have been married 9 years 1 month, before we got married I did not have real property. He lived in a ome he built and paid for as being built, therefore no title or deed was every made. During marriage I recieved a lawsuit settlement and put a great deal of the money into the farm, along with sweat and work. When the money ran out and he told me since he had spent all the money that he did not need me anymore and for me to leave, well I haven’t and don’t plan to. He has been making life for me very unbearable and has also been watching quite a bit of porn on the computer. And he has even threaten me with a gun. If I got a divorce could I make him sell the property (it has been in family for quite a few years) and give me my share of improvments and investment I have done.

  7. Lee Borden says:

    I would be surprised if a judge would order him to sell the property. More likely would be some allocation of other assets that, in the judge’s mind, are designed to offer you some compensation for the investments you have made over time. That may take the form of an allocation of cash or debt, or maybe even a cash payment.

  8. Linda says:

    I have separate property from my husband. When we married I had a home and property and other property. If I should sale any part or all of the separate property to relocate would this pose a problem for my separate property or do I have a document drawn up and have my present husband sign like a partition or what to make sure there is no commingling? How could I do this? Please help

  9. Lee Borden says:

    In general, it’s a good idea not to do a lot of selling and buying of property on the eve of divorce; it often looks to the judge, rightly or wrongly, like the person doing the selling and/or buying is trying to game the system. If you and your husband are cooperative enough to sign an agreement, why not just sign papers for an uncontested divorce?

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