Marriage isn’t just a romantic partnership between two people who want to build a life together. It’s also a financial partnership that allows two individuals to combine their assets, property, and debts.
However, when this partnership dissolves, it can be difficult to untangle your finances and lives.
For this reason, understanding Virginia’s laws regarding the separation of property is incredibly important during a divorce.
This article will explain the different types of property in Virginia. We’ll also provide brief description of how courts generally divide these forms of property during a divorce.
Property Division and Divorce in Virginia: How to Divide Your Stuff
All Virginia divorces that include some form of jointly owned property are subject to the state’s equitable distribution process.
“Equitable distribution” refers to the “fair” division of property between two divorcing spouses.
Put simply, this process includes the classification, valuation, and division of all marital property in a manner that is “fair and just.”
Please note our emphasis on a “fair” distribution, rather than an “equal” distribution.
Unlike some states, Virginia allows spouses to divide their property in a way that is “fair” rather than in a direct 50/50 split.
While this 50/50 split is common, property can also be distributed in different ratios. This is especially true if a spouse contributed a disproportionate amount of property or debt to the marriage.
The factors used to determine whether a split of property is “fair” are laid out in Va. Code § 20-107.3(E).
Property Classification Categories
The accurate classification of property, assets, and debts is essential to a fair and equitable distribution in Virginia.
“Property, assets, and debt” generally come in three different categories:
- Separate Property
- Marital Property
- “Mixed” (or “Hybrid”) Property
We’ll outline the basics of each below.
Separate property is the easiest classification to understand.
As defined by the Virginia Code, separate property includes:
- All property, real and personal, acquired by either party before the marriage.
- All property acquired during the marriage by bequest, devise, descent, survivorship, or gift from a source other than the other party (i.e. inheritances and gifts given to a specific spouse, such as heirlooms).
- All property acquired during the marriage in exchange for, or from the proceeds of, the sale of other separate property.
This section also includes anything accrued financially from assets such as stocks, bonds, or mutual funds, provided that those financial assets were kept separate throughout the marriage.
Finally, you should note that the largest benefit of a prenuptial agreement is to establish certain property as “separate” before you formalize your marriage.
For this reason, separate property can also include any property, assets, and debts which your prenup specifically defines as separate.
Virginia courts treat debt in much the same way as property.
Like separate property, separate debt includes all debt incurred by either party before the marriage. Common examples include student loans and some forms of credit card debt.
Similarly, you can also classify most debt accrued after your separation as separate debt.
For example, if you tell your spouse “we’re getting a divorce” and leave to live elsewhere, you may be able to classify any debts your spouse takes on after this point as separate rather than marital.
Finally, you should note that:
“To the extent that a party can show…that the debt was incurred for the benefit of the marriage or family, the court may designate the debt as marital.”Virginia Code § 20-107.3(A)(4)
In this way, certain forms of separate debt may become marital debt if it was incurred “for the benefit of the marriage.”
For example, if one spouse purchases a car entirely in their own name, but both spouses use it as the “family” car, the court may consider the car (and any associated debts resulting from the purchase of the car) to be marital property.
On the other hand, “marital” property includes all property that is titled in the name of both spouses.
Marital property can also include any property used for the benefit of the “family” rather than the “individual.”
Common examples of marital property include the family home, the family car, and jointly owned retirement accounts.
Similarly, courts will often consider any “shared” property to be marital in nature.
This can include property such as your couch, dog, silverware, and any other items in your shared home.
In the same way, courts will generally consider all gifts given from one spouse to the other as marital property.
Essentially, you should consider any property that doesn’t fall under Virginia’s specific definition for “separate” property to be marital property.
As mentioned in the separate property section above, sometimes separate property can become marital property.
For example, if you use marital funds to contribute to an otherwise separate retirement or savings account, those accounts will most likely become “marital” for the purposes of equitable distribution.
Or, more specifically:
“When marital and separate property are commingled into newly acquired property resulting in the loss of identity of the contributing properties, the commingled property shall be deemed transmuted to marital property. However, to the extent that the contributed property is retraceable…and was not a gift, the contributed property shall retain its original classification.”Virginia Code § 20-107.3(A)(3)(e)
Essentially, separate property becomes marital property when you can no longer establish, through evidence, that the property is distinctly separate.
Marital debt includes all debt incurred in the joint names of the parties during the period of marriage.
Common examples of marital debt include things such as mortgage payments, car payments, and payments on jointly owned credit card accounts.
However, some extenuating circumstances can turn marital debt into separate debt.
If a party can show that a debt was incurred during the marriage, but for the benefit of only one of the parties, and was not used for a marital purpose, the courts may classify it as separate debt.
For example, if one spouse chooses to take on a large amount of debt for a singularly held hobby (such as model trains) the court may consider this debt to be separate in the event of an eventual divorce.
Hybrid Marital Property
The specifics of hybrid marital property are too complicated to cover in an article such as this.
Instead, you should always speak about any potential hybrid property with an attorney who has reviewed your entire case.
However, as a very quick definition, “hybrid” property is effectively the marital share of any otherwise separate forms of property.
The crucial element you should remember about hybrid property is the effect of personal effort.
Personal effort is any form of labor, effort, inventiveness, physical or intellectual skill, creativity, managerial, promotional, or marketing activity that one spouse directly applies to the property of the other spouse.
This is to say, otherwise separate property can become “mixed” when one spouse puts personal effort into increasing the value of the other spouse’s property.
A Quick, Basic Example of Mixed Property in Practice
An easy example of this is if one spouse owns a house, but the other spouse renovates that house.
In such a scenario, the spouse who owns the house would retain the full “separate” value of the house, while the spouse the renovated the house may have a claim to any increases in value brought on by their renovations.
So, if the house was originally valued at $200,000, and the renovations brought the price up to $250,000, the spouse who renovated the house may have a claim to a percentage of that $50,000 increase, as determined by a judge.
(Hopefully you can see why the specifics of this process are too complicated to cover in an article such as this.)
Property and “Loss of Identity”
Another common way that separate property becomes hybrid marital property is when one spouse commingles separate property with marital property.
This happens the most when value from one category of property contributes to the value of another, resulting in the loss of identity of the contributed property.
If this commingling cannot be separated or retraced to separate property in a way that satisfies the court, then the property will remain hybrid, giving both spouses a claim to a portion of it.
An essential element of any divorce is the equitable distribution of all shared property.
As part of the equitable distribution process, you’ll have to categorize all of your property as either “separate,” “marital,” or “hybrid.”
In this way, understanding how to answer the question of “who owns what?” prior to your divorce is crucial to ensuring a smooth and trouble-free divorce.
Ultimately, the only way to properly understand this question is to speak with an attorney about your property.
Only an attorney can help you navigate the complicated issue of property division during a Virginia divorce.