What Is Considered Separate Property in a Divorce?

Divorce can be a complex process, especially when it comes to dividing property and assets between spouses. Is Alabama a community property state? In Alabama, as in most states, assets are divided using the principle of “equitable distribution,” which means that assets are divided fairly but not necessarily equally. 

Is Alabama a 50/50 State in a Divorce?

No, when you hear the term 50/50 state, it typically refers to a community property state. Alabama is not a community property state. With an equitable distribution state, assets are divided fairly. However, it doesn’t mean a judge splits assets down the middle 50/50. For example, one spouse might receive the marital home while the other spouse will receive another asset of similar value. 

Judges in Alabama have considerable discretion when deciding what an equitable distribution of assets in a divorce is. What one judge might decide in a particular case vary widely from the decisions in other cases.

This uncertainty is why we recommend that clients try to work out an agreement with their spouse instead of leaving it to chance with the judge. Our experienced divorce attorneys are skilled negotiators. Get a free consultation by calling (256) 859-7277 or using the contact form on the website.

How Is Property Divided in a Divorce in Alabama?

Alabama divorce laws on property division are pretty straightforward. Marital property is split between the spouses, while separate property goes to the respective spouse. Marital property includes all assets acquired during the marriage, no matter whose name they are in. Separate property includes assets owned by one spouse prior to the marriage plus any gifts or inheritances received by one spouse during the marriage. 

Figuring out what is marital property and what is separate property can be extremely complex, especially when you are dealing with long-term marriages or high-asset divorces with co-owned businesses.

Separate Property in a Divorce

As a rule, separate property, or separate assets, are the funds, properties, investments, heirlooms, inheritances, or other possessions you own independently – items with only your name listed on any proof of purchase. Separate property typically includes assets you owned prior to your marriage, things you inherited, items you bought with your own personal funds, or things you received as a gift.

Any assets used for both you and your spouse (such as vehicles, retirement accounts, house purchases, etc.) or purchased through marital funds, even if purchased by only you, will usually be considered marital property. Some debts can also be considered separate, such as student loans or credit card debt you acquired before your marriage, but those debts incurred within marriage will be included in the division.

Potential Marital Assets 

Many types of assets can be subject to property division in an Alabama divorce. Some common examples include the following.

Real Estate

Any real estate acquired during the marriage will typically be considered marital property and will be subject to division. That could include the marital home, vacation homes, and investment properties.

Bank Accounts

Any bank accounts opened during the marriage could be considered marital property, regardless of whose name is on them, and will be subject to division. Examples include checking accounts, savings accounts, and investment accounts.

Retirement Accounts

Retirement accounts such as 401(k)s, IRAs, and pensions can also be subject to division in an Alabama divorce. These accounts could be divided using a Qualified Domestic Relations Order (QDRO).

Personal Property

Personal property such as furniture, electronics, jewelry, and vehicles can also be subject to division. Gifts from one spouse to the other can also be subject to division in the divorce. The court will assign a value to each item and divide the total value equitably between the spouses.

Intangible Assets

You may have to look beyond the typical tangible assets such as real estate, vehicles, and bank accounts and consider less common assets that can be marital property. For example, intellectual property, such as a trademark, can be marital property.

Other examples include the cash value of a life insurance policy, tax credits, tax refunds, etc. With the popularity of cryptocurrency and NFTs in recent years, separating marital property can be even more complex. 

Determining What Is Separate and Marital Property

A court will look at several factors to determine what is considered marital property and what is separate property in Alabama. For example, they will consider whether an asset was acquired before or after the marriage and what funds were used to purchase it.

Here is how each of these factors can help determine an asset’s status for division in the divorce: 

• Timing: If you acquired the asset before the marriage, it is generally considered separate property. Similarly, if you received it after separating, it could be regarded as separate property.
• Source of funds: If an asset was acquired using funds that were clearly separate property (such as an inheritance), it might retain its status as separate property.

It is important to note that separate property can become commingled with marital property over time. For example, suppose one spouse inherits a large sum of money during the marriage and deposits it into a joint bank account. In that case, that money may lose its status as separate property and become subject to division during the divorce.

Understanding the Value of Property

The way in which the communal and separate properties are divided depends on numerous factors, but mostly on the life circumstances of each spouse, like economic and vocational standing, and the length of the marriage.

The important thing to remember is that each court follows a different set of rules for property division. Each divorce case is unique, and each court will award and divide property accordingly. For this reason, separate property may sometimes be included in that division.

The division may also depend on any personal sacrifices of the marriage. If one spouse stayed home with the children during most of the marriage while the other acted as the chief breadwinner, the latter would likely have more valuable separate assets, but the court wouldn’t likely judge everything only from that information. In this situation, the court may recognize the value of the stay-at-home spouse by awarding that spouse more of the communal assets, to level the playing field, so to speak.

To determine how property will be divided, the monetary values of both communal and separate properties have to be legally determined. If you are walking through property division issues, each of your respective lawyers, and sometimes financial advisers or accountants, will try to help you and your spouse assess the value of your personal properties: your home, additional properties, vehicles, investments, heirlooms, benefits, and any debts.

Contact an Experienced Alabama Divorce Lawyer

If you’re searching online for answers to questions such as, Is Alabama a community property state? please contact an experienced Alabama divorce lawyer. The best way to ensure that your property division issues are handled correctly is by hiring an experienced attorney who will work to keep your best interests at the forefront of your divorce proceedings.

If you’re located in the state of Alabama, please contact us at Summit Family Law. We can walk you through every step of your property division. Call us at (256) 859-7277 today!