7 Types of Personal Property that are Not Split in a Divorce

Uncontested Divorce Mediation

Posted December 5, 2019

divorce mediation chicago

In a divorce, one thing that spouses often worry about is splitting the finances and personal property. It’s become increasingly well-known that things like personal retirement accounts and savings funds are not protected, they will be split evenly or in a way the court deems fair. Investment accounts, marital property, and even things you might call personal belongings of value are all game for financial splitting. But there are a few specific categories where your personal property is protected from divorce division.

If you are worried that your spouse will lay claim to your personal property in the Chicago divorce mediation process or that your property is at risk of being sold to split the value, it’s important to know what of your property is protected. There are seven categories of personal property that cannot be claimed or split during the divorce, remaining the sole property of the original owning spouse. Let’s take a look.

1. Personal Gifts

Gifts given to the family are considered in value when separating divorce finances, but personal gifts are not. If, for example, your parents give you a car at the beginning of your marriage, but the car is in your name only and never used by your spouse, then this is a protected personal gift. If you were gifted real estate, expensive jewelry, or a kitchen full of appliances, who the gift was addressed to will matter. In many cases, gifts from your spouse will also be considered personal property, not marital property. However, anything you bought for yourself with marital funds will be calculated in the value separation.

2. Inheritance

Your spouse cannot lay any claim to your familial (or non-familial) inheritance. If someone left you something in a will or in a trust that was left to you and not to your marriage-unit or family, then that inheritance is entirely yours. Your spouse might have influenced how you spent or invested it if you were still partners, but they do not have any legal claim to inheritance. This includes a home you might have inherited, a lump sum, an investment account, or specific heirloom family items. Even if you inherit from someone you are not related to or have never met, the inheritance value is excluded from Chicago divorce mediation considerations.

3. Pre-Marital Property – Property Owned Before the Marriage

The next category is property you owned before you and your spouse got married. If you bought a house in your name before the marriage and then lived there with your spouse, the house is still yours legally with no requirement to split or compensate the value. However, if you bought a house in just your name while married, it’s more likely that the home will be considered marital property, even if you are not joint-owners in the most common arrangement.

Pre-marital property includes homes, cars, and personal possessions. Anything you owned before the marriage is yours to keep. This also means that your jewelry, appliances, keepsakes, and other items of value (monetarily or personally) cannot legally be taken from you in the Chicago divorce mediation process. If you can prove you owned it before marriage, it’s yours to keep.

4. Increase in Pre-Marital Property Value

The value of your pre-marital property is also protected if that value increases. This varies, for example, from marital property where value increases are calculated in the final separation. If a house you buy with your spouse raises in value after purchase, you split the increased value. However, if a house or investment account you own before the marriage raises in value, your spouse cannot claim a right to half of the increased value. The sole ownership of pre-marital property is yours, therefore you are also the sole owner of any increased value through interest, returns, or revaluation or appraisal.

5. Purchased with In Exchange for Pre-Marital Property

The next consideration is property purchased in exchange for your pre-marital property. Here’s where it starts to get financially complicated. Let’s say you traded in your pre-marital car for a new car of equal value. That new car is still yours and is legally considered pre-marital property because you used pre-marital property (rather than marital funds) to acquire the car.

The same rule applies to real estate. If you 1031 exchange one pre-marital home or business for another of similar value, then the new property inherits the qualifier of pre-marital property. This is because your marital funds and your spouse’s property never factors into the exchange. You transition from owning pre-marital property to property you have essentially bought with your pre-marital property. Making the new property entirely yours and not subject to Chicago divorce mediation financial terms.

6. Bought with Non-Marital Property as Loan Collateral

A variation of the previous rule is using your pre-marital property as loan collateral. Let’s say you start with a pre-marital home. You use that home’s value as collateral to buy a car or another house. You pay off the loan, but your personal pre-marital property was put at risk to complete the initial purchase. If you and your pre-marital property were the sole contributors to the loan, then the property purchased is also solely yours.

This also works with loan collateral that is not real estate or vehicles. If you use any pre-marital item of value as loan collateral, the property bought with that loan is excluded from the Chicago divorce mediation proceedings.

7. Excluded in  Prenuptial or Postnuptial Agreement

Finally, there is contractually excluded property. In your prenuptial or postnuptial agreement (if you have one) it is possible to set aside any property as being excluded from marital property and, therefore, protected from Chicago divorce mediation financial splitting. Your prenuptial, for example, might say that your personal vehicle is always excluded from marital property, or that any art belongs to the art-collecting spouse, or that the contents of a specific bank account are excluded. Many even set aside a dollar-amount that belongs to one person out of marital funds in the event of a divorce.

Prenuptial (and postnuptial) are often unique based on the needs and concerns of each individual couple when they marry. If you have a contract with your spouse designating certain properties as personally rather than maritally owned, then those things are excluded from division in Chicago divorce mediation.

Protecting Your Personal Property in Divorce

Do you have personal property you’re worried will be lost or split during the divorce? This list of excluded properties can help you know what can and cannot be protected. For professional guidance on how to prepare financially for your Chicago divorce mediation and protect your pre-marital assets in a fair divorce agreement, contact Split Simple today. Our team of Chicago divorce mediators and experienced divorce legal staff can help you build the divorce agreement you need.

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