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Attorneys at Raleigh Divorce Law Firm

This is separate property. But how can I prove it?

On Behalf of | Feb 18, 2022 | Property Division |

The prospect of dividing marital property can be one of the most stressful things about divorce. After years of accumulating assets, splitting them up requires careful thought and precise calculations.

You know you only have to divide the property classified as “marital property.” Anything considered separate property is yours to keep. The question is: what happens in situations where you have mixed your separate assets with marital assets during the marriage?

What makes an asset separate property?

North Carolina law generally defines an individual’s separate property as:

  • Any real or personal property a spouse obtained or owned before the marriage
  • An asset gifted specifically to that spouse during the marriage, such as an inheritance

There are some circumstances under which separate property can become marital property during the marriage. The most common example would be if one spouse owned a house before they got married, but then after the marriage, the house was sold and the proceeds were used to purchase a residence titled in both individuals’ names. Under NC law, titling the property in both spouses’ names creates a rebuttable presumption that the separate funds used for the purchase of the new home were a gift to the marriage.

The same presumption does not apply to non-real estate assets like bank accounts and retirement accounts. With these types of assets, if you can trace the separate funds contributed, then you can still claim that a portion of the account, including passive earnings on the separate portion, is separate. Even so, the burden of proof generally remains on the party claiming the funds are separate, and the question remains how to prove it.

Is there a paper trail?

Account statements and documents reflecting the source of funds are the primary sources of evidence to prove something is separate property during divorce proceedings. These documents would be any form that verified the financial transactions at issue, such as:

  • Retirement account statements reflecting balances on the date of marriage, and statements documenting any rollovers or transfers into the account during the marriage from separate property
  • Deeds reflecting the date of purchase and how the property was titled
  • Bank account statements reflecting deposits from separate funds and documentation of the source of funds
  • Estate or trust documents verifying disbursements for inheritance or gifts which identify the intended recipient, date, and amount, which can be cross-referenced with the date and amount deposited into a joint account

If you did not save a copy of these documents, all hope is not lost. An experienced family law attorney can work with you to obtain older financial statements, documents that may be public record, and estate documents. A family law attorney can also ensure that the separate portions of various assets are correctly calculated or referred to an expert who can perform the appropriate calculations.

Get organized before divorce

If you are considering a divorce, getting organized is key. It is essential to organize your financial statements and locate documents related to assets or accounts that you funded with separate property or contributed separate funds into during the marriage. asset or account.

Creating a file of these documents may take time. However, it will help ensure an accurate characterization and calculation of your separate and marital property throughout your divorce process.