During a divorce, the property owned by a couple will be divided between them. This process, called equitable distribution, is governed by a statutory framework created by the General Assembly. The overarching goal of the process is to create a division of property between former spouses that is fair, and the law requires a judge to take into account both the financial and non-financial contributions of each spouse to the marriage in making his decision.
Before a court can begin the process of equitable distribution, it has to make a preliminary determination as to what property can be divided. For this purpose, there are three categories of property: 1) separate; 2) marital; and 3) hybrid property. Marital property is subject to division by the court, and separate property is not. Hybrid property, as the name suggests, is somewhere in between.
Separate property, defined by the Virginia State Code § 20-107.3, includes the following: 1) all property, real or personal, acquired by either party before the marriage; 2) all property acquired during the marriage by bequest, devise, descent, survivorship or gift from a source other than the other party; 3) all property acquired during the marriage in exchange for or from the proceeds of sale of separate property, provided that such property acquired during the marriage is maintained as separate property.
Marital property, also defined in Virginia Code § 20-107.3, includes: 1) all property titled in the names of both parties, with some exceptions; and 2) all property that is acquired during the marriage that is not separate property.
While these definitions are slightly wordy, the general idea is that if you owned property before a marriage or received an individual gift or inheritance during a marriage, you’re going to get to keep it after a divorce. This sort of property is considered “separate,” and cannot be transferred from one spouse to another by a court. All other property acquired during the marriage is considered “marital,” and will be split up by a court during the equitable distribution process.
The last category of property, “hybrid” property, is property that is part marital and part separate. For example, let’s say Husband inherited a parcel of land prior to the marriage. During the marriage, Husband and Wife built a small cabin on the land with money earned from their respective jobs, and they use it as a vacation home.
In this example, the cabin would be considered hybrid property. Husband inherited the land before the marriage, and that part of the property would be considered separate. But during the marriage, Wife contributed money, time and effort to the construction of the cabin. The increase in value of the land created by the construction of the cabin is marital property. In valuing the improved real estate for equitable distribution purposes, a court would probably say Husband is entitled to the entire value of the land plus half the value of the cabin, and Wife is entitled to the other half of the value of the cabin.
The determination of marital versus separate property can become complicated, especially if the marriage has a large number of assets or hybrid property is involved. In many cases, it may be helpful to consult an attorney for help determining what property you are entitled to during an equitable distribution.
In closing, it’s worth noting that in many divorces the spouses do not wish to litigate the issue of property division in court, and they are able to reach an agreement on their own as to how to divide it. When this happens, the spouses can enter into a written contract – called a property settlement agreement – that memorializes the agreement. Property settlement agreements can be incorporated into a final decree of divorce, thereby allowing the spouses to bypass the need for a court hearing and avoid the uncertainty of leaving the decision up to a judge.