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Post-Separation Purchases and the Effects on the Divorce

Categorized as Property Division

One of the first recommendations we make after a client retains us is to avoid any and all purchases of big-ticket items until after the divorce. Sometimes our clients diligently listen to us, often times they do not. Here are a couple of scenarios if you have purchased a property/car, or gifted large amounts of money to someone during the divorce:

Marital Property – One scenario would be that the property, or the funds used to purchase the property, would be labeled marital property and would then be subsequently divided 50/50 at the time of the divorce. If you purchased a house or a car, any mortgage or car notes would also be taken into consideration and only the equity would be divided at the divorce.

Dissipation – If the property you purchased is now in someone else’s name (a significant other, extended family member or children outside of the marriage), then the property would not be considered marital. However, the money used to purchase said property could be considered dissipation and will be balanced against you at a final distribution of assets. In other words, if you spent $5,000 on a car for your mother, the final distribution could be offset so that your ex could get $2,500 more from your pension or other asset.

Non-Marital Property- The best case scenario would be that the purchase is considered marital. For example, you used the money in a marital savings account to pay off debt that was in your name alone but incurred during the marriage. The debt would likely be considered marital, so any funds used to pay off that debt would also be considered marital.

To avoid any complications with marital asset and debt allocations, it is advisable to hold off any big-purchases until after the divorce. However, if the purchase has already been made or needs to be made necessarily, talk to an attorney beforehand so that the best strategy that would be the least damaging to you can be applied to your case.

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