‘What’s yours is mine, and what’s mine is yours’ is a common mentality couples may carry into a marriage. This does carry some truth depending on the perspective someone looks at. A common one is shared finances, as over half of American households are dual income beginning in the 1960s. However, a misconception people have is loans and credit cards are not shared if both couple’s names are not on the account. So, who is responsible for those loans and credit cards?
When I filed for my divorce one of the disputes we had was about who was responsible for the credit card. The debt was roughly $9,000, so I could understand why an individual wouldn’t want to pay. My ex-husband was adamant about the card being solely my responsibility because only my name was on the account. In addition to that, he also claimed he never knew the card existed either. I knew I wasn’t the only one responsible because we both used the card for household, personal expenses and for our pet’s expenses.
Martial property is commonly defined as all property acquired by spouses during their marriage, regardless of whose name is on the title of the property. So, it is not uncommon for the courts to define debt the same way if it is acquired and used to benefit the marriage. However, it is important to know this definition varies by state and the decision of the nature of the asset/debt will be at the discretion of the judge, as well with additional information presented by both spouses.
One spouse may have their name on the mortgage and deed of the house, but if this purchase was completed during the marriage and both spouses lived there, it is common for the court to treat the real property as a marital asset. What if the house was bought before the couple got married? Is it still considered marital property? Well that depends if the couples use the house to live together. That transfers the asset as marital property from separate property. Although, if the spouse who owned the house prior to their marriage does not use the house to live with their spouse, and they live in a separate home together, the house will maintain its separate property status, and it is important to understand how to maintain that property as a separate asset.
Ultimately in my divorce, the credit card debt was split between my ex husband and I. The nature of the debt was marital since the card was acquired during the marriage and the use of it benefited the marriage as it paid for gas, groceries and other household items. My ex-husband was not working at the time I acquired the credit card and used it frequently while I was away on business travel. I had personal bank statements to prove my travel meal expenses were charged out of state from where I lived in addition to travel reimbursement from my job. I also pulled the credit card statement to show expenses charged for meals and other items occurred in the same time period. This prove he used the card in the same time period I was traveling, since one person could not be in two different states at the same time.
The key takeaway is understanding how property becomes marital property and when it becomes marital property if it was previously separate. It is also important to know how to maintain separate property if an individual chooses to keep certain properties as separate. A factor courts consider with property is how it is used during the marriage and what benefit it provided to the marriage. It is always best practice to consult with a divorce attorney and divorce financial analyst to understand all the marital assets to be considered in a divorce. It may also be in the best interest to consult with a personal financial advisor as well.
Family Law Forensic Accountants - A W2 Group Company