Most divorces involve the separation of community property, or marital property that was obtained during the marriage and owned by both spouses. The more community property shared in a marriage, the greater the chances that the issue of dividing property can become a contentious part of your divorce.
Two inquiries will be conducted to determine how the parties will split the community property.
- First, what is “marital” and what is “separate”? Marital property generally refers to property received during the marriage, while separate property is property received before the marriage, as well as inheritances and gifts.
- Is the division equitable? Many factors go into this inquiry, such as the length of the marriage, separately owned assets, each spouse’s future financial need and earning potential, one spouse’s financial dependence on the other, any existing prenuptial agreements, and the conduct of the parties while they were married and during the divorce process.
Georgia’s Source of Funds Rule
The largest property asset that couple’s own is typically their home. Because of the various ways that home could be acquired by a couple, there are numerous permutations of how a Georgia family court can handle its division. One of the major factors in determining how this will occur is whether the house is a marital or separate asset.
As may be evident from previous posts here, if the home was owned by one party prior to the marriage and no marital income is used to pay for it at all, it will likely remain a non-marital asset and the property of the party who had previously possessed it. If, on the other hand, the home is purchased during the marriage with marital funds, its entire value will be subject to equitable distribution. However, what happens if there is a combination of the two foregoing scenarios?
When a marital home has been invested in by both marital and non-marital funds, the family court will have to determine how much of the value is marital and how much is non-marital. In Georgia, this is done by the application of a doctrine known as the “source of funds” rule. Rather than relying on the origin of the title of the property as determinate, or converting the entire property to a marital asset if any marital funds are used, a Georgia court will assign a non-marital property value to the home equal to the ratio of non-marital funds invested therein to the total amount of marital and non-marital funds involved. For example, if half of the funds invested in the home are non-marital and half are marital, 50 percent of the home’s value will be considered non-marital property and the other 50 percent marital property subject to equitable distribution by the court.
Obviously, the above is a simpler calculation than will usually be the case in such situations. The end of a marriage is an emotional time to begin with, and adding in the stress of attempting to determine the value of a marital home may just add to that burden.
A family attorney can help ensure the equitable division of property during a divorce
The family law attorneys at Banks, Stubbs & McFarland LLP safeguard your interests for the property distribution phase of your divorce settlement, which is critical in the case of high asset and complex divorces. Our firm’s reputation for skill and client commitment will work to ease the potentially painful process of ending your relationship.
We assist individuals, couples, and families in Forsyth County and surrounding areas to resolve critical divorce issues as swiftly and amicably as possible by facilitating negotiation, and if necessary, litigation in court to protect your interests. Our solutions are made to service you for years to come.
We effectively and efficiently prepare and present your case for a fair separation of property and assets, and disclosure of debts. Contact us for an initial consultation to ensure that your rights are protected throughout the process.