Property Settlement

AuthorJeffrey Lehman, Shirelle Phelps

Page 150

An agreement entered into by a HUSBAND AND WIFE in connection with a DIVORCE that provides for the division of their assets between them.

Property settlements can arise through agreement of the parties, subject to approval by the court, or by court order. Once approved, the settlement functions like a contract for enforcement or modification purposes. Some states use alternate terms to describe a property settlement, such as property agreement, settlement agreement, or separation agreement.

A property settlement involves the property that the couple obtained either before marriage or during marriage. The agreement also may include such issues as maintenance (otherwise known as ALIMONY) payments to one spouse or even custody of the children.

Two types of property that must be distributed in the settlement are community or marital property and separate property. Community or marital property consists of property that is purchased by either or both of the spouses during the time they are married. Property bought during the time the couple is married is presumed to be marital property regardless of how it was actually purchased. The assumption can be overridden only by "clear and convincing" evidence of the intent for the property to be the property of just one spouse. Separate property is property that is bought by either of the spouses before the marriage. Separate property can also be property received in exchange for other separate property, the interest on separate property, or anything that does not fall into the category of marital property.

When determining how the property will be divided, several problems may arise, including the problems of commingling and transmutation. Commingling occurs when separate and marital property are combined, or dealt with together, in a bank or financial account. When this happens, there is no distinction between separate and marital property. To prevent a finding that the commingled property is therefore marital property, the spouses need to keep separate accounts and records for each item of property. Transmutation involves separate property that the spouses have treated as marital property, making it impossible to tell what type of property the spouses had intended it to be. For example, transmutation occurs when the parties took title to property jointly but in reality only one of the spouses paid for the property. The best way to prevent...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT