§ 6.06 Mutations of Separate Property

JurisdictionUnited States
Publication year2021

§ 6.06 Mutations of Separate Property

[1]—In General

Separate property frequently is exchanged for some other property, either in connection with a purchase or an investment. For example, imagine H has saved $50,000 in a bank account before marriage. During marriage, H might use this money to buy stock, a car and a painting. What is the character of property acquired during marriage with the separate property bank account funds?

[2]—States with Express Statutes

Many states expressly provide that property acquired with separate property remains separate.234 One state provides that property acquired during marriage with property accumulated before marriage is separate, but any increase in value of the newly acquired property is marital property.235

[3]—States Without Express Statutes

It is unclear how other states will characterize property purchased with separate property. A technical implied exclusion236 argument could be made that the property is acquired during marriage and therefore should be considered marital property, since no express exclusion is set forth. However, such a result would be blind to the underlying policies of the equitable distribution laws. No effort of either spouse is required to acquire such property, and no marital resources are expended. There is no policy reason for creating a marital interest in such separate property mutations.

For these reasons a policy-oriented analysis would yield the conclusion that mutations of separate property are separate property, as long as they remain traceable to separate property.237 No effort of either spouse is expended to acquire the property, and no marital assets are used. Most states have accepted this analysis.238

It is very important that equitable distribution states accept this concept. Property accumulated before marriage rarely is kept in the same form. Funds could be taken from a bank account to buy stock and then the stock could be sold and invested in something else. If separate property would remain such only for as long as it did not change its form, it would be a large and unwarranted modification of the equitable distribution system.

[4]—"Mutation" of Separate Property Defined

A mutation of separate property is a change in form of separate property, which normally is effected by a purchase. For example, if $100 is saved before marriage and used to buy a watch, the watch is a mutation of the $100 saved before marriage. The concept of mutation reflects the rule that the...

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