§ 6.06 Mutations of Separate Property

• Jurisdiction: United States
• Publication year: 2021

§ 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...