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Which assets can someone protect as separate property during divorce?

On Behalf of | Sep 15, 2023 | Family Law And Divorce |

After years of sharing everything, spouses considering divorce will need to separate their finances. If the matter goes to court, then a judge will interpret Indiana’s equitable distribution statute to decide on a fair way to split the couple’s marital assets between the two spouses.

It can be nearly impossible to predict what will happen during contested property division proceedings because much is left to the discretion of the judge. One of the only ways to protect specific resources from division during contested divorce proceedings in Indiana involves proving to the courts that those assets are separate property that are not subject to division.

What might constitute separate property during an Indiana divorce?

There is a general assumption that whatever people earn or acquire while married belongs both to them and their spouse. Only couples that have already negotiated a marital agreement can avoid are requirements to divide whatever they earn or purchase during the marriage.

Assets owned prior to marriage are not necessarily separate property under Indiana law. They are still potentially subject to division. Any gifts and inherited assets will receive separate consideration from the rest of the marital estate.  Any commingling, such as depositing inherited funds into a joint account, would put those assets at risk of division. So would the use of marital assets to maintain or develop inherited resources. Those who hope to retain some of their belongings as separate property typically need to have very thorough financial records to achieve that goal. Judges will divide most declared property according to what they believe would be fair based on the couple’s circumstances.

Agreeing to specific terms can protect assets too

Litigated divorce is not the only option available to those who want to end a marriage. It is possible to divorce through mutual consent in an uncontested divorce filing. People can potentially negotiate with a spouse and set any terms that they believe would be reasonable and fair for the division of their assets.

Without an agreement or financial records helping to set aside certain assets, individuals will largely depend on a judge’s decisions about what will happen to their property when they divorce if they cannot reach a mutually-agreeable property division settlement with their spouse outside of court. With that said, seeking legal guidance can help someone to craft the strongest possible arguments in their favor that are most likely to sway a judge’s decision accordingly.