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Dividing the Property in a Virginia Divorce: Asset Classification

A major issue to be addressed in most divorces is the division of Assets and Debts. In Virginia, this is called equitable distribution, which literally means “fair distribution.” Equitable distribution starts with designating Assets and Debts as marital or separate. Virginia Code § 20-107.3 sets the rules for property classification. In general, Separate property consists of:

  • Property acquired by either party before the marriage.
  • Property acquired during the marriage by “bequest, devise, descent, survivorship or gift from a source other than the other party.” In plain English, an inheritance is the inheritor’s separate property, as is a gift to either spouse (as long as it did not come from the other spouse).
  • “All property acquired during the marriage in exchange for or from the proceeds of sale of separate property, provided that such property acquired during the marriage is maintained as separate property.” For example, assume that the husband owned an apartment complex before the marriage. If, after the marriage, the husband sold the apartment complex and bought rental condos with the proceeds, then those condos would be the husband’s separate property, assuming that they were maintained separately from the spouses’ marital property.
  • Income received from separate property and not attributable to the personal effort of the spouse. Returning to the example of the husband with the apartment complex, the rent would be the husband’s separate property. However, if the wife helped market the apartments, the portion of the income attributable to the wife’s efforts will be marital property.
  • The increase in value during the marriage of separate property, “unless marital property or the personal efforts of either party have contributed to such increases.” Returning to the example of the husband with the apartment complex, if, over time, the building became worth more than what the husband bought it for, that increase in value is the husband’s separate property. However, if the wife contributed “significant” effort that led to “substantial” appreciation of the property, the appreciation that is attributable to the wife’s efforts is marital property.

In general, Marital property consists of:

  • “All property titled in the names of both parties, except as [otherwise] provided [in the statute].”
  • “All other property acquired by each party during the marriage which is not separate property as defined above.”

Once it is determined which Assets are marital and which are separate, the court will exercise its broad discretion to apportion of these assets between the spouses. The factors that the court takes into consideration can be found in our article on asset division. Proper classification of Assets will help you come to a reasonable and fair resolution of your matter, either by settlement or by litigation. Since there are many nuances to property classification, if you have property that needs to be distributed in your divorce, consult an attorney.

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