Legal Definitions - separate-property state

A separate-property state is a jurisdiction where, generally, assets acquired by one spouse during a marriage are considered that spouse's individual property, rather than being automatically co-owned by both spouses. This system contrasts with community property states, where most assets acquired during marriage are presumed to be jointly owned by both spouses.

In a separate-property state, each spouse typically retains ownership of property they brought into the marriage, as well as property they acquire individually during the marriage, such as through their own earnings, gifts, or inheritances. While property acquired during the marriage may be subject to division upon divorce, the initial ownership designation is distinct. Upon divorce, courts in separate-property states usually divide marital assets based on principles of equitable distribution, aiming for a fair division rather than an automatic 50/50 split.

• Example 1: Individual Earnings and Bank Accounts
  Sarah works as a software engineer and deposits her entire salary into a bank account held solely in her name. Her husband, David, is a freelance graphic designer and keeps his earnings in a separate business account under his name. In a separate-property state, the funds in Sarah's account are generally considered her individual property, and the funds in David's business account are considered his individual property.
  This illustrates the term because, despite being married, each spouse's earnings and the accounts holding them are treated as their own separate assets, not automatically co-owned by the other spouse.
• Example 2: Inherited Property
  During their marriage, Mark inherits a vacation home from his grandmother. He decides to keep the title to the home solely in his name and uses his own separate funds for its maintenance. In a separate-property state, this inherited home would typically remain Mark's separate property. His wife, Lisa, would not automatically gain an ownership interest in the home simply by virtue of their marriage.
  This demonstrates the concept as the inherited asset, acquired by one spouse during the marriage, remains that spouse's individual property, distinguishing it from jointly owned marital assets.
• Example 3: Pre-Marital Assets and Investments
  Before marrying, Emily owned a portfolio of stocks and bonds. After marriage, she continues to manage this portfolio, and any dividends or capital gains generated from these pre-marital investments are reinvested within the same separate account. In a separate-property state, Emily's pre-marital investment portfolio, and generally the growth it experiences, would remain her separate property. Her husband, Ben, would not automatically have an ownership claim to these specific assets.
  This example highlights how a separate-property state maintains the distinction between assets brought into the marriage and those acquired individually during it, treating them as individual property.