In many divorces, the issue of separate property and debt will arise. Each party maintains full rights to their separate property and likewise remain fully responsible for their separate debt. Separate property and debt fall outside the divorce process. However, it is still necessary to identify the separate property and debt so that may be properly addressed. This will frequently will cause significant and often justified disputes regarding the proper classification of property and debt as community or separate. To begin the process, you should identify all your Separate Property and Debt. A Separate Property and Debt Worksheet is useful for these purposes.
Separate property is basically property acquired prior to the marriage, or property acquired during the marriage from means independent of the community. This would include gifts, inheritance, personal injury settlements and the like. Separate property rights can also arise by agreement of the parties through Sole and Separate Property Agreements. Complications arise when community assets or income are used to benefit or improve separate property such as the improvements to a home that was acquired prior to the marriage. There are numerous ways that the community can improve or enhance the value of separate property. Each situation must be analyzed to determine the community and separate property implications of such community improvements to separate property.
Separate debt would likewise include any debt acquired prior to the marriage. It can also include debt that has been unreasonably incurred after separation. The Temporary Domestic Order is meant to protect against this. Gambling debt and debt explicitly identified as separate to the lender when incurred will also be classified as separate debt. Again, the complexity comes when the issue is disputed requiring one party to prove the nature of the debt to the court.