Separating Property When Divorcing in Virgnia.

Kellam T. Parks
Managing Member of Parks Zeigler, PLLC

The classification of property is governed by the Code of Virginia.[1]   There are a large number of cases discussing each, as it is very fact-specific; however the Code’s basic definitions are as follows:

1.  Separate Property: 

(a) All property, real and personal, acquired by either party before the marriage; 

(b) All property acquired during the marriage by bequest, devise, descent, survivorship or gift from a source other than the other party 

(c) 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; and 

(d) That part of any property classified as separate pursuant to the hybrid determination under the Code.
Income received from separate property during the marriage is separate property if not attributable to the personal effort of either party. The increase in value of separate property during the marriage is separate property, unless marital property or the personal efforts of either party have contributed to such increases and then only to the extent of the increases in value attributable to such contributions. The personal efforts of either party must be significant and result in substantial appreciation of the separate property if any increase in value attributable thereto is to be considered marital property. 

2. Marital Property: 

(a) All property titled in the names of both parties, whether as joint tenants, tenants by the entirety or otherwise, except as provided by the hybrid portion of the Code, 

(b) That part of any property classified as marital pursuant to the hybrid portion of the Code; or 

(c) All other property acquired by each party during the marriage which is not separate property as defined by the Code.
All property including that portion of pensions, profit-sharing or deferred compensation or retirement plans of whatever nature, acquired by either spouse during the marriage, and before the last separation of the parties, if at such time or thereafter at least one of the parties intends that the separation be permanent, is presumed to be marital property in the absence of satisfactory evidence that it is separate property. For purposes of this section marital property is presumed to be jointly owned unless there is a deed, title or other clear indicia that it is not jointly owned. 

3. Hybrid Property: 

The Court, when determining if property is part marital and part separate considers many things pursuant to the Code: 

a. In the case of income received from separate property during the marriage, such income shall be marital property only to the extent it is attributable to the personal efforts of either party. In the case of the increase in value of separate property during the marriage, such increase in value shall be marital property only to the extent that marital property or the personal efforts of either party have contributed to such increases, provided that any such personal efforts must be significant and result in substantial appreciation of the separate property. 

For purposes of this subdivision, the non-owning spouse bears the burden of proving that (i) contributions of marital property or personal effort were made and (ii) the separate property increased in value. Once this burden of proof is met, the owning spouse bears the burden of proving that the increase in value or some portion thereof was not caused by contributions of marital property or personal effort. 

"Personal effort" of a party shall be deemed to be labor, effort, inventiveness, physical or intellectual skill, creativity, or managerial, promotional or marketing activity applied directly to the separate property of either party. 

b. In the case of any pension, profit-sharing, or deferred compensation plan or retirement benefit, the marital share as defined in subsection G shall be marital property. 

c. In the case of any personal injury or workers' compensation recovery of either party, the marital share as defined in subsection H shall be marital property. 

d. When marital property and separate property are commingled by contributing one category of property to another, resulting in the loss of identity of the contributed property, the classification of the contributed property shall be transmuted to the category of property receiving the contribution. However, to the extent the contributed property is retraceable by a preponderance of the evidence and was not a gift, such contributed property shall retain its original classification. 

e. When marital property and separate property are commingled into newly acquired property resulting in the loss of identity of the contributing properties, the commingled property shall be deemed transmuted to marital property. However, to the extent the contributed property is retraceable by a preponderance of the evidence and was not a gift, the contributed property shall retain its original classification. 

f. When separate property is retitled in the joint names of the parties, the retitled property shall be deemed transmuted to marital property. However, to the extent the property is retraceable by a preponderance of the evidence and was not a gift, the retitled property shall retain its original classification. 

g. When the separate property of one party is commingled into the separate property of the other party, or the separate property of each party is commingled into newly acquired property, to the extent the contributed property is retraceable by a preponderance of the evidence and was not a gift, each party shall be reimbursed the value of the contributed property in any award made pursuant to this section. 

h. Subdivisions D, E and F applies to jointly owned property. No presumption of gift shall arise under this section where (i) separate property is commingled with jointly owned property; (ii) newly acquired property is conveyed into joint ownership; or (iii) existing property is conveyed or retitled into joint ownership. For purposes of this subdivision section, property is jointly owned when it is titled in the name of both parties, whether as joint tenants, tenants by the entireties, or otherwise. 

[Note: Although there are exceptions, the easiest way to think about hybrid property is that if you can trace back out where the property came from (either separate property or marital property), then it retains that classification. So, for example, if a spouse were to sell a piece of property that he/she owned before the marriage and contributed the proceeds to buy a jointly-owned piece of property after the marriage, then the contribution of the separate property can be traced back out to determine what portion of the monies from the marital property should go to just the one spouse that made the contribution (as opposed to the hypothetical passive increase of value of the marital property over time which would be marital property to be shared by the parties)].


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