Is Your Home Marital Property?

The question of whether your home is martial property comes up all the time.

This is one that can get complicated.

So, unfortunately, you will definitely need to get a lawyer to figure this out.

Let me tell you a story about Stacy Ware and Demarcus Ware.

They marry on April 2, 2017.

After she marries Demarcus, Stacy sells her previous home and gets $111,000.00 in equity.

You can see what’s coming, right?

I mean this is danger all the way if you don’t want something to become a marital asset.

Stacy then uses the $111,000.00 to buy another home with Demarcus.

Stacy and Demarcus live in this home until they separate in March 2022.

Both Stacy and Demarcus are on the deed of the home.

Is Your Home Marital Property | The Law

Now, let me give you the legal mumbo-jumbo from the Court of Appeals:

Assets acquired or accumulated during the course of a marriage are subject to equitable division unless it can be shown by proof that such assets are attributable to one of the parties’ separate estates prior to the marriage or outside the marriage. Because of the general assumption that assets owned by a spouse are marital property, the burden of tracing an asset to a separate-property source is on the party seeking to classify it as such. In addition, nonmarital assets (e.g. inherited property) may be converted to marital assets if they are commingled with marital assets or used for familial purposes.

That legal mumbo-jumbo isn’t too bad so you can probably see where this is heading, right?

Is this home that Stacy buys with her own money from the sale of a home now a marital asset?

The Court of Appeals says, the chancery court correctly identified the marital home as a marital asset. To overcome the presumption that the home is marital property, Stacy must be able to trace the funds she used to purchase the home back to the separate-property source. But Stacy could not adequately trace the funds because she transferred portions of the funds between her personal account and joint account. This commingled her separate-property assets with marital assets. It is also disputed whether Stacy paid the mortgage using solely her money or Demarcus’ money.

This is distinguishable from Neely v. Neely, where the chancellor found that the parties’ marital home was separate property because the wife undisputedly made all payments associated with the marital home and “met her burden of tracing the marital home to a separate-property source. Even if Stacy had been able to perfectly trace the funds, the chancellor’s finding that the home was marital property under the family use doctrine is still supported by the record. Demarcus testified that he would pay bills by depositing money into their joint account. He also stated that he deposited $20,000 to pay toward the home’s mortgage. The record shows these deposits. Stacy claimed that the money Demarcus deposited did not go toward the home or any bills, but she could not prove that it did not. The chancellor did not abuse his discretion by finding the marital home was marital property.

Is Your Home Marital Property | The Lesson You Need

So what is the lesson?

The lesson is if you don’t want your home to be a marital asset then the first thing you should do is make sure you have a separate account with your name only on it. Pay the house note from that separate account only. In other words, do not have a joint account where you put your money and your spouse’s money in it and then pay the house note.

Now, that it is a marital asset, the chancery court is going to try and figure out how to divide up this asset.

Is Your Home Marital Property | How To Divide It

Of course, Stacy doesn’t want it divided equally because she put down $111,000.00 on it.

It seems fair that should be the case, right?

I mean that’s just common sense, right?

Think again.

Here’s the legal mumbo-jumbo from our Court of Appeals:

Appellate courts look to the chancellor’s application of the Ferguson factors when reviewing questions of equitable distribution. The Ferguson factors are the following: (1) contribution to the accumulation of property, (2) dissipation of assets, (3) the market or emotional value of assets subject to distribution, (4) the value of assets not subject to distribution, (5) the tax and economic consequences of the distribution, (6) the extent to which property division may eliminate the need for alimony, (7) the financial security needs of the parties, and (8) any other factor that in equity should be considered.

Mississippi courts agree that an equitable division of property does not necessarily mean an equal division of property. Equitable division is committed to the discretion and conscience of the Court, having in mind all of the equities and other relevant facts and circumstances. Stacy’s argument on appeal seems to be that she deserved more of the home’s equity because she paid more of the home’s mortgage. However, the goal of equitable distribution is not to reward one spouse who had more money or paid more bills. The goal of the chancellor in a divorce case is to do equity.

Demarcus had more debts and a less stable income than Stacy. Stacy noted in her appellant’s brief that Demarcus’ business reported more expenses than income in 2021. The chancellor thoroughly analyzed each Ferguson factor, and each one was supported by the evidence. The only Ferguson factor that Stacy discusses is the contribution to the accumulation of property. Stacy argues that the chancery court did not appreciate that she was the main contributor to the acquisition of the home because she paid the down payment. However, the chancery court considered that Stacy likely would not have obtained the home loan for nearly $600,000 by herself based on her annual income of $60,000. The chancery court did not abuse its discretion by awarding each party fifty percent of the marital home.

The key quote here is an equitable division of property does NOT necessarily mean an equal division of property.

The chancery court found that Demarcus had more debts and a less stable income and that it is unlikely Stacy would have gotten a home loan for $600,000.00 by herself is he only makes $60,000.00 a year.

Is Your Home Marital Property | The Bottom Line

This torpedoes Stacy’s case.

As a result, the chancery court splits the house equally and orders the parties to sell it.

So, Demarcus gets half when Stacy put down $111,000.00 as a down payment!

Ouch! That has to hurt!

Key lessons: get a separate account and pay the note on the house you are living in with your own money. It may not prevent the home from being a marital asset but it is much less likely to be one and it is much less likely to get split in half by the chancery court judge.