Exempt Property
Assets that are protected from division in divorce because they are classified as separate property — typically pre-marital assets, inheritances, and personal gifts.
Understanding Exempt Property
Exempt (separate) property generally includes assets owned before the marriage, inheritances received by one spouse, gifts given specifically to one spouse, and personal injury settlements for pain and suffering. However, exempt property can lose its protected status if it is commingled with marital assets. For example, depositing an inheritance into a joint account or using pre-marital savings to renovate the marital home may convert exempt property to marital property. The burden of proving an asset is exempt falls on the spouse claiming the exemption, often requiring detailed financial records and tracing.
Real-World Examples
The wife's $100,000 inheritance from her grandmother remains exempt from division because she kept it in a separate bank account throughout the marriage.
Related Terms
Any property or item of value owned by either or both spouses that is subject to division in a divorce. Assets include real estate, bank accounts, investments, retirement funds, businesses, and personal property.
ComminglingMixing separate property with marital property in a way that makes it difficult or impossible to distinguish between the two. Commingled assets may be treated as marital property.
Community PropertyA property division system used in nine states where all assets and debts acquired during the marriage are owned equally (50/50) by both spouses.
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This definition is provided for educational purposes only and does not constitute legal advice. Divorce laws and terminology may vary by state and jurisdiction.
Always consult a licensed attorney in your area for advice specific to your situation.