What is Traceability?
During a divorce, marital property is divided among the spouses. Virginia is an equitable property state, meaning the court has the power to classify a couple’s property as separate, marital, or a hybrid. Marital property is typically divided 50/50, (though not always), whereas separate property allows the spouse who owns the property prior to marriage to keep it or receive more money if the property was sold for marital purposes. Traceability is the process of identifying pre-marital funds or assets that were applied or are part of hybrid or marital property.
Why is Traceability Important?
In Dixon v. Dixon, the Henrico Circuit Court determined that a property and home were equally owned by both spouses despite Mr. Dixon’s sale of pre-marital stocks to fund the purchase of the property and construction of the home. The Court decided equal ownership of the property to both spouses because the sale of his stocks was not clearly linked to the purchase of the land and construction of the house. This vague link was due to lack of specificity to whom checks were written, incorrect bank statements, and the conversion of Mr. Dixon’s personal checking account to a joint checking account where both spouses deposited their monthly income. Dixon v. Dixon, Record No. 1689-18-3, April 23, 2019. In essence, traceability was not clearly established to the satisfaction of this court.
How Do I Make Sure My Pre-Marital Property is Traceable?
Here are a few tips to assist with traceability of pre-marital property:
- Keep a record of all separate property prior to signing a marriage certificate
- Keep separate bank accounts for monthly income and pre-marital funds
- Ensure that checks are completely and specifically filled out, including the memo line
- Keep a copy or proof of large personal checks written from separate funds to purchase assets during the marriage
- Double check bank statements monthly, keeping a record of separate funds
Speak with an experienced Smith Strong attorney about traceability in your specific situation, as these cases are very fact and evidence-specific.
Contact Smith Strong, PLC today for more information on divorce cases in Virginia. Please call one of our offices at (804) 325-1245 (Richmond) or (757) 941-4298 (Williamsburg).