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DIVORCE 57: Court determined 10% interest gifted by father was marital property.

In July 1999, plaintiff’s father gifted to plaintiff a 10% interest in Business. Shortly thereafter, in August 1999, plaintiff and defendant were married. Throughout the marriage, plaintiff and defendant maintained separate bank accounts. When plaintiff received distributions related to the Business stock, she would deposit them into her individual checking account. In 2015, plaintiff filed for divorce.

Marital or Separate Asset

During the divorce proceedings, plaintiff moved for partial summary disposition, arguing that the Business stock was not a part of the marital estate and was not subject to division.

Defendant argued that a genuine issue of material fact exists as to whether the 10% ownership interest in Business was a marital or separate asset.

The trial court must consider whether the funds had been intermingled, and whether defendant had contributed to the value of the stock.

Analysis

When dividing marital property, the trial court must first determine what property is marital and what property is separate. Marital assets are subject to division between the parties, but the parties’ separate assets may not be invaded. In general, separate property is acquired or earned before the marriage and marital property is property acquired or earned during the marriage. Separate property may be transformed into marital property if it is commingled with marital assets and treated by the parties as marital property.

Plaintiff testified that she and defendant maintained separate bank accounts throughout the marriage, and that she always deposited distributions from the Business stock into her individual checking account. Plaintiff also testified that she used distributions from the Business stock— in addition to her other income—to pay certain marital expenses and household bills. Plaintiff’s conduct, including her failure to separate the proceeds related to the Business stock from other marital funds and her use of the funds to pay marital expenses, indicates that the Business stock was a marital asset.

Conclusion

The court concluded that the parties’ conduct demonstrated that the stock was, in fact, part of the marital estate.

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