Q: Is the down-payment my wife made during our marriage considered marital or non-marital upon divorce?
My wife and I bought an investment property together about 8 months into our marriage. We mutually agreed to buy it, both of our names are tied to the mortgage and ownership. At the time of purchase, my wife paid the entire 20% down-payment of $70k from her personal checking account (as we agreed I would use my money to pay down school loans). We both equally maintained the property and managed it. Now, 2 years later, as part of the divorce planning she is stating that the "Schmitz Formula" dictates her $70k (+ appreciation) is non-marital. She states the $70k came from her personal checking account, from wages that were earned prior to the marriage, this checking account had about 8 months of income paid into it while we were married as well (her own money pre/post marriage was co-mingled). We both make about the same income and never maintained joint checking/savings accounts. Would the courts view her appreciated down-payment as marital or non-marital, most likely?
A: There is no clear-cut answer to this, as there are a lot of variables in play. This is really going to come down to her ability to trace the funds. Some questions that need to be answered: What was the source of funds in the account? What was the balance of the account at the time of marriage? How much was put into and taken out of the account in the intervening 8 months? What was the source of those funds? Did you put any money into the account? What is the current equity in the property? How does the current equity-to-value ratio compare to that at the time of the purchase? Were any funds expended to improve/maintain the property? What was the source of those funds?
As I said, this will come down to tracing. The burden of proving the non-marital nature of the asset is on her.
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