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Pack Rat Wins!

Pack Rats like to keep old documents, letters and photos. Pack Rats may be frowned on for their tendency to hang on to too much “stuff”. But Pack Rats may have an advantage in divorce cases. Let’s look at how old documents can be important in a divorce case when one spouse makes a “separate interest” claim.

In Virginia divorces, property owned by the spouses is classified as “marital”, “separate” or “hybrid”. Only marital property can be distributed with the mechanism of an equitable distribution award. The rules for classifying property are complex, but in a nutshell, the Virginia divorce court presumes that all property owned by the parties is marital property. If property is classified as separate, it cannot be distributed between the parties.

“Separate” property includes all property acquired by a party before the marriage and all property acquired during the marriage by gift or inheritance from someone other than the other spouse so long as the property is maintained as separate during the marriage. “Hybrid” property has both “marital” and “separate” elements: the marital portion can be distributed by the court, but the “separate” portion cannot be distributed. A spouse who claims property as “separate” or “hybrid” property has the burden of proving the separate nature and value of the property. If property is not proven “separate” or “hybrid”, it is considered marital and is part of the property the court can distribute with an equitable distribution award.

The burden of proving the separate interest falls on the party asserting it unless the other spouse agrees to it. In the absence of any agreement, the claiming spouse must present evidence during the trial proving the “separate” nature of the property and its value. If successful, this effort can reduce the value of marital assets available to the court for allocation between the parties in equitable distribution.

In Moore v. Moore, the husband and wife had each made contributions to their federal Thrift Savings Plan (TSP) retirement accounts before and during their twenty-year marriage. Each claimed that their respective retirement accounts were “hybrid” with a separate premarital interest as well as the marital interest in their TSP retirement accounts. Mr. Moore’s proof of his separate interest claim consisted of only seven statements over a seventeen-year period during the marriage. Ms. Moore submitted all statements for her TSP account from efore and after the marriage up to the date of the divorce trial.  Ms. Moore’s statements were detailed and showed monthly balances, contributions, earnings and losses and growth on the account. With Ms. Moore’s detailed and complete documentation, the Court was able to calculate and determine that she had a separate interest of $117,717 in her TSP, representing her original pre-marriage contributions and the growth on her premarital contributions.  The judge ruled that $117,717 of her TSP was not subject to equitable distribution and remained the separate property of Ms. Moore. Mr. Moore did not have complete records to prove his separate interest claim and the Court ruled that his TSP account was all marital and his TSP value was included in the distribution of marital property. The pack rat who kept old monthly statements prevailed.

Contact CSAD for an appointment if you have questions about separate asset claims in a divorce and records needed for equitable distribution claims.