Your name on the account doesn’t make it yours

Four questions that catch most people, and the ordinary sentences that turn “mine” into “ours.”

Drawn from the book: Chapters 11 and 12.

Assume a married couple with no prenup, getting divorced. Who owns it?

1. Ten years of her salary, sitting in a bank account with only her name on it.

   HersOursPart of each
   The answer

   Ours, in every state. Earnings during a marriage belong to the marriage. A name on an account gives control while you’re married and nothing extra at a divorce.

2. A house he owned two years before they married. His salary has paid the mortgage since.

   HisOursPart of each
   The answer

   Part of each, in proportions that vary by state. His salary became marital money at the wedding, and it has been buying him equity. California gives the marriage a proportional share of the house, including its rise in value. Texas leaves the house with him and lets the marriage claim back the principal it paid. Most states fall between those two.

3. A diamond necklace he gave her on their tenth anniversary.

   HersOursPart of each
   The answer

   Probably ours. In many states a gift between spouses bought with marital money stays marital. In California, jewelry of substantial value stays community property unless a written document says otherwise.

4. A business he started in the third year of the marriage. She has never been inside it.

   HisOursPart of each
   The answer

   Ours. He built it with his work during the marriage, and that work belongs to the marriage. He usually keeps the company and pays her for her share, once somebody settles what it’s worth.

4 to go.

How “mine” becomes “ours”

Most states treat inheritances and whatever you owned before the wedding as separate property. (In all-property states such as Massachusetts and Connecticut, a judge may divide whatever either of you owns.) It stays separate only with some care:

• Save proof of the starting point. For each account, keep the statement nearest your wedding. Banks tend to discard records after about seven years.
• Give inherited money its own account, in your name alone, and put nothing else in it: no paycheck, no tax refund, not twenty dollars.
• Hesitate before adding a name. If a lender or an attorney insists, find out what the change does to ownership in a divorce.
• Paper any joint use. A signed paragraph written at the time, saying loan or gift, is enough.
• Cover taxes on separate income with separate money. Using marital funds gives the marriage a claim.

People undo all of that in good faith, with sentences like these: “Let’s put it toward the mortgage.” “One account is simpler.” “Both names should go on the deed.” “Use some of it to redo the kitchen.” Each is fine as household advice. Each also shifts property to the marriage for good.

Neither result is wrong. Some couples want the inheritance to become ours, and the Generous Contract makes that the rule. Others want it kept apart, and the No-Surprises Contract does that, with an exception for the family home. The lawsuits come from couples where each spouse privately assumed something different.

Sources

• Cal. Fam. Code § 852(c); In re Marriage of Moore, 28 Cal. 3d 366 (1980); In re Marriage of Marsden, 130 Cal. App. 3d 426 (1982).
• Tex. Fam. Code §§ 3.001 to 3.003, 3.402.
• Mass. Gen. Laws ch. 208, § 34.