Is Idaho a Community Property or an Equitable Distribution State?
Idaho is a community property state. This means that any assets acquired during the couple’s marriage are owned jointly by the couple. This means that when a couple is divorced, they will need to divide their shared marital property equally. While sometimes this division can mean a 50/50 split, couples do have the option to negotiate a different property division settlement.
Examples of marital property include:
- Income earned during the marriage
- Retirement accounts
- Investment accounts
- Bank accounts
- Real estate
- Vehicles
- Art, antiques, and other collections
Examples of separate property include:
- Assets purchased and owned before marriage
- Debts acquired before marriage
- Inheritances and gifts
- Purchases made with separately held property
All separate property should be kept separate from marital property. You should also keep clear financial records that demonstrate that the separate property is truly separate. There are instances in which the courts may classify property that would traditionally be classified as separate property as community property if it was used for community purposes or if it was commingled with community property.
Note: In Idaho, income from separate property made during your marriage is considered community property.
What About Commingled Property?
Commingled property (when marital and separate property are combined) can create a difficult situation as it requires a detailed financial investigation into the asset in question. As mentioned above, it is unwise to commingle separate property with community property. The courts may see this as an intention to convert that separate property to jointly held marital property.
Examples of commonly commingled property include:
- Retirement accounts
- Investment accounts
- Credit accounts
- Real estate
For example, suppose someone receives an inheritance that they then use for a down payment on a family home, but then both spouses contribute to the monthly mortgage. As the family home, to which both spouses contributed, it is subject to property division during the divorce. However, because the house was partially paid for with an inheritance, the inheritance amount (and possibly a percentage of the amount the home increased in value) will need to be deducted from the home’s overall value.
Can a Prenup Help Protect My Separate Property?
As previously mentioned, the courts may determine that a separately held property should be treated as community property in a divorce. You may be wondering how to avoid this. The best way to protect separate property from property division is to keep it fully independent and not commingle it. However, another good way to safeguard your separate property is to establish a prenuptial or marital agreement in which you and your spouse identify the property you want to remain separate.
When drafting a prenuptial agreement (or other nuptial agreement), it’s important that you and your future spouse each retain your own legal representation. Not only can an attorney help you draft a sound agreement but having your own legal representation can also help ensure that both of your interests are well-represented in a mutually beneficial agreement. This can also increase the likelihood that the courts will validate and accept the terms of your prenup should you divorce.
Have more questions about property division in Idaho? Contact May, Rammell & Wells for guidance. Our team is standing by to help you today.