Utah law recognizes a dichotomy in married persons’ property: nonmarital property versus marital property. In the State of Utah, married persons “have always had” the right to separately own and enjoy property apart from their spouse. Mortensen v. Mortensen, 760 P.2d 304, 308 (Utah 1988). Nonmarital property includes property owned prior to the marriage, or property obtained by one of the parties by gift or inheritance during the life of the marriage.
However, there are some circumstances under which property that was once nonmarital becomes marital and thus subject to equitable distribution by the court. This conversion occurs either when the property is (1) enhanced, maintained, or protected by the other spouse, or (2) the property is consumed or “commingled” with marital property such that it loses its identity. Mortensen, 760 P.2d at 308.
An example of “enhancement” might be if one spouse owns a piece of land prior to the marriage and during the marriage, the other spouse contributes to improvements on the land either through labor or by providing monetary contributions. By so doing, the other spouse now has a colorable argument that they are entitled to either a portion of the increase in the property’s value since the marriage, or perhaps even the underlying value of the property itself.
A common example of “commingling” occurs when a party receives an inheritance or monetary gift from family during the marriage and instead of maintaining it in a separate account or investment, moves the funds into a marital account or adds marital funds to an account with the inheritance. This also applies to funds brought into the marriage that a party perhaps hoped to keep separate. Parties should be encouraged to maintain any gifts or inheritances in completely separate accounts, perhaps even separate banking institutions, to avoid commingling.
Parties should be aware that paying off marital debts or contributing to household expenses with inheritance funds is generally not “reimbursed” in the divorce process. On the other hand, if a party uses the inheritance to purchase property, such as a vehicle, that property is commonly considered nonmarital property, even if utilized by the other spouse to a limited extent. The reason for this is that the property purchased maintains its unique “identity” by being easily traceable to the nonmarital funds.
Always remember that property division by the court is a matter of equity and that the court has considerable discretion in determining what is “equitable.” This power necessarily encompasses the underlying determination of what is or is not nonmarital property. Parties with considerable separate property coming into a marriage should definitely consider the use of a prenuptial agreement to define expectations and guide the court in event of future disputes.
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