How to Invest Separate Assets Without "Commingling"

[veger]

I am happily married for 14 months. I live in TN. I have a considerable sum of premarital money (that I've had from a prior inheritance) that I would like to put towards a new house. It would be enough to pay for at least half, and maybe almost all of the purchase price of the new house.

Q: Do I understand correctly that my wife's name would HAVE to be on the new deed?

Q: If anything happens to our marriage, would the house be split 50% with my wife because we acquired it after the marriage?

Q: Is there a way to invest my money into the house without making the entire house community property? Can I keep my initial investment separate from the community portion and avoid "commingling"? (bearing in mind that future house payments would have to be from my paycheck which I understand is a community asset.)

BTW, my wife does not know about the money I have, since she is a spendaholic and the money would be gone in months (she blew a lot of money previously and went bankrupt) so I'm trying to protect this money.

[Anonymous]

Q: Do I understand correctly that my wife's name would HAVE to be on the new deed?

Probably not - although, on the title or not, she would likely have to execute a quitclaim deed at the time you were to sell the property, as property acquired during the marriage appears to be presumed to be community property under Tennessee law. However, if she will be a party to a mortgage on the home, she would ordinarily be named on the deed.

Q: If anything happens to our marriage, would the house be split 50% with my wife because we acquired it after the marriage?

That's not clear. If you acquire the property with money you have from prior to the marriage, ordinarily you would be able to claim an exception to the general rule of community property. However, where you are contributing only a part of the required assets (albeit a substantial part), the picture becomes more complicated, particularly over time.

Q: Is there a way to invest my money into the house without making the entire house community property? Can I keep my initial investment separate from the community portion and avoid "commingling"? (bearing in mind that future house payments would have to be from my paycheck which I understand is a community asset.)

There may be a means to accomplish that end. Such as by placing the money into a trust account, and then having the trust lend you and your wife the money to acquire the house, or by placing the money into an LLC and having the LLC lend the money. However such systems have to be properly structured under state law, if they are even possible, and thus you should only attempt this with the assistance of a qualified lawyer within your state. (I believe your simplest solution would have been a prenuptial agreement, but unfortunately it is a bit late for that.)

[pazion]

With my expertise in this matter from the divorce of my husband and his ex wife, it didn't matter what he did to try to save himself from losing everything to his ex wife. They have two children (not sure if you have any or plan to have any). She not only got ALL the contents of the home (most of which were his prior to their marriage) but she got ALL the equity from the marital home. She refused to work so he made all the money from a self inquired business, thus, paid for everything, including the mortgage of their $150,000. home, new vehicles, etc. He lost everything to her no matter what their standings were before they were married. To me, it seems that, unless you have a prenup, everything goes out the window in regards to assests once you say "I do".

I wish you lots of luck and hope you never have to learn things the hard way

[mmartinez]

I'm not a lawyer, but I have consulted with a lawyer regarding New Mexico state law, (New Mexico being a community property state), and here's what I learned:

- assets (property and bank accounts) prior to marriage are separate property in the event of divorce as long as a *claim( is made that they are separate (because everything will be assumed to be marital unless you say otherwise), and it can be shown on paper that no community effort, money or contribution went into maintaining the assets. If these assets are not touched, then state law will protect you. If you have a bank account, this means you don't contribute any of your income into the account, because your income is community/marital property. Nor do you use the money in any way. If you contribute funds from your separate account into your marriage account or you use funds to buy things in your house, the funds you use become marital property, but the funds you don't use, remain separate.

- If the assets are used in some way during marriage, then this complicates things. Because time or effort spent on these assets is considered to be "marital" time and effort. So if you buy another property in your own name, there's a chance a divorce court will consider it "marital" property because you devoted effort to buy the property, to fix it up, to furnish it, etc. Even small amounts of community effort will ruin the chance that a divorce court will consider it separate property.

- If you contribute any of your income towards paying the monthly mortgage on this new property, then the property *for sure* will be considered marital property, and there's no ifs-ands-or buts about it. If you divorce, and your wife gets a lawyer who's even somewhat saavy, her lawyer will be sure to point this out.

- You can do anything you want on paper (such as put property in your own name, have your wife sign a quit claim, etc.) but it won't mean *anything* to a divorce court. The main thing a divorce court considers is whether you "mingled" your separate assets. It's up to you to prove that you didn't. If you have to do hand-waving to prove it, then forget about it.

Most "horror-stories," such as the one given by the previous poster, are cases where the individuals involved were not careful to keep their assets separate or did not understand the criteria the court uses to consider something as "separate."

Michael

[mmartinez]

I'm rereading your original post, and perhaps I didn't read it carefully the first time. It sounds like you want to buy a new "primary" residence? If that's the case, forget about it. It will definitely become community property, which by definition means 50/50. If both you and your wife are going to live in it, then your wife will be contributing to the upkeep of the house. Furthermore, if you're going to make monthly mortgage payments with money from your income (or from any other community funds) then it just solidifies the case for it being community property.

Best thing for you to do is draft up a post-nuptial contract. Of course, you have to be totally up-front with all your assets, otherwise the court may consider it void and null.