What Constitutes Separate Property in Virginia?
The separately owned property does not automatically become marital upon marriage, even when placed into joint names. Suppose one party invested separate funds into a marital asset. In that case, they may be entitled to a return of the purchase or the amount invested plus appreciation if they can trace out or prove that investment. This is a substantial issue in many cases. The goal of the tracing process is to link every asset to its primary source, either separate or marital property. Harris v. Harris, 2004 Va. App. LEXIS 138 (2004). See also Mann v Mann, 22 VA. App 459; 470S.E. 2d 605, 1996, holding that the interest passively earned on the husband’s premarital assets are separate.
The Code of Virginia, §20-107.3(A)(1)(iv) defines “separate property” as “that part of any property classified as separate according to subdivision A.3. Code of Virginia, §20-107.3(A)(3)(e) provides that “when marital property and separate property are commingled into newly acquired property resulting in the loss of identity of the contributing properties, the commingled property shall be deemed transmuted to marital property. However, to the extent the contributed property is retraceable by a preponderance of the evidence and was not a gift, the contributed property shall retain its original classification.” (emphasis added). Code of Virginia, §20-107.3(A)(3)(g) provides that section (e) of this section shall apply to jointly owned property.
No presumption of gift shall arise under this section where (ii) newly acquired property is conveyed into joint ownership. The increase in value of a separate property during the marriage is individual property unless marital property or the personal efforts of either party have contributed to such increases and then only to the extent of the gains in value attributable to such contributions. The individual steps of either party must be significant and result in substantial appreciation of the separate property if any increase in value attributable to it is considered marital property. See Code of Virginia, §20-107.3(A)(3)(a). In this case, all of the increases in real estate are attributable to market fluctuations.
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