In general, states define the marital estate in two ways: all-property, which is also called Kitchen Sink method, and dual classification, which means the spouses must determine when an asset was acquired to determine if it was acquired before the marriage and therefore immune from distribution.

In general, separate property includes a gift to one party or a bequest to one party, or in dual classification states, assets acquired before the marriage.

Usually occurring in community property states, separate property includes property brought to the marriage and may include inheritances or gifts received during the marriage.

Prenuptial agreements also establish separate property.

Problems sometimes happen because during the happier times of a marriage the terms and conditions under which a gift to one person is made may be misconstrued as a gift to a couple. This can easily happen when a couple get financial help from one or the other spouse’s parents in buying the marital home.

Kitchen Sink states are all-property jurisdictions that include separate property in the marital estate and treat such property as eligible for distribution in a divorce.

The Kitchen Sink States are Connecticut, Indiana, Kansas, Massachusetts, Michigan, Mississippi, Montana, New Hampshire, North and South Dakota, Oregon, Vermont, Washington, and Wyoming. Eight other states include separate property when the court finds a need. These are Alabama, Alaska, Arkansas, Hawaii, Iowa, Minnesota, Ohio, Wisconsin.

In these jurisdictions, gifts between spouses and inheritances can become very much of an issue.

Dual classification is used in 29 states to define separate and marital property. Generally, separate property in these jurisdictions is immune from distribution.

A married couple often merge finances. Even if each spouse keeps a separate bank account, he or she may not realize that in some jurisdictions the money may be considered to be a marital asset and subject to distribution in a divorce. When separating or divorcing, the accrual value of assets, such as bank accounts or real estate, carries significant weight in determining a fair and equitable property distribution award.

Increasingly, courts classify the appreciation of a separate property business as marital when the owner "...engaged in active efforts ... even to a small degree." Spouses who have a separate property business cannot argue that the appreciation of that business is passive, and hence separate, even when they are not involved in the day-to-day operations of the business.

See also Classification of Assets; Dual Classification States, All-Property States; Commingling; Separate Property; Equitable Division (Distribution) of Property; Community Property; Kitchen Sink States.

Compare Kitchen Sink States and All-Property States.

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