My wife and I bought an investment property together about 8 months into our marriage. We mutually agreed to buy it, both of our names are tied to the mortgage and ownership. At the time of purchase, my wife paid the entire 20% down-payment of $70k from her personal checking account (as we agreed I would use my money to pay down school loans). We both equally maintained the property and managed it. Now, 2 years later, as part of the divorce planning she is stating that the "Schmitz Formula" dictates her $70k (+ appreciation) is non-marital. She states the $70k came from her personal checking account, from wages that were earned prior to the marriage, this checking account had about 8 months of income paid into it while we were married as well (her own money pre/post marriage was co-mingled). We both make about the same income and never maintained joint checking/savings accounts. Would the courts view her appreciated down-payment as marital or non-marital, most likely?
The stock answer is that all assets are at the outset considered marital property. This holds unless and until one part can trace the asset to a non-marital source. If the funds were commingled then that would pose a problem for your wife, but not necessarily insurmountable as she might still trace the $70k. However, this would be her burden to do, and one big caveat based on your facts is if you agreed to use your nonmarital money to pay down both your and her school loans and in exchange she would use her $70k nonmarital funds to buy the investment property. If that is the case, a judge would likely but not necessarily rule that to the extent you used nonmarital funds to pay down her nonmarital education debt, you would gain a dollar for dollar interest in the $70k down payment on the investment property. this is what I would argue and I think it would be successful. That all said, you could both spend a lot of money litigating this issue, and may be better off reaching a reasonable compromise, but I would not be afraid to take your case to trial if she refuses to be reasonable.
This is fact-intensive. If the money was hers before the marriage, that's typically non-marital. However if that money became commingled with marital assets, it could have lost its non-marital character.
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