Deciding who gets what can be the most quarrelsome part of any divorce proceeding. Particularly, this issue can be extremely egregious if a dispute arises over real estate.

I have seen many divorces fight over whether real estate is marital property or separate property.

Generally, property that falls out of the marital estate is:

1) Property that is inherited or gifted to one spouse.

2) Property that one spouse owned before the marriage.

In the case of Knight v. Knight, which was a divorce proceeding arising out of Winston County, Alabama, the parties were married for 30 years. During their marriage, the parties resided in a house in Haleyville that is located on 40 acres that was gifted to the husband just before the marriage.

In 1990, the husband’s parents purchased 20 acres of land adjoining the 40 acres, which they gifted to the husband but he and the wife never used. Also, during the marriage, the husband acquired two other parcels of real property in Winston County from which he derived rental income.

The trial court ruled that none of the real property, other than the 40 acres and the marital home, could be considered as marital property because the husband acquired all of the other property through gift or inheritance. Also, the trial court held that none of the property had been used regularly for the common benefit of the parties during the marriage. Accordingly, the wife appealed challenging the distribution of the property.

The Court of Civil Appeals affirmed the trial court’s order. The Court held that the wife’s only argument on appeal was that the rental property should be considered marital property.

The wife claims that the husband had reported the rental income from that property on the parties’ joint income tax returns. Nevertheless, the wife failed to cite legal authority in regards to the income tax issue; therefore, the Court of Civil Appeals rejected the argument.

Often, issues arise regarding claims to one’s inheritance when in the process of a divorce proceeding. As a general rule, only marital property is subject to division at divorce; therefore, the property must be deemed marital property to be vulnerable to division. Normally, inheritances are not considered marital property. Instead, inheritances are treated as separate property and pass outside of the divorce and may not be divided in the divorce proceeding.

Additionally, gifts are not ordinarily deemed marital property; however, that is not always the case. Notably, if the gift is used for the common benefit of the parties during the marriage then the gift will lose its immunity. Once property is comingled or used for the common benefit of parties during the marriage, such as money placed into a joint bank account, then the gift in question will not be an exemption and be subject to division in a divorce proceeding.