ULC

Marital Property Act Summary

Elementary sociology tells us the self-evident fact that the nuclear family is the basic social unit upon which all other social and political institutions are based. Much has been said, as well, in those arenas in which public policy is debated and made, about the primacy of the family and the need to support and sustain it. But most of this discussion and concern has overlooked an inherent weakness in the family as an economic unit, at least in those states that are common law states. Although members of the family may have property and income, the family does not. As an economic unit, it is non-existent. And of all those factors that contribute to the problems of the family, perhaps its economic weakness is the most devastating.

After three years of consideration, the Uniform Law Commissioners promulgated the Uniform Marital Property Act (UMPA) in 1983. For the first time, the family can be made into a functioning economic unit. And, for the first time, there is an opportunity to give more than lip service to the family as an economic entity.

UMPA creates a class of property that is the property of the marriage, and not the property of individuals. That class of property is made up of all property of the spouses, except certain specific exceptions that remain individual property. If there is a question about specific property, whether it is marital or individual property, the Act raises the presumption that it is marital property. The presumption forces any party claiming property as individual property to bring sufficient evidence to overcome the presumption. Thus, UMPA explicitly favors the family and a finding of marital property.

Each spouse has an undivided present one-half interest in the marital property. Each spouse owns his or her own individual property. Further, marital property interests exist notwithstanding title as evidenced by title documents or otherwise. A spouse has his or her interest in marital property, even if that spouse's name appears nowhere on any title documents.

When does marital property come into being? There are three possible dates, one of which becomes the determination date. All property acquired by either spouse, with the given exceptions, is marital property for existing marriages after the effective date of the Act. Thereafter, marital property may come into being at the time of marriage or at the time marital domicile is established in the state.

Property of the spouses that is not marital property is individual property. Any property acquired by a spouse before the effective date of UMPA or before marriage is individual property. The bulk of property classified as individual property will fall into this category. Property acquired before marital domicile is established in a state or jurisdiction adopting UMPA remains as classified under the law of the prior domicile.

During marriage, certain other property of spouses is also individual property. For example, an inheritance does not become marital property. A gift to a particular spouse from a third person is that spouse's individual property. Recovery of damages for personal injury is individual property, unless subrogated to prior compensation drawn from marital property. UMPA specifically identifies the kinds of property that are individual property. But it should be remembered that UMPA presumes marital property in the absence of evidence to the contrary.

Certain, specific kinds of property are specially considered in UMPA. Income from individual property earned after the determination date is marital property. Appreciation of individual property remains individual property, unless the appreciation is attributable to the efforts of the other spouse. That appreciation is marital property. Insurance policies and proceeds become marital property insofar as acquired or paid for after the determination date. Any program entitling a spouse to deferred employment benefits is marital property insofar as acquired or paid into following the determination date. Commingled or mixed property is marital property except for that individual property that can be specifically traced. UMPA sets specific rules in each of these categories to solve significant, known problems in the establishment of marital property.

Although marital property exists no matter what the title documents say, the power to transfer or consume marital property does follow title. A third person acquiring property from a spouse may rely upon the title document whatever it may be, or appropriate affirmations of title, even if the other spouse is not included on the documents or does not consent to the transfer. The numerous and complex systems for the transfer of all types of property, as they have evolved in this country, are not disturbed by the establishment of marital property. UMPA does not impose extraordinary burdens on third parties because of the existence of marital property. Marital property must be managed within the marriage, and any inappropriate act of transfer must also be remedied within the context of the marriage.

Between spouses, UMPA imposes responsibilities and inhibits the mishandling of marital property. All marital property must be managed in good faith for the marriage. If it is not, the injured spouse may recover from the spouse responsible for the injury. UMPA restricts gifts to third parties from marital property by one spouse not acting jointly with the other to a small amount (suggested $500.00). Property cannot easily be shifted by gift to avoid the responsibilities of family. Also, any third party must be a bona fide purchaser for value to be free from an injured spouse's capacity to trace and recover an asset improperly or fraudulently sold to that third party. Such provisions inhibit and restrain collusion and other practices designed to avoid legal family responsibilities.

UMPA, in addition, establishes creditors' rights, an issue of great importance if the family is to have credit as a family. Any obligation for the family may be settled out of marital property and the individual property of the spouse incurring the obligation. Indeed, UMPA presumes that obligations arising after the determination date, incurred by a spouse, are for the family.

However, individual obligations may arise as well. All individual obligations may be satisfied out of the incurring spouse's individual property. If the obligations precede the determination date, in time, the creditor may, also, be satisfied from marital property that would have been individual property but for the marriage. If the obligations arise after the determination date, they may be satisfied out of the incurring spouse's share of the marital property, as well as his or her individual property. These rules clearly designate that property which a creditor may use to satisfy a debt.

UMPA merely establishes marital property and makes only those adjustments in the general incidents of property ownership to do so. It does not affect the actual distribution of marital property at divorce or death. These matters are covered in the divorce and probate statutes of a state. There are a number of other topics related to distribution for which UMPA does provide, however. Spouses can use the survivorship rules provided in UMPA to pass their shares in specific marital property to each other at death without probate. UMPA also empowers spouses to determine what is marital property and individual property by agreement, and to agree on distribution even at separation or divorce. These features permit spouses considerable flexibility in ordering their own affairs.

UMPA provides the means to overcome a share of the economic inequities inherent in the current family structure. The concept of marital property requires careful consideration everywhere for that reason.