What Assets Cannot Be Split In A Divorce? Identifying Non-Divisible Assets

Before filing for divorce, it’s crucial to understand the process of asset division and which assets are excluded from this division. This article will shed light on the intricacies of divorce and how are assets divided, providing you with valuable insights into the legal framework that governs the distribution of property during this challenging time.

However, it’s equally important to be aware of the assets that may not be subject to division, as this knowledge will play a significant role in determining your financial future post-divorce.

1. Intellectual property rights

When it comes to intellectual property rights in a divorce agreement, it is important to consider the following:

• Patents: Patent ownership usually remains with the inventor unless otherwise agreed.
• Copyrights: Similar to patents, copyrights usually remain with the creator unless there is an agreement to transfer it.
• Trademarks: Trademarks also remain with the original owner unless otherwise specified in an agreement.
• Trade secrets: Trade secrets are protected by confidentiality agreements and usually belong to a business entity rather than to individuals.

Joint property is often the subject of a divorce settlement. However, intellectual property rights require careful consideration and negotiation, as they do not lend themselves to simple division between the parties.

2. Personal gifts and inheritance

Although personal gifts and inheritance are generally considered to be indivisible assets in a divorce agreement, there may be exceptions. For example, if these assets were used for the benefit of both spouses during the marriage, they may lose their separate status and become subject to equitable distribution.

It is important to consult with an experienced attorney who will inform you of the specific laws relevant to your case, especially if you’re navigating a divorce in a community property state like Wahkiakum County. This will help you determine how to handle personal gifts and inheritances during your divorce, ensuring you’re well-prepared for the legal processes in your particular jurisdiction.

3. Non-marital property acquired before marriage

This category of property includes: 

• property owned before the marriage;
• inheritance received by one of the parties before or during the marriage;
• gifts received by one of the spouses before or during the marriage;
• assets acquired as a result of a personal injury settlement.

It is extremely important to keep documentation and records of any property that does not belong to the couple: titles, deeds, or bank statements that are necessary to resolve property issues. If these assets were used for joint purposes during the marriage, they may lose their status as indivisible and become subject to division during the divorce.

Consulting with an experienced attorney will ensure that your property rights are protected during the divorce proceedings.

4. Compensation for bodily injury or pain and suffering

If you have received compensation for bodily injuries that occurred before or during the marriage, this is generally considered to be an indivisible property. Compensation for pain and suffering is also considered separately from the marital assets in divorce.

It is important to note that if the funds from these settlements were mixed with the spouses’ property or used for common purposes, they may lose their status as indivisible. In such cases, they become subject to equitable distribution. It is extremely important to consult with an experienced attorney who will assess your specific situation and help you understand the complexities of distributing compensation for personal injuries or pain and suffering in a divorce settlement. They will ensure that your rights are protected and that these unique types of assets are treated fairly.

5. Prenuptial or postnuptial agreements

These documents address the following aspects: 

• Division of property: prenuptial or postnuptial agreements often specify how property acquired during the marriage, as well as any pre-existing property, will be divided between the spouses.
• Asset protection: These agreements can protect certain assets from division, ensuring that they remain with their original owner.
• Debts and obligations: prenuptial and postnuptial agreements can also govern the distribution of debts and financial obligations between the spouses.

Although these agreements are legally binding, they must still comply with applicable laws governing divorce and property division. To ensure that prenuptial or postnuptial agreements meet all legal requirements and accurately reflect your intentions regarding the division of property during the divorce proceedings, you should consult an experienced family law attorney. 

“We tend to focus on assets and forget about debts. Financial security requires facing up to the big picture: assets minus debts.”

Suze Orman

Trust funds and assets held in trusts

Trusts. Trusts established before or during marriage may contain assets that are considered separate property and are not subject to division in the event of a divorce. If the trust was funded by the marital estate or used for joint purposes during the marriage, there may be arguments in favor of equitable distribution.

Irrevocable trusts. Assets held in irrevocable trusts are usually indivisible, as they are intended to provide long-term financial support and protection for the beneficiaries. The terms of the trust usually dictate how distributions are to be made and whether they can be changed or modified.

There may be situations where certain provisions of the trust allow for post-divorce distributions or specify how marital property should be handled. How property is divided during a divorce proceeding depends on various factors, such as state laws, prenuptial and postnuptial agreements, and personal circumstances. It is important to consult with an experienced family law attorney to help you understand your situation and protect your rights.

Certain types of retirement plans

This category of assets includes: 

• Pensions: If one spouse has accumulated pension benefits during the marriage, they are usually subject to equitable distribution. The portion that is considered marital property can be divided between both parties.
• Annuities: Similar to pensions, if an annuity was purchased with marital funds or contributions were made during the marriage, it may be considered marital property subject to division.
• Qualified Domestic Relations Order (QDRO): This legal document allows for the division of certain retirement accounts, such as 401(k)s or traditional pension plans, without incurring taxes or penalties.

It is important to consult with an attorney who specializes in family law and financial professionals who can provide guidance on how to value and properly divide retirement assets during the divorce process.