I live in NC, and I'm in the process of reaching a property settlement with my soon to be ex wife.
During the marriage, I received an inheritance from my uncle. The funds were deposited into a joint checking account with my wife. All of our accounts were established jointly with right of suvivorship for estate planning reasons.
The inheritance funds were transfered from the joint checking account to a CD also in joint wros name where they remain.
My wife's attorney advised her that once funds were mixed in a joint account, they became marital property. My attorney advises that separate property deposited into a joint account remains separate property unless there is documentation that indicates the funds were a gift to either the other spouse or the marriage.
There is clear documentation and a paper trail from the Estates Clerk of Court's office all the way to the CD of separate property and no documents indicating a gift.
Where do I stand on this matter?
In equitable distribution states, when one spouse's separate property is commingled or mixed with the other spouse's property or with marital property, the separate property becomes indistinguishable from the marital property. By commingling, the separate property loses its status as separate property and becomes marital property subject to being equitably divided by the court. HOWEVER, In some states, if the spouse can trace the source of some of the money in the marital checking account back to his or her separate account with deposit slips and bank statements, then the separate money can be set apart from the marital property.
The courts of several states have wrestled with this dilemma over the years, including North Carolina. When marital and separate funds are mixed together, regardless of whether the marital or separate contribution was made first, the entire mixture is presumptively marital property. That presumption can be overcome though. The spouse, however, who made the separate contributions can establish a partial separate interest by proving the nature and amount of the separate contributions. E.g., Schmitz v. Schmitz, 88 P.3d 1116 (Alaska 2004); Lilly v. Lilly, 107 N.C. App. 484, 420 S.E.2d 492 (1992); Von Raab v. Von Raab, 26 Va. App. 239, 494 S.E.2d 156 (1997).
It would appear thet you have the upper hand in this situation, thankfully.
I wish you the best.
The information you provided in your reply is consistant with the advice from my attorney, and I have a copy of your Lilly v Lilly citation from my previous legal research. There are a number of appellate decisions in NC that also support this opinion.
NCGS 50-20 (b)(1) established the presumption that my wife puts forth, but it also states that the presumption can be rebutted. (It is presumed that all property acquired after the date of marriage and before the date of separation is marital property except property which is separate property under subdivision (2) of this subsection. This presumption may be rebutted by the greater weight of the evidence.)
During our marriage, my wife didn't work, and all of our income came from my employment. This income was sufficient for us to pay all of our living expenses, remain debt free, and save a substantial amount above and beyond the funds that I am claiming as separate property.
I have no problem with dividing the funds that we saved from my income with her 50/50, but I don't feel that she has a claim to separate funds that she had no part in at all.
As a stay at home mom, she certainly had a part in making it possible for me to have a job that paid well, and for her efforts, I feel that she deserves half of what remains from those earnings. However, she had no part at all in the inheritance which would have been the same regardless of her efforts in making a home for me and our children who are all adults now.
Can you offer any additional advice on how I can present this matter and get it resolved without more unnecessary legal assistance?
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