In a Rhode Island divorce, property may be either marital or non-marital. A court can divide marital property between spouses under the state’s equitable distribution rules. Marital property is generally anything purchased, acquired, or received during marriage, regardless of whether title is in the name of one or both spouses. Non-marital property, on the other hand, is exempt from equitable distribution, or division, in divorce. Examples of non-marital property include inheritances from family received by one spouse or gifts received from one spouse from third parties. Non-marital property cannot be divided in divorce and remains the property of the spouse who received it.
There are situations, however, in which the Court might consider the non-marital property of one spouse to be marital property, and then divide that property. This is commonly known as the “transmutation” of non-marital property into marital property, and most often occurs where a party is careless in keeping their non-marital property separate from marital property.
Transmutation of Gifts or Inheritances
To get a clearer understanding of transmutation under Rhode Island law, imagine a situation in which you personally received an inheritance from the estate of a loved one who passes away. Since you and your spouse always shared one bank account, you decide to put that inheritance into the joint account. Both you and your spouse use the account for common expenses, and you later use the inheritance to buy your dream car. Without realizing it, you may have just turned your dream car into your spouse’s dream car as well.
Even though inherited money is considered non-marital property for divorce purposes, comingling those funds with marital funds by putting them in a joint account might turn those finances into marital property. Likewise, putting your spouse on the title to real estate that you acquired by gift or inheritance could also “transmute” that separate real estate into marital property. To avoid transmuting non-marital property, therefore, it is very important to keep that property strictly separate during the marriage.
Transmutation Can Complicate Divorce Cases
The process of transmutation can be complicated and involve serious risks for a spouse seeking to maintain separate property. Conversely, transmutation can help a spouse overcome an unfair situation where inherited or gifted property has been used jointly during the marriage, but the other spouse then seeks to keep it separate during divorce. As our Rhode Island courts have stressed, these cases are highly fact specific and much will depend on the unique circumstances of your individual case.
To get specific advice about complicated transmutation issues specific to your situation, you can count on McIntyre Tate LLP and our Rhode Island property settlement lawyers. Call (401) 351-7700 to schedule an initial consultation with our team.