What is separate property? | New Mexico Financial & Family Law

New Mexico is a community property state, which effectively means that nearly any and all property acquired during the marriage by either spouse is co-owned by both spouses. The only exception is for specific types of property that can be considered “separate property.”

New Mexico law (N.M.A.S. §40-3-8) refers to five distinct reasons a piece of property might be considered legally separate:

The property was acquired prior to the declaration of marriage or after the dissolution of the marriage
Property acquired after the petition for dissolution of marriage has been filed and once the division of assets has already begun
Property that can be justified to be declared as separate, which must be confirmed in a judgement or court decree
“Property acquired by either spouse by gift, bequest, devise or descent [inheritance]”
Property that has been declared as separate according to a legally valid written agreement consented to by both spouses, such as property described as separate under a prenuptial agreement

Any property acquired after the marriage has begun and not deemed as “separate” will be considered community property under New Mexico law and available for division during a divorce.

Anyone who has questions regarding what property might be separate or how to ensure the property will be considered separate can refer to an experienced New Mexico divorce attorney for legal guidance, assistance, and representation.

All Community Property Will Be Divided Equitably in Most New Mexico Divorce Cases

All marital property will be divided during a New Mexico divorce case such that each spouse will receive as equal of a share as possible. Some assets, like homes and vehicles, may need to be sold in some instances so that the liquid value of the asset can be split.

In some cases, the couple will determine that a completely equal split is not needed and that a more fair arrangement can be made given the circumstances. These agreements can lead to some assets being held by one spouse, such as a home, while the other spouse receives a smaller overall portion of marital property. Courts will only approve such agreements when they can be justified and can sufficiently demonstrate that they will not cause hardship to one spouse or the other.

Property Obtained Prior to the Marriage or After the Divorce Has Started May Be Considered Separate

All property brought into a marriage may be considered separate under most circumstances. However, there are a few exceptions.

Commingling Assets

Certain assets may be impossible to completely separate if they become entwined in marital property in a complicated and unclear way. The most obvious example is that the couple may join their bank accounts once the marriage begins, so any finances that existed separately may now become difficult to tell apart from marital assets.

Joint Ownership or Tenancy

If the couple jointly owned an asset such as a car or a home prior to the marriage, that joint ownership will carry over into the marriage unless specific alternative arrangements are agreed to.

Contributory Support in the Acquisition/Development of an Asset

In some marital situations, a spouse will have an asset, investment, or operation that is kept legally separate from the marital property but that nevertheless could be seen as having needed the marriage in order to exist.

The most common example is a spouse owning a small business that is supported both directly and indirectly by the other spouse. If, for example, the small business owner did not contribute income from the small business to the operation of the household, then it could be argued that the other spouse’s financial support was instrumental to the survival and growth of the business. If, however, the small business owner drew a reasonable salary from the business and used it to contribute to the household’s finances, then it would be more difficult to make this argument.

Some cases may also involve a spouse contributing or supporting to certain business ventures or other assets prior to the marriage, which could arguably make the holding already jointly owned and eligible for marital property division.

Property Acquired After the Divorce Proceedings Have Begun

Once the petition for divorce has been filed and the couple no longer cohabits, either spouse can petition for the division of assets to immediately begin (see N.M.A.S. §40-4-3). Once property division has begun and the couple is separated, new property or assets acquired during this period are very likely to be considered separate.

Some Property Will Be Ruled as Separate on a Case-by-Case Basis

If a spouse, for whatever reason, feels that a piece of property or an investment should be considered separate from marital property, they can submit to have a judgment or decree affirming their sole ownership.

Unfortunately, there is no real way to have blanket exemptions for a property unless it was acquired during a specific relevant transaction or otherwise is part of a group of similar acquisitions. What this means is that the spouse may have to petition to have each and every piece of property declared as separate, in many cases.

Property Given as a Gift or Inheritance May Be Considered Separate

Property specifically gifted to a spouse is likely to be considered separate, especially if the property was transferred as part of a last will and testament of a close family member, friend, associate, or acquaintance. Some gifts and inheritances may be given to the couple as a unit, however, so it is important to keep certain items from commingling and to request that the gift-giver or grantor specifically name the one spouse in the transfer documents.

The Couple Can Agree to Keep Certain Property Separate

The couple may enter into an agreement with one another to designate specific items or assets as separate. Commonly, this is done prior to the marriage through a prenuptial agreement that refers to specific types of assets as separate. For example, someone may intend to continue investing in rental properties after the marriage and may wish to keep every property listed as separate.

An agreement of this nature can be struck after the marriage has begun, which is often referred to as a postnuptial agreement.

Further, the couple can enter into an agreement once the divorce has begun that certain property will be considered separate and will be held solely by one spouse, making it not eligible for division.

Keeping Separate Property Legally Separate Can Be Difficult Without a New Mexico Divorce Attorney

Marital property is one aspect of a divorce that can be seen as falling on a spectrum, however, it is the court’s duty to make a hard binary decision as to whether a piece of property is separate or not. Some spouses will use this legal ambiguity to their advantage, allowing them to argue that the property is not actually separate and that agreements designating it as separate should be seen as legally invalid.

In other words, it can be very tough to hold onto the separate property when going through a divorce. That’s why knowledgeable and experienced divorce lawyers from New Mexico Financial & Family Law can help. We have handled hundreds of divorce cases and know the specific legal provings that can provide a convincing case for certain property to be considered separate.

If you would like guidance, legal advice, and representation when trying to form a prenuptial agreement to keep property separate or when handling the division of marital assets, we are here for you. Schedule a no-risk, no-obligation consultation when you call (505) 503-1637 or contact us online.