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Family Use Doctrine

A married person can unwittingly lose inherited property through “family use.”

In the equitable distribution of assets in divorce, property is divided into two separate categories: marital or non marital. Marital assets include all assets acquired or accumulated during the marriage, except those acquired by gift or inheritance and which are kept separate. Separate property is property acquired before the marriage or acquired during the marriage by gift or inheritance. A person who has separate property can cause that property to become marital property by “commingling” the property with the marital estate. This happens for example, when a person inherits money and then places it in joint account with their spouse.

The recent case of Faerber v. Faerber, No. 2008-CA-00236-COA accentuates two types of “commingling” which may not be obvious to the public or to many practitioners. First, the parties lived in a home which was the separate property of the husband. The stated law in Mississippi is that a couple’s home will be converted from separate property through the family’s use of it. This doctrine would seem to apply to almost any property.

Another form of commingling in Faerber v. Faerber, dealt with the increase in value of a business which was clearly separate property. Although there was no no dispute as to fact that a business was a separate asset, the Court of Appeals ordered the trial court to consider the claim of the non owning spouse to the increase in the value of the business during the marriage is marital property.