What type of property does the Source of Funds Rule apply to?

The Source of Funds Rule is applied to property acquired both before and after marriage. This legal principle is particularly important in determining how property is classified during a divorce or separation.

When assessing the nature of marital property, the Source of Funds Rule examines the origin of the financial resources used to acquire an asset. For example, if a spouse uses pre-marital funds to purchase a home during marriage, that home may still be considered separate property based on the source of those funds. Conversely, any property acquired during marriage using marital funds would typically be classified as marital property, regardless of when the asset is purchased.

Understanding the Source of Funds Rule is essential in family law, as it helps clarify ownership and the potential division of assets in divorce proceedings. The rule not only addresses property obtained during the marriage but also acknowledges the significance of pre-marriage assets, thus reflecting a more comprehensive approach to property classification in family law scenarios.