Separate Means Separate: Separate Property in New York
August 19, 2015
During a divorce, there is always the matter of dividing the marital assets. New York’s Equitable Distribution Law is based on the concept that marriage is an economic partnership.
The Court of Appeals, the highest court in the State of New York, has held that “upon dissolution of the marriage, there should be a winding up of the parties’ economic affairs and a severance of their economic ties.”
The distribution of marital assets must be fair and equitable, but it does not have to be a 50/50 split. However, before one can divide the marital assets one must identify what they are.What Makes Assets Separate?
The main distinction between assets in a divorce is between marital property and separate property. For the most part, New York statutes provide the definition of what constitutes separate property.
Generally, separate property includes property that owned prior to the marriage, any property received by inherence or as a gift, personal injury compensation awards or settlements, property obtained by use of other separate property and any property designated as separate in a written agreement.
Because the separate property retains its separate character during the marriage, you may not need to resort to a trust or other formal financial instrument to protect that property.
While these definitions appear straightforward, complexity can develop over time in real world situations.
While some of these situations are clear and it is easy to track the separate property through the marriage, for instance, a wife’s grandmother’s wedding ring, in other circumstances it may not be so clear or obvious.
If you receive money as a gift or inherence, and use the proceeds to purchase a home with your spouse, your separate property could be considered transformed in to marital property, depending on the specific circumstances.
One possible solution would be to indicate clearly in written documents, executed at the time of the transaction, the character and nature of the property and the intent of the parties.
It is easier and much more certain if you have contemporaneous documents from the time of an event (the purchase of a home or other real estate, or other assets like stocks), that describes what the parties were thinking at the time, than to attempt to reconstruct events of decades earlier.
This is especially true of a divorce, where warm feelings and hopeful intentions of years past may be long discarded over the scorched earth of bitter, adversarial proceedings. It is also less expensive to have assets clearly identified, rather than needing to have extensive depositions and court hearings to decide the issue.
The question of separateness can become complex when issues of appreciation and the degree to which each spouses efforts assisted appreciation enter the equation. An attorney can advise you how to identify an asset you want to remain separate, and reduce the likelihood of a dispute in the future.