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Assets

Not all Assets are Marital Assets

According to the New York Domestic Relations Law, all property and assets acquired during a marriage are marital assets regardless of whose name is on the title. During a divorce and the process of dividing the assets, a value is assigned to a property, and those values are taking into consideration. Since it is impossible to split a house or a car down the middle, if it is agreed that one spouse retains the family home, the scales are balanced on the other side with other assets.

New York laws are based on equitable distribution. Equitable means that while the scale might be somewhat balanced, the goal is not to split assets entirely in half, such as is the law in “community property” states, such as California. Equitable distribution means that the division of assets is fair to each of the parties. What is fair is based on a complex formula with multiple variables such as the duration of the marriage, age, occupations, income levels, employment status, vocational skills, and training. Other variables considered are the size of the estate, shared liabilities, needs of each of the spouses, and the ability of each spouse to earn a living.

While the court considers all marital assets when determining what is equitable, not all assets are necessarily considered. There are several circumstances where property and assets are separate and beyond the scope of distribution.

Property owned prior to marriage

Property acquired before the marriage is separate property. Even an increase of the value of the separate property during the time of the marriage is separate. If the separate property is exchanged, it is still considered to be separate.

There are cases where previously owned property may become marital property. If a previously owned home becomes the family home and capital improvements are done to the home, coupled with both spouses sharing responsibility for maintaining the home, over time, the status of separate property may be lost and an equitable distribution of the property may result subject to a separate property credit

Inherited Property is separate property

If a person inherits property, that property remains separate even if acquired during the marriage. The same is true for any property or assets gained because of a personal injury settlement or verdict.

Separate property can become marital property if not kept separate

During a divorce, while identifying assets, defining separate property is an easier matter if the property and assets are genuinely separate. That means that the ownership of the separate property remains with the original spouse, and any other asset or money is kept separate and held in separate accounts not used for marital purposes.

If money or assets are “commingled” with marital assets and those assets or funds are used for marital purposes, such paying bills, the mortgage, family vacations, and the spouse has access to those assets for shopping for the family and him or herself, the separate property may become marital property, and can be considered upon the division of assets.

Proving separate property is the burden of the person claiming that the property is separate. The easiest way to prove that property is separate is through a written premarital agreement, or in the case of property inherited during a marriage, a post-marital agreement is recommended. Without these agreements, the spouse must show that the property is genuinely separate and has not been commingled or even treated as a marital asset.

The process of equitable distribution can be challenging, especially when dealing with multiple properties owned by either or both spouses. It is essential to work with a family law attorney who has the experience and attention to detail to track down all of the assets and argue when a property should remain separate and when it could be considered a marital asset.

Call the Law Office of Anthony LoPresti for a free consultation to discuss your unique circumstances.

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