As published in NYSBA One on One | Spring 2017 | Vol. 38 | No. 1
Divorce can be one of the most difficult and stressful events in a person’s life and the division of marital property can be challenging and rife with emotions. New York is an Equitable Distribution State, Section 236B of the Domestic Relations Law of New York State. The basic preliminary assumption of divorcing parties is that all marital assets and all marital debts will be divided equally between husband and wife. I caution the practitioner to realize this does not necessarily happen, since property may be acquired throughout a marriage by gift, bequest, devise, descent or as provided for in a prenuptial or postnuptial agreement or as compensation from a personal injury case.
When a married couple divorces, only the marital property is to be divided equitably or fairly, but not necessarily equally, and since separate property is an equitable distribution consideration, then the property ought to be valued and assigned a dollar amount.
Presumably, each spouse enters into his or her marriage with separate or non-marital property. Separate property is the property, money, investments and assets each of the people owns prior to saying “I do.”
Separate property includes real and personal property owned or inherited prior to the marriage; the proceeds of a vested pension wherein the payee became legally entitled to receive the pension proceeds prior to the marriage; property obtained by inheritance or gift from someone other than the spouse during the marriage; property obtained during the marriage in exchange for separate property; property identified as separate in a written agreement between the spouses; the increase in value of the separate property—to the point the increase in value is not due to efforts or contributions of either spouse during the marriage, in other words, if the asset has appreciated in value, then the marital portion or the appreciation would be subject to equitable distribution based upon the contributions made; or compensation for personal injuries during the marriage, unrelated to loss of wages or earning capacity.
So, unless you have commingled (mixed) your separate property with marital property, separate it does remain. Conversely, if you commingle your separate property with marital property, it may just lose its classification as separate property and be deemed marital, and thus subject to division with your divorcing spouse. For instance, if you deposit money into a jointly held bank account, most likely that money will be transmuted or altered into marital property, having lost its character as separate property.
Please note that generally, such rule does not apply to real estate, where there may be a separate property contribution at the time of the purchase. This event will be commonly termed a “look-back” and you should be able to get your separate property contribution returned to you, typically after the property is sold.
But just as a new couple you begin to form a life together, so too are you building a marital estate. Marital property acquired during the term of the marriage is often times referred to as the marital estate. Property obtained during the marriage is marital property.
By contrast, marital property includes personal property bought during the marriage; bank accounts, cash, retirement accounts acquired during the marriage; advanced educational degrees acquired during the marriage; and real estate purchased during the marriage.
A prenuptial or postnuptial agreement is a marital agreement, which may, by written agreement executed with the proper formalities, exclude certain property from the marital estate.
New York property will not automatically be divided down the middle or in half. This means that property must be valued and divided equitably or fairly.
With the use of a neutral, third-party mediator rather than a judge, if the clients do not agree on the type of property being addressed, the clients produce proof of separate ownership for consideration. However, if they cannot agree on a division of the property, then after trial, the court will decide what would be fair and equitable, not necessarily equal since property is not automatically divided by two and distributed to each spouse. But keep in mind, if the property was acquired during the marriage, the spouse claiming that property is his or her separate property carries the burden of proving the property is in fact, separate property and that debt obligations are also taken into consideration when dividing marital property for equitable distribution purposes.