The characterization of assets and property as either “marital” or “separate” when parties are divorcing or separating is part of the process of negotiating settlements or resolving issues through a trial.

New York presumes that any asset/property acquired by a married person or couple from the date of their marriage and through the date of the commencement of an action for divorce or separation. But this presumption is a “rebuttable” presumption meaning, if one party claims that the asset is not marital in nature but instead it is separate property, then if that party is able to meet her burden of proof to demonstrate that the asset is not marital but is in fact separate, then that asset is not distributed to the parties as part of the divorce or separation. The separate property goes back to the party who proved that the asset was her separate property.

When a couple gets divorced, the first step in the equitable distribution process in a divorce case is identifying their assets and property as either separate or marital in nature.

When a couple gets married, they often already have their own bank or investment accounts, or they may already own their own business or possess other assets. And, of course, married couples typically acquire more property through time and, hopefully, those assets owned prior to the marriage will have appreciated in value over the years.

New York carves out specific exceptions to the presumption of an asset acquired during marriage as being marital property subject to equitable distribution upon divorce or separation. Some examples include an inheritance from a third party, a gift made to them by a third party and proceeds of a personal injury award for pain and suffering. Of note is the fact that if for example, the husband gave the wife a new ring for their 25rh wedding anniversary, that ring is not deemed the separate property of the wife, but is in fact, a marital asset and the value of that ring would be part of the equitable distribution between them, notwithstanding the original intent having been a gift from the husband to the wife.

Marital property versus separate property is often a sticky issue in divorce and separation cases. One of the most difficult is where a married person comes into the marriage with having sold a pre-marital house that she possibly obtained through a previous marriage. Then, when she and her new husband buy a house and they use her pre-marital proceeds from the sale of that first house to buy the second house, what happens when this couple divorces? Does the wife’s contribution from the sale of her pre-marital house get classified as her separate property so that when this second house is sold in her second divorce, she recoups from the proceeds of sale her separate property contribution to its purchase in the first instance? This example is provided to show the reader how fact and circumstance driven these “marital property v. separate property” arguments are.

In the above example, mention should be made here about the wife’s “burden of tracing.” As part of the inquiry as to whether the wife could recoup her separate property contribution to the purchase of her second marriage’s house, the wife would have to show where the money came from and where it ended up between the time she received the money and the time it was used to purchase the second house. If the marriage is of long duration, often times, those documents needed to meet the burden of tracing are nowhere to be found and the separate property claim is lost.

In the above fact pattern, separate property became marital property through the process of “transmutation” or “commingling” of marital assets with separate property assets.

The Pollack Law Firm, P.C., rated Nassau County’s “BEST” divorce lawyers and proudly serving clients in Nassau and Suffolk County for more than 22 years, is always available to assist and represent parties in divorce, separation and all other matrimonial and family law matters. Please call today to schedule a complimentary case analysis: (516) 938-3330.

DISCLAIMER: This article is intended to provide only general information for entertainment purposes and should never be relied upon as legal advice. One should seek the assistance of experienced matrimonial counsel to assist in explaining the law, options and making important decisions in any divorce, matrimonial or any family law matter. By reading this article, no attorney / client relationship arises in any manner whatsoever.

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