The Difference Between Separate Property and Marital Property in New York
Which assets are marital property and which are separate property can be a subject of great contention between divorcing spouses in New York State. It is crucial to know which is which when it comes time to divide your property in a divorce case in New York State, so here is a brief explanation of separate vs. marital 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.
Under New York State law, generally speaking, “separate property” is defined as property acquired by an individual prior to marriage, and “marital property”, in the absence of a prenuptial agreement, is defined as property acquired by one or both spouses during the marriage, irrespective of whose name the asset is in.
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.
In New York State, there are statutory exceptions to the general rule for separate property whereby a spouse may acquire separate property during the marriage. Some examples include a bequest from the estate of a deceased relative, a gift made to them by a non-spouse, and certain compensation for personal injuries.
Property acquired during the marriage in exchange for separate property remains separate property. Additionally, any assets defined as “separate property” in a written pre- or post-nuptial agreement is separate property. Lastly, the post-marital increase in the value of one spouse’s separate property may constitute marital property if the increase is a result of contributions or efforts of the other spouse during the marriage.
This can be a complicated area, so be sure to discuss your unique situation with an experienced family law attorney in New York.
Can Separate Property Become Marital Property?
In New York State, the process of identifying assets as separate or marital property could be further complicated by “transmutation,” or “commingling.”
Transmutation by commingling occurs when separate property and marital property become mixed to such an extent that they are unable to be isolated and identified for purposes of classification and distribution. When this occurs, the separate property characterization of a particular asset is lost, and the commingled asset is transformed into marital property.
Fortunately or unfortunately, as the case may be, the parties in a divorce are often not aware of this until it is too late. A New York State family lawyer can advise you about certain exceptions to this rule, and whether an exception applies to your unique case based upon the facts and circumstances.