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What Is Marital Property and Separate Property in New York Divorce?

January 6, 2018

This article is by Zogby.com, a premier Los Angeles hard money lender. In a New York divorce, the courts will attempt to divide marital property fairly, which does not always mean equally. Division of marital assets takes into account the unique circumstances involved as well as the financial contributions and situations of each spouse. It’s important to understand that only marital property will be divided in divorce, not separate property that belongs to only one spouse. New York law makes the difference between these two types of property very clear.

What Is Marital Property?
Property and assets obtained during the marriage are usually presumed to be part of the marital estate. Some property can be specifically excluded from a marital estate with a prenuptial or postnuptial agreement, however.

Marital property in New York may include:

  • Real estate purchased during the marriage. If one spouse used separate property — such as savings — to make a contribution to the real estate purchase, that spouse may claim more equity in the home as separate property in a divorce. This often happens when one spouse pays the down payment with their personal savings.
  • Personal property. This may include cars, artwork, and furniture purchased during the marriage.
  • Cash, bank accounts, retirement accounts, and investments acquired during marriage.

Prior to 2016, the lifetime value of a professional degree, business license, or career enhancement acquired during the marriage could be considered marital property. While this is no longer true, a judge can still consider the enhanced earning capacity that is developed during a marriage due to a license or advanced degree when dividing property or determining a spousal maintenance or support award.

What Is Separate Property?
Many people enter into a marriage with their own savings, investments, and property. Under New York law, separate property refers to any property acquired prior to marriage. There are also cases in which property received during the marriage can be considered separate, such as a gift or inheritance from someone other than the spouse or a personal injury award.

Separate property can come in many forms:

  • Real estate purchased or owned by one spouse prior to marriage
  • Personal property like a car obtained prior to marriage
  • Any property obtained by gift or inheritance from someone other than the spouse, even if this property is obtained during the marriage
  • Property acquired in exchange for separate property during the marriage. As an example, one spouse may trade in their separately owned vehicle during the marriage for a new car.
  • Compensation for personal injuries during the marriage that are not tied to reduced earning capacity or lost wages.
  • Increased value of any separate property unless the increased value is due to contributions or effort by the other spouse during marriage
  • Anything named as separate property in a written agreement between spouses
  • Any property acquired by one spouse after legal separation.

Comingling Separate and Marital Property
Each spouse’s separate property remains with them after divorce unless the separate property is mixed with marital property. In this case, a court may consider the separate property as marital assets and divide it during the divorce. The biggest exception to this rule is real estate, which remains separate, even if it’s the marital home. Still, a home that becomes the marital residence, even if owned by only one spouse, may be considered partially marital property because marital money is used to pay for housing expenses.

How Marital Property Is Divided
Both spouses are encouraged to work together and with their attorneys to determine how their property should be divided. When divorce court processes a divorce decree, a judge will typically accept a written agreement between spouses. When spouses cannot reach an agreement, the court will decide what is and is not marital property and create a distribution plan.

New York courts consider many factors when dividing marital assets as equitably as possible. These factors can include:

  • A maintenance or support order by the court. If a spouse receives maintenance, they may be entitled to a lower share of equity in the marital home, for example.
  • Income and property of each spouse at marriage and divorce.
  • Age and health of each spouse
  • How long the marriage lasted
  • If minor children are involved, need of the spouse with custody to live in the marital property, and the use of the household contents
  • Loss of health insurance
  • Whether marital assets are liquid or can be converted to cash easily
  • When there is a business, the court will consider whether it should be awarded to only one spouse for easier business management
  • The likely financial future of each spouse
  • Whether a spouse has wasted marital assets during divorce
  • Tax consequences
  • Whether a spouse has disposed of or transferred marital property at a price lower than market value with the knowledge that divorce was impending
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