Divorce and Property Rights
When you married your spouse, you may have already owned property or had cash savings or investments. Your spouse also may have entered the marriage with property, cash and/or investments. This is called separate property. During the marriage, you and your spouse most likely obtained more property and cash. Under most circumstances, the property and cash you obtained during the marriage will be presumed to be marital property. The marital property obtained during the marriage is called the marital estate. You and your spouse may exclude certain property from the marital estate by entering into a marital agreement, such as a prenuptial or postnuptial agreement. Without such an agreement, there is a presumption that property acquired during the marriage is marital property.
Marital property includes:
- Real property you and your spouse bought together during the marriage, except for any contributions of your separate property you may have made to such property, like paying part or all of the down payment with separate property funds;
- Personal property, like cars, boats, airplanes, furniture, and artwork you and your spouse bought together during the marriage;
- Cash, securities, bank accounts, and retirement accounts acquired during the marriage;
- Advanced educational degrees, licenses, and permits to engage in specialized businesses acquired during the marriage.
Separate property includes:
- Real property you obtained or owned prior to the marriage;
- Personal property you obtained or owned prior to the marriage;
- Property you obtained by inheritance or gift from someone other than your spouse during the marriage;
- Compensation you received for personal injuries during the marriage not related to loss of wages or earning capacity during the marriage;
- Property you acquired in exchange for your separate property during the marriage;
- Any increase in the value of your separate property, except to the extent that the increase is due to contributions or efforts of your spouse;
- Property described as separate property in a written agreement between you and your spouse.
When you or your spouse files for legal separation or divorce, you can agree on the division of marital property and separate property. If you cannot agree, the court will decide, after trial, which property is separate property and which property is marital property. The court will also decide what would be a fair and equitable, but not necessarily equal, division of the marital property.
Unless you have mixed or commingled your separate property with marital property, your separate property remains yours after the divorce, and so does your spouse’s separate property. The court will confirm that your separate property belongs to you and your spouse’s separate property belongs to your spouse.
However, if you mix or commingle your separate property with marital property, the court may consider part or all of your separate property to be marital property, and divide it up with your spouse. This rule does not usually apply to real estate, particularly the marital home, where a separate property contribution to the purchase will normally remain your separate property. You will be able to get your separate property contribution back after the marital house is sold.
- You inherit stock and deposit it into a jointly-owned investment account that both you and your spouse worked to grow. A court may consider a large part of the increase in your separate inheritance to be marital property, and it will be divided up as such.
- You brought a valuable antique chair into the marriage, but it was in disrepair. You encouraged your spouse to work on the chair and get it back in shape for sale. Your spouse does so, and at the time of the divorce, the chair has greatly increased in value. A court may consider the increased value of the chair to be marital property due to your spouse’s direct contribution to increasing its value.
- You have a bank account from prior to the marriage in your name and after the marriage you add your spouse’s name. By adding their name, there is now a presumption of a gift of one-half the value of the account.
Once the court determines the “marital pot” or the marital estate, it will begin the process of valuing and then dividing the marital property. New York courts must divide the marital property “equitably.” That means fairly, considering the circumstances of the case and of the parties involved, but it does not necessarily mean “equally.”
In New York, property is not automatically divided in half and distributed equally to each spouse. Instead, the court takes into account 13 specific factors in determining the equitable distribution of property:
- The income and property of each spouse at the time of the marriage, and at the time of the divorce;
- The length of the marriage and the age and health of both spouses;
- If there are minor children involved, the need of the spouse who has custody of the children to live in the marital residence and to use or own its household contents;
- The loss of inheritance and pension rights of each spouse because of the divorce;
- The loss of health insurance benefits of each spouse because of the divorce;
- Any award of support or maintenance the court will be making;
- Whether one spouse made contributions to marital property that the spouse does not have title to; for example, where one spouse helps the other spouse increase their ability to earn more money by getting a degree, license or certification;
- The liquid or non-liquid character of all marital property (“liquid” means that the property can easily be converted to cash);
- The probable future financial circumstances of each party;
- The impossibility or difficulty of determining the value of certain assets, like interests in a business, and whether one spouse should be awarded the business so it can be run without interference by the other spouse;
- The tax consequences to each party;
- Whether either spouse has wasted or used up any of the marital property while the divorce was ongoing;
- Whether either spouse transferred or disposed of marital property at less than market value, knowing that the divorce would be happening.
Even after considering these factors, the court may take into account “any other factor” it finds to be fair in arriving at an equitable distribution of the marital property. Also, certain types of property cannot be divided. In that case, the court may make a “distributive award.” A distributive award is a monetary payment by one spouse to the other, either in a lump sum or paid over time.
- Your spouse earned a medical degree during the marriage and now runs a medical business. Both the degree and practice may be considered marital property because of your contribution to your spouse’s ability to earn more money as a doctor. The court will not close the business, but may order that your spouse pay you a fixed amount for your contribution to the medical degree and to the business annually over a period of several years.
Legal Editor: Jody N. Gerber, January 2015
Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.