In every marriage, each spouse brings certain property to the marriage (separate property), and the couple accumulates property together (marital property). In any divorce proceeding in New York, the parties are free to reach a settlement with regard to the distribution of all their property, both separate and marital. In the absence of such an agreement, the judge will decide what constitutes an equitable distribution of property and will determine what is “separate property” and what is “marital property”.
New York’s Domestic Relations Law defines marital property as “all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held.”
You and your spouse may exclude property from the marital estate by entering into a marital agreement that excludes specified property. In the absence of such an agreement, it is presumed that property acquired during the marriage is marital property.
Property is defined very broadly. Thus marital property can include pension benefits that vest during the marriage; a house you and your spouse bought; cars, boats and airplanes; furniture; artwork; cash, securities and other financial instruments; bank accounts; retirement accounts; advanced educational degrees; licenses; and permits to engage in specialized businesses.
New York’s Domestic Relations Law defines separate property, to include:
Possessions you acquired or owned prior to the marriage;
Property acquired by inheritance or gift from someone other than your spouse;
Compensation you receive for personal injuries;
Property acquired in exchange for your separate property;
The increase in value of your separate property, except to the extent that the appreciation is due in part to the contributions or efforts of your spouse;
Property described as separate property by written agreement between you and your spouse.
If you commingle your separate assets with marital assets, the judge may consider part or all of it as marital property and distribute it accordingly. Examples:
You inherit stock and deposit it into a jointly-owned marital investment account that both you and your spouse worked to grow, a judge may consider what you deposited into a jointly-owned marital investment account to be marital property.
You brought an antique chair to the marriage, but it was in disrepair; you encouraged your spouse to work on the chair and put it in shape for sale. Your spouse does so, and at the time of divorce, the chair has quintupled in value. A judge may consider the increased value of the chair to be marital property.
You brought cash to the marriage and kept it in a separate account. You and your spouse decide to buy a house, but don’t have enough for a down payment. You decide to take some money from your account to invest in the down payment. You may lose your right to claim that part of the value of the house was your separate property.
