When a couple decides to divorce and their marital estate must be divided between them, a threshold issue is determining which assets qualify as separate property and which must be allocated among the parties. Often, this is a fairly simple analysis. Property owned by an individual prior to the marriage usually stays with that person once the divorce is finalized. Items acquired once a couple was wed typically are subject to New York’s equitable distribution law, with a couple of exceptions. However, there are situations where assets bear characteristics of both separate and marital property.
In Szypula v. Szypula, New York’s top court reviewed a divorce case involving John Szypula, who had served in the Navy for 11 years. Nine years into his military service, John married Meredith. After work in the private sector, John took a job with the U.S. Foreign Service in 2012. Under the rules of the Foreign Service Pension System, he was entitled to obtain pension credits for his years in the Navy, so long as he “bought back” that time through paycheck deductions. He elected to do this.
Later, when the Szypulas commenced their divorce, they did not agree as to the disposition of John’s Foreign Service pension. Given that the salary deductions came from marital funds, Meredith claimed that she was entitled a share of all pension credits John had accumulated up to the point of their breakup. However, John disagreed, claiming Meredith had no right to the credits he was able to obtain due to his first nine Navy years when he was single.
Though John had prevailed in the lower court, the Court of Appeals reversed, holding that the portion of the Foreign Service pension attributable to the purchased military service credit is marital property. The key rationale was that marital funds were used to transform otherwise ineligible service time into a current, enforceable pension right.
This decision highlights the fact that New York courts generally construe marital property broadly while taking a narrow view of separate property. There are several ways, such as the commingling of funds, that an asset that was once separate property can become part of the marital estate.
Bryan L. Salamone & Associates, P.C. is the Long Island divorce leader. You can rely on us for skillful representation during complex property division disputes and other types of matters. Please call 631-388-6009 or contact us online for an appointment.