How Does Separate Property Become Marital Property?

Long Island divorce lawyer protects clients’ assets

You might understand that, in a divorce, separate property reverts to the individual spouses while marital property is divided among the parties. However, this classification is not necessarily set in stone, and a spouse who fails to realize this could face an unpleasant surprise if their marriage ends. The New York lawyers of Bryan L. Salamone and Associates, P.C. help clients throughout Long Island understand how separate property can become marital property so they can make appropriate plans to safeguard their financial interests.

What is the difference between marital and separate property in New York?

When parties to a divorce cannot agree on a division of marital property, then the judge allocates assets and debts in accord with New York’s equitable distribution law. This means that the court issues an order based on what he or she believes to be fair. The value of the marital estate does not have to be split evenly. But the first determination that has to be made is the classification of assets owned by the spouses into divisible marital property and separate assets that stay with their individual owners, rather than being included in the equitable distribution process.

Classifying separate property

There are several types of assets that can be classified as separate property in a divorce, such as:

  • Assets owned before marriage by one party
  • Gifts and inheritances directed to one spouse
  • Assets provided to one spouse as the beneficiary of a trust
  • Property designated as separate in a prenuptial or postnuptial agreement

If a dispute exists over whether a particular item constitutes separate or marital property, our attorneys will review the facts and advise you as to how the court might rule. For example, if a couple lived together prior to marriage, there might be questions as to whether household appliances, or the residence itself should be included with the assets to be divided among the spouses.

How separate property can become marital property

The designation of a particular item as separate property is not necessarily permanent. The longer a marriage lasts, the more likely that assets that once would have legally reverted back to an individual party fully or partially become part of the divisible marital estate. If you’re concerned about losing your exclusive control of certain assets, an experienced New York attorney can guide you on the steps you should take.

Transmuting separate properties into marital property

There are numerous ways in which separate assets can be transmuted into marital property that is subject to division upon divorce. There might be some instances where a specific transmutation agreement is executed, but in most cases, the shift is informal, and possibly even unintentional. Once formerly separate assets are commingled or given as gifts, the original owner cannot claim sole ownership of them. This means that putting funds from an inheritance into a joint account or giving a family heirloom to your spouse for your anniversary means that they no longer have separate property status.

You should also be aware of active and passive appreciation that can accrue on assets such as retirement accounts and the family residence. For example, you might have owned your house prior to your wedding, but if you pay for your mortgage, improvements or repairs through shared funds, the increase in the home’s value is divisible marital property. Even without active measures, the increase in the value of investments, pensions and other assets that occurs during the course of a marriage also is part of the distribution between divorcing spouses.

Challenges in property classification

The process of dividing assets often leads to serious disputes, but there are certain types of assets that are more likely to trigger questions about whether they constitute separate or marital property, such as:

  • Complex financial instruments
  • Business ownership
  • Inheritance proceeds
  • Homes and vehicles used by both spouses

When a disagreement exists, a judge might look at the history surrounding the given asset, as well as any contribution made by the spouse seeking to have the item classified as marital property.

Preserving separate property

Preserving assets as separate property requires consistent diligence. If you are not married yet, you should carefully document which assets belong to you individually and seriously consider a prenuptial agreement so that there is no confusion if your relationship ends in divorce. You should also maintain separate accounts throughout the course of your marriage to avoid questions about commingling with marital assets. Should you receive an individual gift or inheritance while you are wed, keep detailed records about how you obtained that property and keep the proceeds distinct from the shared marital estate at all times.

Speak with a Long Island lawyer about separate and marital property in your divorce

Bryan L. Salamone & Associates, P.C. handles property division issues, as well as other aspects of the New York divorce process for clients across Long Island. Please call 1.631.479.3839 or contact us online to set up a consultation regarding your specific legal needs.