How N.Y. Courts Decide if Property Is Marital or Separate

In a New York divorce, determining whether property is marital or separate directly impacts the equitable distribution of assets. Under New York law, marital property is generally defined as any property acquired by either spouse during the marriage, regardless of whose name is on the title. On the other hand, separate property includes assets that were owned by either spouse before the marriage, as well as inheritances or gifts received by one spouse individually during the marriage.

Equitable distribution means that marital property is divided fairly, but not necessarily equally. When deciding on each spouse’s share, the court considers various factors, including the duration of the marriage, the income and property of each spouse, contributions to the marriage (including homemaking), and the future financial needs of each spouse. 

The classification of property as marital or separate is foundational in this process, as only marital property is subject to distribution.

Marital property can encompass a wide range of assets, including real estate, bank accounts, retirement accounts, investments, and even business interests. The key factor in classifying an asset as marital is whether it was acquired during the marriage. For example, if a couple purchases a home together after getting married, that property is considered marital, regardless of whether the title is in one spouse’s name. Similarly, earnings and income generated during the marriage are typically deemed marital property, even if deposited into an account in one spouse’s name.

Separate property, on the other hand, includes assets that were acquired before the marriage, gifts or inheritances received by one spouse individually, personal injury compensation, and any property explicitly agreed upon as separate in a prenuptial or postnuptial agreement. For example, if one spouse owned a car before the marriage, that car would generally remain separate property.

One of the complexities in distinguishing between marital and separate property arises when assets are commingled or transmuted. This can occur when separate property is mixed with marital property, potentially transforming it into marital property. For instance, if one spouse deposits inheritance money (which is separate property) into a joint bank account used by both spouses, those funds may be considered commingled or transmuted, making them subject to equitable distribution.

Another important consideration is the appreciation of separate property. If separate property increases in value during the marriage, the appreciation may be considered marital property, especially if the non-owning spouse contributed to the property’s upkeep or management. For example, if one spouse owned a home before the marriage and the other spouse helped with renovations that increased the home’s value, the appreciation might be classified as marital property. However, passive appreciation on separate property (such as increase in value of a bank or brokerage account) usually keeps such property separate and not subject to equitable distribution.

The burden of proving the separate property is on the party holding title. Thus, a party must prove and trace the asset that they are asserting is separate to the original source. This can be often be difficult if a party does not have the records maintained (which most people do not).   

These issues are often complex and it is important to discuss same with an experienced equitable distribution attorney.

The Long Island family law attorneys at Jakubowski, Robertson, Maffei, Goldsmith & Tartaglia, LLP in St. James work with clients to address the complications of dividing property in a divorce. Call us at 631-360-0400 or contact us online to arrange a free initial consultation.