How Spouses Can Keep Their Separate Property Separate

In New York, maintaining individual ownership of separately owned assets is vital for spouses who wish to avoid having them classified as marital property during a divorce. New York follows an equitable distribution rule, by which assets acquired during a marriage are subject to fair but not necessarily equal division. Property owned prior to the marriage, or acquired by gift or inheritance during the marriage, is generally considered separately owned and can remain so. 

However, spouses must take proactive steps to prevent their separate property from being transformed into marital property due to commingling or transmutation. Commingling occurs when separate property and marital property are mixed such that it becomes difficult to distinguish them. For example, one spouse uses separate funds to contribute to a joint bank account or pays for household expenses with an asset acquired before the marriage. Transmutation can result from changing the title of a property to include both spouses’ names, or from leveraging separate property to fund a joint purchase. For example, one spouse owns a home prior to marriage but then uses it as collateral for a jointly held vacation property. 

Spouses can take these measures designed to make sure their separate property remains distinct:

• Maintain separate accounts — Keep funds acquired before the marriage, inheritances and other separate assets in accounts solely in your name. Avoid depositing marital income or using these accounts for joint expenses. This could blur the line between separate and marital assets.

• Avoid joint titles — Do not add your spouse’s name to the title of any property you wish to keep separate, such as a home, car or investment account. Adding a spouse’s name implies shared ownership and could turn the asset into marital property.

• Keep documents of transactions — Maintain detailed records of all transactions involving separate property. This includes retaining receipts, bank statements and legal documents that trace the asset’s origin and usage. If separate funds are used for marital purposes, document the contribution clearly to preserve the right to reimbursement.

• Establish a trust — Placing separate property in a trust can shield it from being commingled with marital assets. A properly structured trust can keep the property under the control of the original owner while safeguarding its separate status.

• Refrain from using separate property for joint purposes — Using separate property for joint expenses, such as paying down a mortgage on a marital home or funding family vacations, can complicate ownership claims. If such usage is unavoidable, clearly document the intention to retain the property’s separate status.

• Create a prenuptial or postnuptial agreement — These contracts explicitly state which assets are considered separate property, outline the terms for their treatment during the marriage and define what happens in case of a divorce. Prenups and postnups provide a safety net that protects separately owned property from being categorized as marital, even if commingling actions are inadvertently taken.

Protecting separate property in New York requires vigilance. Spouses should take positive actions to preserve the separate nature of these assets and also avoid unintentional actions that could transform them into marital property.

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