Author: Chloe I. Ross, Esq.

What is marital property and what is separate property?

Marital property is any property acquired during the marriage and before either a separation agreement is fully executed or a divorce action is commenced (whichever comes first). As long as the property was acquired while the parties are married, then the property is presumed to be marital even if it is titled to only one spouse.

 Separate property is not subject to equitable distribution during a divorce and includes the following:

-          Property acquired by either party before the marriage;

-          Property gifted to one spouse by a party that is not the other spouse;

-          Compensation given to one party for personal injuries;

-          The increased value of separate property during the marriage if the increase in value is not due to contributions by the non-titled spouse; and

-          Property described as separate property in a valid pre-nuptial or post-nuptial agreement.

Under DRL §236, marital property - and not separate property - is to be distributed equitably between the parties in a divorce, “considering the circumstances of the case and the respective parties.” Marital fault, however, is not among the circumstances that the court can consider when deciding how to equitably distribute property. This means that, while the court will consider things like the income of the parties, the duration of marriage, and the health insurance available to the parties, the court cannot alter the distribution of marital property because one spouse had an affair.

 Can separate property become marital property?

Yes. When separate property becomes marital property, the process is called “transmutation.” Transmutation occurs when separate property becomes jointly titled and it is irreversible. Once an asset becomes marital property through transmutation, it cannot go back to being separate property.

 There are plenty of ways that transmutation can occur, including when separate money is placed into a joint account or when one spouse's name is added to the title of another spouse's separate property. There are a very limited number of exceptions that would allow separate property that has changed title to remain separate property, and the presumption will always be that property is marital once it is jointly titled to the parties.

 Separate property may also become marital property through a process known as “co-mingling.” If marital funds and separate funds are mixed in the same account - even if the account began as separate property and the other spouse's name was never added to it - all of the money will be presumed to be marital. You may be able to argue against this presumption of marital property if you only ever put money into the account, but it's very hard to prove what money is separate once you start taking funds out of the account.

Does a spouse have any rights to the other's separate property during a divorce?

If one party uses marital funds to improve separate property or pay off separate debts (such as a mortgage on their separate property), then a credit for the amount of marital funds used will be credited to the marital estate before property is distributed.          

The courts may also analyze any increase in value of separate property that occurred during the marriage. Generally, the non-titled spouse does not have any right to any passive increases due to factors such as market forces. However, if the non-titled spouse contributes to the increase in value (whether directly or indirectly) then a percentage of that property's increase in value will become subject to equitable distribution.

The classification of separate and marital property is a complicated concept and is very case-specific. If you are going through a divorce and are wondering how your property may be distributed, call us today at (518) 427-7000 to set up a consultation.