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What You Need to Know About Separate Property

| Apr 16, 2021 | Firm News |

The term “separate property” is often times discussed in connection with litigation and settlement in divorce proceedings. Separate property is defined in the Domestic Relations Law as that property owned by a party prior to the parties marriage or acquired by a party during the marriage from an inheritance, gift (other than a gift from the other spouse) or as a result of disability or personal injury award.

Thus a party contemplating a divorce who believes they have a “separate property” asset must be prepared to identify the claimed property and substantiate that claim through sufficient, reliable documentation that irrefutably proves the existence of the separate property asset.

Separate property claims include contributions toward a down payment on a residence or other real property and/or an ownership interest in real property or other assets prior to the parties’ marriage, including a business. Claims also include the existence of pre-marriage retirement assets such as pension service credits, 401k (s) or IRA(s). Bank and investment accounts owned by a party prior to the marriage are also separate property.

In order to prevent a separate property asset from being equitably distributed in a divorce action or settlement, the title owner needs to be able to prove that the asset has not been “commingled “ with marital property or not “transmuted” to marital by adding the name of the other spouse to make it titled jointly.

While the separate property proponent can claim that a spouse’s name was added for convenience purposes only, if marital funds are contributed to the separate property account, the account or asset may very well have changed its character such that the “separate” nature of the asset has lost its identity as a “separate” asset. Some courts will grant a separate property credit even when the assets were placed into joint names.

When a non-titled party seeks to have what could be a “separate property” asset from being exclusively awarded to the titled spouse, that party bears the burden of showing that the asset has been sufficiently commingled with marital property so as to make it lose its separate property character.

Discussions with your attorney from the beginning as to the existence of such property is essential so as to prepare for identifying such property and determine the strengths and weaknesses of these separate property claims.