In New York, marital property is determined according to the rules of “equitable distribution,” which requires marital property to be divided along lines that are considered fair to each partner, either by their own agreement or through court intervention. These rules are codified in Domestic Relations Law Section 236B. Essentially, when adjudicating a divorce action, the court must determine how to divide the divorcing parties’ marital property in an equitable manner. This is different from other states that operate under the rules of “community property.” So, in New York, what is marital property, what is separate property, and what does it mean to divide property “equitably”?

What Is Marital Property?

The definition of whether something is marital property or separate property is largely time-related. New York statute defines marital property as “all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held.”

In order to be considered marital property, an asset must be:

• Acquired by one or both spouses after the couple became legally married regardless of whose name the asset is in; and
• Acquired prior to legal separation or a legal matrimonial action.

Clearly, the definition of marital property is wide-ranging. Virtually all property that has value can be considered marital property, including, but not limited to:

• Houses and other real estate bought over the course of the marriage;
• Vehicles & property such as cars, boats, airplanes, furniture, or artwork;
• Cash, cryptocurrency, bank accounts, financial securities such as stocks & bonds, retirement accounts, pensions;
• Physical assets like gold or other precious metals;
• Businesses and professional practices; and
• Gifts given by one spouse to the other, either physical or monetary.

However, New York matrimonial law states that “[marital property] shall not include separate property.” Separate property consists of assets acquired before the marriage, during any legal period of separation, as well as certain specific types of property acquired during the marriage. Common examples of separate property include:

• Real or personal property either spouse owned or obtained prior to the marriage;
• Property you received during the marriage via a gift from a third party or inheritance;
• Personal injury compensation (not related to loss of wages or earning capacity) for an injury that occurred during the marriage;
• Assets acquired in exchange for other separate property during the marriage;
• Increases in the value of the separate property, except in cases where the increase was due to a spousal contribution; and
• Property explicitly described as separate in a written agreement, such as a prenuptial or post-nuptial agreement, between both spouses.

The laws pertaining to separate property are very complicated, and separate property claims are subject to challenge in divorce proceedings under such theories as transmutation and commingling. For example, adding to separate assets during the marriage, changing the title to joint names, and other active contributions to premarital property can alter the characteristic of separate assets, making them wholly or partially subject to equitable distribution. These challenges are especially ripe in the case of long-term divorces, where a party’s separate property claim traces back over the course of decades.

How Is Marital Property Determined In A Divorce?

A couple who chooses to divorce is free to divide their marital or separate property in any way that they choose, and they may even choose to share their separate property with one another. Couples are often able to reach an agreement on property division that is agreeable to both spouses, and courts encourage couples to resolve any differences and work together fairly to decide how to split assets and liabilities.

However, if couples cannot agree on how to separate their assets, it will be up to the court to determine where each piece of property (asset, debt, or liability) belongs: under marital or separate property. If a prenuptial contract was signed, the court must adhere to any specific provisions outlined in the agreement.

New York Is An Equitable Distribution State

As previously mentioned, New York is an “equitable distribution state.” Equitable does not mean equal, and courts are tasked with dividing property in a way that is fair to the parties. In order to determine the division of property, the courts look to the factors enumerated in DRL 236B, which include:

• Marriage length, age & health of each partner;
• Property & income held by each spouse;
• Loss of inheritance or property rights from divorce;
• Loss of health insurance benefits;
• Court-ordered maintenance (alimony or child support);
• Contributions made by each spouse to the other’s separate property;
• Value or liquidity of all marital property;
• Future financial circumstances;
• Assignment of business interests or ownership;
• Tax consequences of property assignation;
• Wasted or expended marital property by either spouse;
• Market value of the marital property at the time of disposition; and
• Custody of minors and the need to use the marital house and its contents.

If you are looking to negotiate a property settlement with your partner or enter into a prenuptial agreement to determine how assets should be assigned prior to entering into a marriage, our family law lawyers at Tully Rinckey PLLC are here to help.