WAYS TO PROTECT YOUR FINANCES DURING DIVORCE

WAYS TO PROTECT YOUR FINANCES DURING DIVORCE

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Marital Property vs. Separate Property in New York

New York is an equitable distribution state, which means that all marital property will be divided between you and your spouse in a way that is equitable, or fair. So what is marital property? Marital property includes any assets that were acquired or earned during the course of your marriage, regardless of the form in which title is held. On the other hand, separate property includes:

  • Property acquired before the marriage
  • Property or assets inherited by one spouse
  • Property received as a gift from a third party
  • Compensation from a personal injury claim
  • Assets included in a prenuptial agreement

In many cases, the line between separate and marital property is unclear. Imagine this: you got married after building a successful career and acquiring assets totaling close to $2 million. You kept most of your money in an account that was solely in your name. Over the course of your marriage, you continued to add all of your earnings to this account. This would be separate property, right? Not necessarily.

In the absence of a prenuptial or postnuptial agreement, any earnings that were acquired from the date of your marriage to the date that a separation or divorce action was filed will be subject to equitable distribution—even if these assets were held in an account that was solely in your name. This is why, if you wish to keep your property separate, you should take steps to safeguard your finances.

How to Keep Separate Property Really Separate

If you are planning on getting married, or you already are, there are steps you can take to keep your separate property really separate. First, you should consider a prenuptial agreement. This will help clarify how your property will be divided in the event of a divorce. Next, you should avoid commingling separate property with marital property during your marriage if you don’t want it to be divided.

This means you should avoid transferring separate funds to joint, marital accounts. Instead, create new accounts for you and your spouse to place income earned after marriage. Finally, it is important to keep accurate and complete records establishing the separate nature of your property. This will make it easier to determine what should and shouldn’t be divided if you and your spouse decide to split.

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