There’s a distinction between separate property and marital property in a divorce. Generally speaking, property owned by one spouse before marriage is separate, but property purchased during the marriage (including any increases in value to pre-existing property) is marital property.
Most states follow community property laws, but even in equitable division states, judges still decide what is fair. Let’s explore how this works.
Real estate
Modern courts distinguish between marital and separate property. Marital property is anything acquired during the marriage, including investments, real estate, and even a home. Separate property includes items that one spouse owned prior to the marriage, and kept exclusively for their own benefit. However, if that separate property rises in value because of direct contributions made by the other spouse, then it may be considered marital property.
New York is an equitable distribution state, which means that a judge will consider a number of factors when deciding how to split up marital property during divorce. Those factors are designed to show how each of you contributed to the marriage (and perhaps harmed it), and what each spouse will need moving forward. Depending on the circumstances, your lawyer could recommend selling any investment property and dividing the proceeds. This option is often a better solution for couples who have children or want to sever financial connections with their former spouses.
Personal property
Personal property includes items such as furniture, electronics, and even cars. It can be tricky to figure out what is separate and community property. For example, personal property that was owned by one spouse prior to marriage or received as a gift or inheritance is usually separate property. However, personal property that was acquired during the marriage is generally considered community property. Courts strive to divide this property equitably between the two parties.
Usually this means that each spouse will receive a percentage of the total value of the marital property minus debts. The couple can also choose to work out a property settlement agreement themselves and decide what they want. However, the judge will still need to formally approve this agreement and it will need to follow state law regarding property division. It can be beneficial to have a lawyer review any property settlement agreement for this reason. The lawyer can help ensure that it is fair and in accordance with the law.
Business assets
If you and your spouse own a business, it presents additional issues in the process of splitting property during divorce. You may be able to work out an agreement or you might have to go to court, depending on how you and your spouse handle the situation.
In most cases, the court will try to be fair and based on factors like how long the business has been owned and what contributions both spouses made to its success. The other factor to consider is whether the business was started before or during your marriage.
If the business was started before your marriage, then it is likely to be considered separate property. However, if marital funds were used to start or grow the business during your marriage, then the courts will be more likely to view it as marital property. This is why it is important to keep separate bank accounts and not merge any assets when you get married.
Debts
The question of property division is often the most contentious issue in divorce. That’s because real estate like the family home carries not only monetary value but also sentimental value for divorcing couples. It’s important to have an experienced Albany divorce attorney to help you understand property law and the different issues that can come up.
It’s not just the assets that are split, but also the debts. In New York, like in most states, courts follow equitable distribution law when dividing up property and debt. This means that judges can decide how to divide up property even if the spouses do not agree.
Determining what property is separate and marital can be complicated, particularly if couples have mixed (commingled) their separate and marital assets together or used one spouse’s money to purchase something that was solely the other spouse’s. Lawyers can assist in determining the ownership of property by conducting discovery, taking depositions, and making formal disclosures.
