Marital Assets v. Separate Property
DRL §236 (B)(1)(c) defines marital property as all property acquired by either or both spouses during the marriage and before the execution of a separate agreement or the commencement of a matrimonial action regardless of the form in which title is held. Furthermore, property acquired during a marriage is presumed to be marital property unless a spouse can prove otherwise, with the exception of separate property as defined below. The marital time period commences on the day of the marriage, and ends when a spouse files a Summons with Notice for Divorce with the County Clerk.
DRL §236 (B) (1) (d) defines separate property as:
- premarital property including assets or property acquired by one spouse before the marriage
- property acquired in exchange for the increase in value or separate property, unless the increase in value can be attributed in part to the efforts of contributions of the other spouse
- Property excluded expressly by a prenuptial agreement, as long as the terms are valid and enforceable under current principles
- Compensation for personal injury, meaning any proceeds derived by either spouse through the settlement or resolution of a personal injury suit.
- Inheritance by one party individually
- Gifts given to one party individually
It can become difficult to distinguish between marital and separate property, especially if the marriage lasted a significant number of years. Generally, the longer the parties are married, the more difficult it becomes to trace the origin of the assets and determine whether alleged separate property is, in fact, separate property.
The Court draws a distinction between the following two circumstances when determining marital versus separate property:
- When a separate asset increases in value due to the efforts of one of the spouses at least in a small part, this is called Active Appreciation and results in the creation of marital property which would be subject to equitable distribution.
- If the increase in value of an asset cam about without the interference of either party during the marriage, the asset remains the separate property of one spouse and is called a Passively Appreciating Asset.
If you and your spouse have clearly defined assets, such as a house, along with pension and deferred compensation, it is relatively easy to divide these assets.
Using Forensic Valuation Services- In other cases, it is difficult to determine a party's marital assets due unique circumstances such as one spouse's interest in a business venture. In these cases, one of the most effective ways to successfully divide marital assets is through the use of forensic valuation services. Determining the proper value of assets such as the value of businesses, ownership interests and other intangible assets, a client can put themselves in the best position for a fair division. In some cases, one party hides marital assets to avoid appropriate distribution. A skilled and experienced attorney will help discover hidden assets to ensure that equitable distribution occurs.