When couples divorce, their marital property is divided between them in a process known as equitable distribution. Separate property isn’t split as explained below. Sometimes, it can be difficult to determine whether an asset is separate or marital if there isn’t clear proof of ownership or the item is used or enjoyed by both parties. This tends to happen with certain types of personal property, such as artwork, collectibles, jewelry and similar items. The parties may need to provide additional evidence in such cases.
Separate vs Marital Property in Divorce
In New York, marital property is defined as property that is acquired after the parties’ wedding date up to the date a divorce action is filed. Separate property is property that is either acquired before the parties marry, a provable gift specifically to one party during the marriage, or through an inheritance during the marriage. Absent specific circumstances, separate property exclusively belongs to the spouse owning the property and is not divided in divorce. Importantly, separate property can be converted to marital property. For example, separate funds transferred into a joint bank account or used to pay marital expenses or buy marital property can become marital funds.
Personal Property Rules
The same rules apply to personal property as real property, but there can be complications.
For instance, if there is a dispute over who bought or was gifted an item, proof of ownership will be needed. Unlike real estate or a car, there may not be an ownership document for a piece of jewelry or artwork, like a deed or title. Ideally, there is an invoice with a name, a receipt made out to the recipient or purchaser and/or a notarized letter indicating ownership. Simply having a credit card receipt is not enough alone because the court needs to know what funds were used to pay the credit card bill. If marital funds were used to buy personal property, the item would become marital property.
Another issue that can arise is personal property that is used or enjoyed by both spouses. For example, a family heirloom given as a gift or inheritance to one spouse would generally be deemed separate property belonging to that spouse. However, if the heirloom is displayed in the home for both spouses to enjoy, an argument can be made that any appreciation in the value of the heirloom during the marriage is marital property and therefore, would be split equally.
Avoiding Equitable Distribution of Your Separate Personal Property
The best ways to protect separate personal property are to use a prenuptial or post-nuptial agreement or a trust. In this way, you clarify ownership and minimize the risk of inadvertently converting the item into marital property.
If you are concerned about protecting valuable personal property, contact us for a consultation to discuss what steps you should be taking.
