Once a divorce action is filed, the couple’s financial relationship changes even though the marriage is still intact legally. This has important ramifications for both parties as it affects what is considered their income, expenses and assets. Generally, filing for divorce begins the process of separating the couple’s finances, but when it comes to marital property, they still have joint obligations to maintain that property during the divorce until a final decision is made regarding how to split it.
The requirement to maintain marital property is encompassed in New York’s ‘automatic orders rule’ which states that the financial status quo must continue until there is a written agreement between the parties or a court order resolving the issue(s). The rule is triggered upon filing of the divorce action and the purpose of it is to ensure that divorcing spouses do not walk away from their financial obligations or dispose of or damage assets.
Generally, each spouse is responsible for his or her own expenses once a divorce action starts, however, the rule provides an exception for costs related to maintaining marital property. Therefore, both spouses are jointly responsible for the mortgage, real estate taxes, homeowner’s insurance, utilities, HOA fees, necessary repairs, and the like for marital assets. If spouses cannot agree on how to allocate expenses between them, they can go to court, and the judge will make a temporary determination until a final property distribution is made.
If the marital property is income-producing, the parties must also share that income equally during the divorce. Generally, once the divorce is filed, each spouse’s income becomes his or her “separate property.” However, income from marital property remains marital property during the divorce. Therefore, even if one spouse is physically collecting rent, he or she must pay over half that money to the other spouse during the divorce.
If you are considering a divorce, it is important to get good legal and financial advice to ensure fair treatment during the divorce as well as in a settlement or litigation. Contact us to help you get the best result in your matter.
