What Happens To Your Assets When You Get Married In New York?

New York is a title state, which means that if you’re not married, nothing that either party acquires during that period of living together counts. If you’re not married, there is nothing marital to share. It’s only when a marriage occurs that any title to any property can become marital.

New York is an equitable distribution state. Equitable means fair, although equitable is often considered half and half in a marriage, especially when it comes to things like retirement benefits. Several agreements can be entered into between couples, and they are all basically contracts. It’s just a question of how or if any of those contracts will be enforced or are not necessarily enforceable.

So, when we talk about New York as a title state, it’s essential to understand that unless there is a valid marriage, there is nothing to distribute legally. But, of course, contractually is a different story if you do not get married. As far as the court system can be involved, the court will be concerned with those things that happened within marriage, and New York is not unique in that. But, still, it has robust, enforceable laws because New York has been the original center of financial wealth in America. You have Wall Street and all of the financial institutions that New York City has encompassed for these hundreds of years. It is logical that these ‘hard’ rule laws of New York were well crafted. Most Long Island couples have simple financial divorces. However, when the laws were first enacted, they considered all of the enormous wealth that high earning families had at that time. Those laws have never changed.

What Happens To Their Assets And Property When A Couple Divorces In New York?

When a couple gets married, that’s the date that everything begins if a divorce brings the marriage to an end. That the date the accumulation of marital assets starts. Assets are money, real estate, retirement benefits, and other things that money can purchase. It can include things like intellectual property, patents or copyrights, professional practices and or licenses or trademarks. The law treats all of these things the same, meaning that if it’s acquired during the marriage, it is marital property. To distribute marital property, there’s a four-step process that one must go through. First, you have to identify it. Is it marital, or is it separate property? Separate property means anything typically not acquired during the marriage, or if it is acquired during the marriage, it’s acquired based upon certain exceptions. The second thing that you have to do is, after you identify it, you have to categorize it. Is it marital, or is it separate? You take a look at an asset, and you identify it. Let’s call it a house or a bank account or stock. Then you have to determine whether or not that house or that bank account or stock is considered marital. In other words, was it acquired after the date of marriage?

And if it was acquired during the marriage, there are four exceptions to what marital property would be considered. First are things you bring into the marriage with you. That gets tricky because if it has grown, then that portion of the asset, and certainly the growth could be considered marital. For example, if you have a retirement account, you worked a job for ten years and then married, stayed married for ten years, there is only a portion of that retirement benefit that would be considered marital. Other little fine-tuning nuances determine what portion of any of those assets are marital or not.

The second are things that you inherit. Again, an inheritance can transmute over to marital property from separate property if it is blended into a marital account or used in the marriage for bills that go in or out of it. Suppose it’s inherited and put into a separate account in the name of the person who inherited that property. In that case, it will typically be considered strictly the separate property of the spouse that inherited it.

The third thing is gifts from third parties. So the reasoning behind this is that if someone gives you something and it’s outside of the marriage, it’s not a gift given to a husband and wife. Let’s say it’s a father or mother who gives you a house or an account or cash in advance of an inheritance. If that is kept separately and joint names are not put on to it, either in an account or title to real estate, that would be considered separate property.

The last exception is awards from personal injury. There are also exceptions to that in New York.

In many litigated personal injury cases, the Plaintiff’s personal injury attorney will set up the case naming the non-injured spouse as a co-plaintiff named for what’s called loss of consortium, which is the loss of the ability to engage in meaningful sexual and social relations during their marriage, a result of the personal injury.

The theory is that the spouse who was not injured is suffering partially due to that injury that was incurred, that was sustained by the person who was awarded that personal injury award. So those are the four exceptions the court has to determine after something of value is identified and categorized, whether it’s marital or separate. It has to be evaluated so we know what it is worth. When you take a look at cash in the bank, that’s easy. If there’s $100,000 in a bank account, that’s what it’s worth. If you look at something like a stock, that’s something that goes up and down.

These things become somewhat problematic in determining the value of any particular asset, because valuation is sometimes in the evaluator’s eye. In the case of real property, you’d probably want to get an appraisal, and then it’s a question of when does the evaluation date count? Is it from the date that a summons was filed in the court? Because that’s the date that the action started, typically that’s the date in the divorce case that asset accumulation is cut off or is it more to the date of when a judge is looking at it for trial, which is the case in some of the asset evaluation. Often, it is the date a Summons was filed, and an Index Number purchased that acts as a cutoff date. In many cases, an expert, an appraiser, a business evaluator, or a forensic accountant would be hired and called to come in to do a formal evaluation on an asset to determine what it’s worth.

This is very common if you own a business, if you’re a sole or a partial business owner, and that business was acquired during the marriage or as we said before was separate property that was brought into the marriage. Still, if the other spouse acted in furtherance of the business directly, then that spouse, (the non-titled spouse), doesn’t necessarily own the asset. Each case is fact specific, and while there are hard and fast rules, various subtle nuances make some assets marital, some partially marital, and some non-marital – separate property. In the case of a business, there are so many variables, it’s not something I can accurately predict without knowing the facts. In many cases, however, the non-titled spouse will be entitled to a portion of that business.

Suppose the business was acquired during the marriage, and the other spouse, who doesn’t own the business on paper, was not actively involved in the business. In that case, the likelihood is that they will get a lot less than if they were actively involved in the business. But it has to be evaluated to be distributed.

The fourth and final step is the distribution of that asset. How does it get distributed? If you have a business and you’re not looking to necessarily sell that business now, how does that work? Say that it’s a thriving asset and if it’s worth $1,000,000 and the spouse who doesn’t own it is entitled to, let’s say, 10%, then a creative solution will have to be created, as no one wants that business to be sold. If the parties can’t agree, a judge will be making that determination.

Then how in this example does the non-titled spouse get his or her $100,000? Are there other assets in the marriage to trade against it, or is it something that’s going to be paid out? If it is paid out, is it paid out with interest? How are the terms of that calculated? If a judge has to determine it, you’re subjecting yourself to the judge’s whim and how the judge feels that day and whether or not your lawyer has done a good job or whether or not he has experience with those lawyers whether he has any built-in prejudice. You’re always better off making that deal yourself if you can.

Mediation is always the best way to start things off, in my humble opinion. You can always choose to litigate.

For more information on the Impact Of Marriage On Your Assets In NY, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (631) 462-3100 today.