In a New York Divorce, What Is Separate Property?

New York divorce law allows spouses to keep their separate property while the rest of their assets go into the marital estate for equitable distribution between them. But what exactly is separate property? Generally speaking, there are three ways to establish that property is separate:

• The spouse owned the property before marriage.
• The property was a personal gift or inheritance received during the marriage.
• The property was designated as separate in a marital agreement.

However, two problems could arise during your divorce with respect to your marital property. First, your spouse may claim that it was never separate. Second, you might have treated a separate asset as if it was marital property and thereby given your spouse a claim to a share of it. Consider these scenarios:

• A husband bought his wife a very expensive piece of jewelry, which she claims was a gift. He claims that he gave it to her so she could wear it to dinners with his clients as an outward sign of his success that might help him close business deals. He also expected the price of gold to increase above the rate of inflation, and felt the jewelry would give a solid return if they ever needed to sell it. Was the jewelry a gift or an investment?
• A couple gets married and the wife’s parents lend them money for the down payment on a home. They buy the home but never repay the loan. Now that they are divorcing, the wife says it wasn’t a loan, but a gift to her, and she is entitled to that proportion of the home’s equity. Was the down payment a loan or a gift? If it was a gift, was it given only to the wife or to them as a couple?

These examples demonstrate how difficult it can be to prove that an asset was truly a gift. Now, consider this final scenario:

• When the couple was married, only the husband owned a car. He later bought a new car and gave his wife the used one, which she used exclusively from that point on. When they divorce, is the wife’s car separate property, or does it belong in the marital estate?

In this last example, an argument can be made that the car the husband gave to his wife was either given as a gift, so it became the wife’s separate property, or was commingled with the marital estate, so that now it belongs to both of them.

Property issues can be difficult to unravel. But a nonconfrontational process, such as divorce mediation, is often a more effective and less expensive way to resolve property disputes. For more information on how divorce mediation can work for you, call Solutions Divorce Mediation, Inc. at 1.631.683.8172 or contact our Long Island office online.