What Happens to Marital Property?

martial property

"anything that is obtained during the marriage may be marital property subject to equitable distribution"

One of the first questions arising from a divorce, after custody of children if there are any, is what happens to the marital property. NY State is an equitable distribution state, and therefore marital property will be divided equitably-not necessarily equally-between the parties. Marital property is defined as all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action regardless of the form in which title is held. Of import is that the extent of spousal contribution to the property is irrelevant in the determination of whether something should be classified as marital property.

Thus, anything that is obtained during the marriage may be marital property subject to equitable distribution.  As you might expect, there are some exceptions.  Clearly, if something is not marital property it is considered separate property.  What constitutes separate property?  First, property acquired before marriage or property acquired by bequest, devise or descent…thus something you inherit will be classified as separate property.  Second, compensation for personal injuries regardless of when received.  Third, property acquired in exchange for separate property….you inherit $50,000.00 and you buy a car….that car is separate property.  Lastly, any property agreed to by the parties as separate property.

So, what’s the practical application?  Absent the four categories just mentioned, property acquired during the marriage is subject to distribution.  When considering this, people immediately think of the marital estate bought during the marriage. Additionally, people think of stocks, bonds, cars, summer homes etc…however, there are other things that are acquired during the marriage that people need to be aware of. Consider the following. Pension plans, 401ks, virtually any and all employment related benefits will be considered marital property.  For example, has your spouse made partner in a law firm? That partnership is a martial asset.  Did you attend and graduate from law school during your marriage? That is a marital asset. On the flip side, is there credit card debt? That is marital property that will also be equitably divided.

Learning Point: Division of marital property needs to be examined carefully by an attorney.  There are exceptions that will come into play when determining what constitutes a marital asset. Quick example….three days after you are married, your spouse graduates from medical school….that in all likelihood, even though obtained during the marriage, will not be considered marital property.  Seek immediate legal advice when you decide to divorce your spouse so that your rights are protected.

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