Preventing Separate Property From Becoming Marital Property

Will Rogers said, “I never met a man I didn’t like.” It appears that the Appellate Courts have never met property which they would not like to classify as “marital.” This is a trend that exists.

Separate property is exempt from equitable distribution during a marital asset division if it was:

  • Acquired prior to the marriage
  • Received as a result of a gift or inheritance or
  • Received as a result of a personal injury award.

The problem is that title to the property is often changed or co-mingled during the marriage. Thus the separate property becomes “transmuted.” Separate transmuted property can only be returned to the owner if it can be properly identified and has not been co-mingled with other marital assets.

The courts have stretched the rules in either direction depending on the fact pattern in order to meet a fairness test, and sometimes to be equitable, but more often because they want to.

In a recent New York Court of Appeals case, the court found that when a wife refused to purchase property with her husband. The husband then purchased the property with separate pre-existing funds that were never co-mingled with the wife’s or the marital funds, and he purchased an apartment house with his mother. He paid almost all of the renovation expenses and costs of the building from money that was inherited from his father.

At first blush this meets all of the requirements of being separate property that was not transmuted.

However, during the 40-year marriage several times the husband paid mortgage payments from marital funds. As a result of this, the Court of Appeals found that the entire property had been contaminated and therefore, held to be marital property and subject to equitable distribution.

Issues of marital asset division are very complex. Contact Kantrowitz, Goldhamer & Graifman, experienced New York & New Jersey family law attorneys who can review your individual case and provide guidance on whether property might be considered separate or marital.