The process of a wedding, joining families, and other life changes is often overwhelming for couples that are getting married. But this leaves the less exciting issues of finances, property, and other assets outside the spotlight.
In reality, knowing the true meaning of ownership in a marriage in New York is essential to your future. Our office has spent over a decade working with clients on establishing their ownership rights during a divorce in New York. We noticed a recent rise in questions concerning property rights, and decided to dedicate this post to wealth ownership before, and after, marriage.
If you enter into a marriage contract with wealth, such as a business or investments, this is known as your separate property. During the course of your marriage, you and your spouse spouses will obtain more assets, and those assets are considered marital property. Marital property can range from cash to lottery winnings to furniture to retirement accounts. It covers anything gained during the marriage and is known as the marital estate. The idea that wealth accumulated before a marriage is your own and wealth accumulated during a marriage is shared with your spouse sounds clear-cut. But in reality, the lines get blurred very quickly.
You will want to grow wealth prior to and during your marriage. A good example of this is owning a business prior to getting married. You will still try to grow that business during the marriage. But if that your spouse contributes to the growth of the business, that accumulation of wealth is now shared property. Or, you buy a house and then get married, that property is separate property… unless you put into a joint account, transfer it to an account that was opened after the marriage, or your spouse puts work into managing or maintaining the property with shared funds. Your wealth can get blended between you and your spouse so easily, and it becomes difficult to draw a hard line between one spouse’s ownership and the other’s.
One reason wealth division is a complicated part of divorce is New York’s equitable distributions system. Any assets you accumulate during the marriage are defined as marital property, or a marital estate. Since New York is an equitable distribution state, New York Courts will divide your marital estate as equally and fairly as possible. This does not mean an equal division of assets. It’s up to the judge to reach a fair outcome, taking into consideration a wide range of issues, such as the length of the marriage, spousal maintenance, tax consequences, and likely future financial circumstances of each spouse after the divorce agreement.
Equitable distribution is a valuable process that allows a judge to view all parts of a marriage before making a final decision. But it does make the divorce process in New York, and the separation of your assets, much more complicated. One way to navigate these murky waters is with an experienced divorce attorney. He or she must have knowledge of New York’s equitable distribution system. Another preventative measure is to draw up a premarital agreement prior to your marriage. This guarantees that property deemed separate remains separate if the marriage dissolves. It’s also a healthy way to look at finances together. Premarital agreements allow both parties to learn about each other’s financial situation, and to make arrangements together that make sure their needs are met. It’s a valuable process.