As soon as people start thinking about divorce, they usually start contemplating property division. Some couples have already signed agreements with each other establishing specific terms in the event that they divorce. The majority of couples, however, have to settle property division matters and other disagreements at the end of a marriage when their relationship is at its worst. Couples sometimes fight so intensely over their resources that they significantly increase the overall cost of their divorce proceedings.
One of the more effective ways of protecting property is to establish that certain resources are the separate property of one spouse. Is a checking account or retirement savings account held in the name of just one spouse their separate property?
Account ownership isn’t the deciding factor
It may seem reasonable to assume that an account in the name of one spouse that the other never contributed to is the separate property of the account holder. That overly-reductive approach to property division might put someone at a disadvantage during negotiations or family court proceedings.
Contrary to what people often assume, the name on the account is not what the courts care about the most during property division proceedings. Instead, the main consideration is how someone acquired the resources used to fund the account.
If someone set money aside in the savings account prior to marriage and then never touches the account during marriage, it may remain their separate property. However, if they made contributions to the account using marital income, and they probably need to share the marital portion of the account with their spouse when they divorce.
That is as true for a retirement account partially funded by an employer as it is for a checking or savings account started during the marriage. Even an account that someone specifically starts to have separate resources when they file for divorce requires disclosure during the divorce process. They may ultimately have to take the funds in the account into consideration when dividing other assets even if they used those funds to support themselves during the divorce.
Identifying separate and marital property is a key part of the property division process in a New York divorce. Spouses who know how to identify separate and marital property accurately may have an easier time preparing for divorce.