COMINGLING WILL LOSE YOUR SEPARATE PROPERTY STATUS

It is not uncommon for couples to have joint accounts.  The problem occurs when money which would generally be defined as separate property is placed into a joint account and then there is an action for divorce.  The concern is that the soon to be ex-spouse will be entitled to his or her marital portion. If you comingled this money, then yes it will more than likely now be considered marital property subject to equitable distribution.

According to the Domestic Relations Law money received as a result of a personal injury award or inheritance is considered separate property unless you comingled it.  If you are claiming an asset is your separate property it is your burden to prove that this money is separate and not marital.  If you placed what would be separate property money into an account where marital funds are deposited, including your paycheck as that is marital, those separate funds will now be deemed as a marital asset.  Any separate property money needs to be placed in a separate account and at no time can marital funds be comingled. In other words, do not place any marital money either into that account or take your separate property out of the account to pay household expenses or other expenses of the marriage. Remember ….this includes depositing your paycheck into your separate property account.

The same holds true for retirement accounts. If you have an IRA or any retirement asset that was established prior to marriage, kept it in a separate account, with no contributions from your current employer. Start a separate account or else only a portion of that account will be your separate property.

Practically speaking, once you either get an inheritance or a personal injury award, you have a decision where to place it. Do so wisely so it will stay your separate property. Do not use this account to pay marital bills, deposit your paycheck or let your spouse have access to the account.  If you do, then you risk the Court determining that your spouse is now entitled to part of what you believe is your separate property.

Likewise, if you have a retirement account prior to marriage, you should start a separate account after you are married and let your pre-marriage asset develop only by market forces otherwise it will be considered marital.