COMINGLING WILL LOSE YOUR SEPARATE PROPERTY STATUS

It is not uncommon for married couples not to keep their assets separate, especially with a long term marriage. However, when the issue of divorce arises, a problem is created for the spouse who believed that funds such as inheritance or a personal injury award would normally be that person’s separate property.  

If you mixed this money with marital assets for a significant period or with many transactions, court will more than likely find that what would have been your separate property is now a marital asset and subject to equitable distribution. The reason for this is because New York Domestic Relations Law provides that money received as separate property shall remain separate property unless you comingled it. Additionally, if you are claiming an asset is your separate property it is your burden to prove that this money is separate and not marital. 

Any separate property money needs to be placed in a separate account and at no time should it be comingled. In other words, do not place any marital money either into a marital account or take your separate property out of your separate account to pay household expenses or other expenses of the marriage. This also includes depositing your paycheck into your separate property account as your salary is a marital asset regardless of the title holder of the account it is deposited into. 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, and do not add 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 get either an inheritance or a personal injury award, place it wisely so it will stay your separate property.  Do not 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.