You may have received many valuable gifts from friends and family during the recent holidays. Each one either came with a tag bearing your name or was handed to you directly by the giver. This means that it was meant exclusively for you, but if your marriage ever ends, it’s possible that the gift could be divided in a divorce action unless certain steps are taken to protect it.
Separate assets defined
When a couple divorces in New York State, marital property is distributed between the spouses in a manner deemed equitable, or fair, while the separate property is not normally subject to distribution. Legally defined, separate property consists of assets that you-
- Owned prior to the marriage
- Received as an inheritance or exclusive gift
- Received as a personal injury award
- Acquired in exchange for other separate assets
Here’s the catch, though. Property in any of these categories can be converted from a separate to marital asset if you take certain actions.
Actions to avoid
If you received a $5,000 cash gift from your parents for Christmas and deposited it in an account that is in your name only, it has been clearly defined as a separate asset. On the other hand, if you place the money in an account you hold jointly with your spouse, an action referred to as “commingling” assets, it may be treated as marital property and divided during divorce. Other steps that could convert the money into a marital asset include:
- You use it to pay family bills, such as the mortgage on the marital home
- You pay any taxes due on the money from a joint account
Keep everything as separate as possible. Cash gifts should be placed in a non-shared bank account, and gifts of substantial value, such as real estate or automobiles, should be in your name only, with all applicable taxes being paid using your own financial resources.
Unlike some other states, New York law holds that if your property increases in value after you receive it, the appreciation belongs solely to you. This only applies, however, if your spouse did not contribute to the increased value in any way. For example, if your parents buy you a cottage in the Catskills and your spouse contributes financially to its upkeep, he or she may be able to claim a share of the appreciated value.
If you are planning to file for divorce and have concerns about how your past holiday gifts will be treated when it comes time to divide the marital estate, contact a New York family law attorney who can review your situation and advise you on the best way to protect the property that was originally intended for you alone. Jayson Lutzky, who has an office located in Bronx, NY, offers free in-person initial consultations for matters related to divorce and family court. Call 718-514-6619 to set up your appointment or visit mynewyorkcitylawyer.com. Saturday appointments are available.