Prenuptial Agreements and Asset Protection

New York generally views marriage as an economic partnership which begins at the date of marriage and continues until or unless the parties are legally separated or one spouse begins a divorce case. The “marital property” that is acquired during this economic partnership is subject to equitable distribution.

Marital property can include, among other things, the value of a business or practice, retirement assets and accounts, real estate, stocks, bonds, bank accounts, mutual funds, cash surrender value of life insurance policies, vehicles, jewelry, collectibles, furniture, and furnishings, etc.

Equitable distribution does not necessarily mean equal and the law sets forth various factors for a court to consider in determining what is equitable. In long-term marriages, courts are somewhat predisposed to divide marital property equally unless there are compelling reasons to do otherwise.

While it surprises many people, the fact is our law prohibits consideration of marital fault as a basis for a disparate distribution of marital property, unless that fault was so egregious that it “shocks the conscience of the court.” Spouses who are somewhat abusive, controlling, or maintain intimate relationships outside of marriage are generally not penalized in asset distribution. Egregious misconduct is far worse and so far surpasses the marital fault encountered in the vast majority of relationships.

Marital property that is accrued during the course of the marriage includes all accounts and interests of both spouses regardless of whether the holding is in joint names or solely in the name of one of the spouses. For instance, a 401(k) retirement account in the name of one spouse, which was earned during the course of the marriage, is marital property.

The only exceptions regarding property or assets that were obtained during the course of the marriage, are those assets that are directly traceable to gifts from third parties, inheritances, or personal-injury awards received by one spouse. These assets are considered “Separate Property” and are not to be divided unless commingled with marital assets.

“Separate Property” also includes assets acquired prior to marriage by one spouse still existing at the time of divorce.

At the conclusion of a divorce case, each party should expect to retain their separate property and to divide the marital property. During the process, each asset will be classified as marital or separate property and treated accordingly. Unfortunately, based upon the way many people hold and manage assets during the course of their marriage the bright line between separate and marital property can be substantially blurred forming a variety a claims that may be made. There are many variables that might affect the likely equitable distribution result after trial and the determination of “marital” and “separate” property, which we can explore with you in consultation based upon your individual circumstances.