One issue many people have upon entering a marriage is what will happen to certain assets they bring into the relationship if the marriage fails. The manner in which one woman handled a piece of real estate, and the decision at which the courts arrived with regard to that property, is very instructive to anyone holding such concerns. The way the woman used the property made it marital property subject to equitable distribution, according to a Supreme Court judge and upheld by the Appellate Division.
Six years before Christina and Thomas Myers married, the wife took ownership of a piece of real estate. The woman owned the property free and clear of any debt. When she and the husband married, they used the property as their marital home. In 2005, the couple applied for a mortgage on the home to consolidate other debts. As part of the lender’s requirements, the woman transferred title of the home from her name to the names of both her and her husband jointly.
When the wife filed for divorce in 2011, the couple agreed to all property distribution issues except how to handle the home. The trial court declared that it was marital property and that the home and its associated debt should be split evenly between the two. The court made this decision while noting that the couple used the financial benefits of the loans for the benefit of both spouses, including vacations and paying off other debts.
In the wife’s appeal, she did not try to argue that the home was her separate property. She acknowledged that it became marital property when she signed the deed placing ownership of the home in the names of her and her husband. Instead, she contended that, since the deed was solely to acquire the mortgage, she “transmute[d] separate property into marital property without changing the nature of the property itself,” so the trial court should have given her a separate property credit for the house.
This approach did not work. In some cases when a spouse simply executes a new deed that transfers property from her name to the names of the couple jointly, the trial court may issue a credit to the spouse who owned the separate property. Myers’ case did not qualify for that credit. The trial court had plenty of evidence from which it could conclude that the couple engaged “in a financial partnership, of which the marital residence, and the loans thereupon, was simply one agreed-upon portion.” The transactions regarding the home allowed the wife to eliminate several of her separate debts and replace them with marital ones, which the couple paid off during the marriage using the husband’s income. As a result, giving the wife a credit would be improper.
For people who enter marriages with substantial wealth or prized assets they wish to avoid exposing to equitable distribution in the event of divorce, it is important to take great care in how one handles those assets. Furthermore, if you find yourself facing divorce, it is also important to secure determined, knowledgeable counsel to help you with your case. For advice and counsel with your divorce and equitable distribution issues, New York family law attorney Ingrid Gherman can help. Putting her skill and experience on your side, you can help make sure that your separate property is protected.
Contact her online or by calling (212) 941-0767 to schedule your confidential consultation.