Divorce proceedings in New York require the court to fairly divide assets acquired during the marriage between the spouses. For many, navigating the distribution of inherited assets during this time can be a concern. For more information on how courts treat inheritance during a divorce, continue reading and consult with a knowledgeable Suffolk County property distribution lawyer today.
Is New York an Equitable Distribution State?
New York is an equitable distribution state, which determines how marital property is divided during a divorce. Equitable distribution does not automatically mean an equal 50/50 split. Instead, the court aims for a division that is fair and just under the specific circumstances of the case.
The law requires the court to distinguish between marital property and separate property. Marital property is subject to equitable distribution and generally includes all assets acquired by either or both spouses during the marriage, regardless of who holds the title. Separate property is not subject to division unless it has become commingled with marital assets. The court considers various factors to determine a fair division, including the length of the marriage and the contributions of each spouse.
How Do NY Courts Treat Inheritance in a Divorce?
In New York, an inheritance received by one spouse, either before or during the marriage, is generally considered separate property and is therefore exempt from equitable distribution. Separate property is defined under Domestic Relations Law § 236(B)(1)(d) to include property acquired by “bequest, devise, or descent.” This means that as long as the inheritance is kept separate from the couple’s marital assets, it should remain the property of the recipient spouse during a divorce.
However, it is not guaranteed that inheritance will remain separate property. An inheritance can lose its separate status if it becomes commingled with marital property or if the other spouse can demonstrate that their efforts or contributions led to an appreciation in its value.
Commingling occurs when separate funds are mixed with marital funds (for example, depositing inherited money into a joint bank account used for marital expenses). Once commingled, the inheritance may be considered marital property and be subject to division. Also, any appreciation of the separate property due to marital efforts, like one spouse managing inherited stocks or renovating an inherited house, may be considered marital property. The burden of proving the separate nature of the funds is on the spouse who inherited the property.
If I Use My Inheritance to Buy a House, Is the House Marital Property?
If separate inheritance funds are used as a down payment or to purchase a house during the marriage, the house itself generally becomes marital property subject to equitable distribution. However, the spouse who contributed the separate funds may be entitled to a credit for the amount of the inheritance used. This credit could allow the inheriting spouse to recover their initial investment before the remaining equity in the house is divided between the parties.
For more information and legal advice, contact a skilled attorney today.
