Though you likely did not enter your New York marriage with the assumption that it will one day end, it would be wise for you and your spouse to operate in such a way that would ensure the best possible financial outcome should you one day decide to part ways. In addition to drafting a prenuptial agreement (or, if you are already married, a post-nuptial agreement), FindLaw advises you to abide by certain money management dos and don’ts to ensure your financial security should your marriage one day end.
You should keep detailed and accurate financial records that establish the separate nature of property you wish to keep independent of the marital estate. Such property may include inheritances, gifts or property you acquired prior to the union. You should also avoid commingling property you know you want to stay in your family in the event of divorce or your death.
You should also bear in mind that if non-marital property appreciates, the courts may consider the increased value as marital property. For instance, if you own a home outside of the marriage and the home appreciates, the home’s original value is your separate property. However, the judge may give your spouse more property or money in the settlement to make up for the difference between the home’s original value and its new value.
If you want to purchase an item or property you wish to remain separate during a divorce, use non-marital funds. If you want proceeds from a personal injury case or lawsuit to remain yours in divorce, keep the funds in a separate bank account and do not use them for marital expenses.
As for the don’ts … Do not use your own personal funds to pay off marital debt. Doing so may cause those funds to lose their separate status.
Do not deposit income you earn during the marriage into an account with separate funds. Because New York generally characterizes income as marital property, commingling funds may erase the separate status of your separate money. You also avoid opening a joint account with separate funds.
You should not operate under the assumption that all the property you owned prior to entering the union will remain separate. For instance, if you owned a home before marriage and your spouse helped renovate it, he or she may be entitled to a portion of the home’s increased value. This same concept holds true with a business your started before getting married.
You should not use this article as legal advice. It is for educational purposes only.