Separate property is the part of a New York divorce that does not get divided. The spouse who owns it keeps it. That sounds simple, but the line between separate property and marital property is one of the most contested issues in matrimonial litigation, and the rules are more nuanced than the basic definition suggests. Domestic Relations Law section 236(B)(1)(d) defines what counts as separate property, and the spouse claiming an asset is separate carries the burden of proving it. Clients calling Roven Law Group often arrive with assumptions about what they will keep that turn out to be incorrect once the analysis is done carefully.
Here is how New York treats separate property and what protects it from being treated as marital.
The Statutory Definition
Section 236(B)(1)(d) lists four categories of separate property. The first is property acquired before the marriage. Anything one spouse owned at the time of the wedding remains separate, including bank accounts, real estate, vehicles, retirement contributions, and personal property.
The second category is property acquired by inheritance or as a gift from a party other than the spouse. An inheritance received during the marriage is separate property even though the receipt occurred while the parties were married. A gift from a parent, sibling, or third party is also separate. A gift from one spouse to the other becomes the receiving spouse’s separate property in some circumstances and marital property in others, depending on how the gift was treated during the marriage.
The third category is compensation for personal injuries. A settlement or judgment received for a personal injury claim is separate property to the extent it represents pain and suffering, lost separate earnings, or other personal damages. The portion that represents lost wages during the marriage is treated as marital. The classification often requires a careful look at the underlying settlement allocation.
The fourth category is property acquired in exchange for separate property, or the increase in value of separate property except to the extent the appreciation results from the contributions or efforts of the other spouse. This is the rule that produces the most litigation.
Property Owned Before the Marriage
A house, retirement account, business interest, or investment portfolio owned before the marriage starts as separate property. The spouse who owned it at the wedding remains the owner. The complication is that pre-marital assets often grow during the marriage, sometimes substantially, and the appreciation has to be analyzed under the active versus passive rule.
Active appreciation results from the efforts of either spouse during the marriage. A pre-marital house that is renovated using joint income, a business that is grown through one spouse’s work during the marriage, or an investment account that is actively managed during the marriage produces active appreciation that is treated as marital. Passive appreciation results from market forces alone. A pre-marital stock portfolio that grew because the broader market grew, with no active management or contribution from either spouse, produces passive appreciation that remains separate.
The line between active and passive appreciation often depends on detailed facts about how the asset was managed during the marriage, and the spouse claiming separate treatment carries the burden of proving the appreciation was passive.
Inheritances and Gifts From Third Parties
Inheritances and third-party gifts are separate property as long as they are kept separate. An inheritance deposited in a separate account in the receiving spouse’s name alone, never commingled with marital funds, used for the receiving spouse’s purposes, remains separate.
The protection disappears when the inheritance is commingled. An inheritance deposited in a joint account, used to pay marital expenses, applied toward joint property, or transferred to the other spouse can be converted, in whole or in part, to marital property. The spouse claiming separate treatment has to prove the funds remained traceable as separate, which becomes harder the longer they sit in commingled accounts.
A gift between spouses presents a different problem. A car titled in one spouse’s name and given to the other as a birthday present is generally the recipient’s separate property. A larger gift, like a transfer of pre-marital real estate from one spouse to both spouses jointly, can convert separate property into marital.
Personal Injury Compensation
Settlements and judgments for personal injuries are partly separate and partly marital depending on what the compensation represents. The portion attributed to pain and suffering, future medical expenses, future lost earnings, or other personal damages is separate. The portion attributed to lost wages during the marriage is marital because it replaces income that would have been marital had it been earned in the normal course.
When a settlement does not allocate among these categories, the court has to do the allocation, which often requires testimony from the personal injury attorney who handled the underlying case. Settlement agreements that allocate clearly avoid the dispute later.
Prenuptial and Postnuptial Agreements
Prenuptial and postnuptial agreements can expand the categories of separate property beyond what section 236(B)(1)(d) provides. The parties can agree that specific assets, future income from particular sources, or business interests acquired during the marriage will be treated as separate. These agreements are enforceable when they meet the formal requirements of section 236(B)(3), including signature, acknowledgment, and absence of duress or unconscionability.
Burden of Proof
The spouse claiming an asset is separate property carries the burden of proving it. Documentation is what wins these cases. Bank records showing the source of the funds, deeds and titles confirming pre-marital ownership, inheritance documents from the estate that produced the gift, and brokerage statements tracking pre-marital balances are all the kind of evidence courts look for.
How Roven Law Group Protects Separate Property Claims
Identifying and proving separate property requires careful financial work, particularly in long marriages where commingling has occurred. Roven Law Group analyzes the records, traces the funds, and presents the separate property case in negotiation or at trial. The firm represents clients in matrimonial proceedings across Manhattan, Brooklyn, the Bronx, Queens, and Staten Island. Schedule a consultation to discuss what may qualify as separate property in your divorce.