Most of us own some valuable assets before marrying that we do not want to lose if our marriage is not a success. “What’s mine is yours” is not always fair. There are ways you can protect your separate property if you divorce.
Separate property vs. marital property
New York statutes recognize two types of property one or both spouses will own while married. They are separate property and marital property.
Marital property is that which is purchased either by one or both spouses while they are married. Simply put, it belongs to them both. If the couple divorces, the marital property will be split between them although there is no presumption the split should be 50/50.
Separate property is that which is owned by a spouse prior to marrying. Separate property will remain in the hands of the spouse who owned it should the couple later divorce unless that separate property is so mixed with the marital property that it is converted into marital property.
Protecting separate property
It is only natural that if you have separate property you want to keep that property in your own hands if you divorce. There are some ways you can proactively protect your separate property.
You and your spouse can execute a prenuptial agreement before marrying. This is a contract that outlines who will keep what assets if you divorce. This way, you can ensure your separate property will remain in your possession if you divorce.
Another option you may not have thought of is to keep separate property in a revocable trust. A revocable trust is an estate planning tool. You place assets in the trust, and the trust is managed by a trustee. Assets placed in the trust are no longer owned by you—they are the property of the trust.
The beauty of a revocable trust is that you can serve as trustee to your own trust, and you can move assets back and forth between the trust and your personal possession. Simply put, if you put separate property in a revocable trust, it cannot be owned by both you and your spouse and it will likely remain separate property.
You want the property division process to be fair, and you definitely do not want to lose your separate property to your spouse in your divorce. Being proactive can help you retain what is yours.