For 13 years, Mr. De Niro and Ms. Hightower failed to account annually for their commingled separate and marital property when making investments or acquiring assets as required by their 2004 Prenuptial Agreement (PNA). In effect, the decisions in their 2018 divorce action have now interpreted this annual accounting requirement as an agreement to forever arbitrate and not litigate the marital and separate property issues of the divorce.

In his March 15, 2023 decision in Anonymous v. Anonymous, Supreme Court New York County Justice Ariel D. Chesler directed the parties to immediately provide to the parties’ chosen accountant those 13 years of disclosures . The accountant, and not the Court, would make the separate/marital property determinations. In doing so Justice Chesler applied the 2021 Appellate Division affirmance of a 2021 Order of now-retired Justice Matthew F. Cooper.Continue Reading Lessons to be learned from the De Niro/Hightower divorce and prenuptial agreement

Sometimes developing divorce case law seems like a bad game of telephone.

Take the February 7, 2014 decision of the Fourth Department in Foti v. FotiHere, the Court reversed the order of Supreme Court, Monroe County Justice Kenneth R. Fisher which had granted a wife partial summary judgment determining that various real estate entities and management companies were her separate property. She had proven that her interests were received from her father by gift.

Generally, under New York’s Domestic Relations Law §236B, property that is owned by a spouse before the marriage constitutes “separate property,” and is not divided on divorce, except, under some circumstances, to the extent of some portion of appreciation in value of the separate property over the course of the marriage. Inheritances and gifts (from someone other than the other spouse) are also “separate property.” On divorce, the court will divide  the parties’ “marital property,” property acquired during the marriage which is not “separate property.”

In Foti, the Fourth Department held that there was an issue of fact whether the wife commingled her interests in the entities, transforming the nature of those interests to marital property. The possible “commingling” arose from deductions taken on the parties’ joint tax return: “Here, the parties filed a joint federal tax return in which defendant reported her interest in the entities as tax losses, and ‘[a] party to litigation may not take a position contrary to a position taken in an income tax return,’” quoting from the 2009 decision of the Court of Appeals in Mahoney-Buntzman v. Buntzman, 12 N.Y.3d 415, 881 N.Y.S.2d 369.

In Mahoney-Bunztman, the Court of Appeals held that a husband’s decision to declare on his joint income tax return that money he received on the disposition of his interest in a real estate development company was ordinary earned income prevented him from later claiming that that money was merely a transformation of his separate property.Continue Reading Deducting Separate Property Business Losses on Joint Tax Return May Transform Property to Marital