The August 21, 2013 decision of the Appellate Division, Second Department in Patete v. Rodriguez may have expanded the credits available to the non-titled spouse when marital funds are expended on a separate-property asset.

When New York adopted its Equitable Distribution Law in 1980, courts were now longer bound by which spouse held title to an asset generated during the marriage. Upon divorce, the non-titled spouse could be awarded an equitable share.

Not all property of parties getting divorced, however, is “marital property” subject to Equitable Distribution. The law recognizes as “separate property,” assets owned by one of the spouses either before the marriage, or acquired through inheritance, or by gift from someone other than the other spouse, etc. The appreciation in the value of separate property is also separate property, subject to a claim that such appreciation is due to the contributions or efforts of the non-titled spouse.

Determining what is or should be marital and separate property, and each spouse’s equitable share of marital property is not always clear. Indeed, the rules and guidelines are not free from doubt.

Take last week’s decision in Patete, for example. This divorce was the second time around for these parties. They married for the first time in 1978. Incident to their first divorce in 1981, the wife conveyed her interest in the 68th Street, Maspeth, Queens marital residence to the husband.

The parties married again in 1985. At that time the husband still owned the 68th Street home. Again it was used as the marital residence. As the home was the husband’s property before the second marriage, it was deemed his separate property when the second marriage here ended in divorce.

In 1987, two years into the second marriage, however, the husband sold the 68th Street property. $125,000 of the proceeds were used to purchase the parties’ jointly-owned new marital residence on 64th Street in Maspeth.

The appellate court acknowledged that the 68th Street property remained the husband’s separate property until its sale in 1987. Thus, the $125,000 in sales proceeds used to purchase the jointly-owned 68th Street home was also his separate property. The husband was entitled to a separate property credit for his use of separate funds to purchase the 68th Street home.

However, between the date of the second marriage and the sale of the 68th Street home, marital funds were used to pay the mortgage on the husband’s separate-property 68th Street home. As a result, the Second Department held:

The [wife] should receive a credit for one-half of the marital funds used to the pay this mortgage on the plaintiff’s separate property.

The Court reported that the total amount of marital funds used for this purpose was $7,338.94.The Court did not state that this was the amount by which the principal amount due on the mortgage was reduced, just that such was the amount used to pay the mortgage.Continue Reading Credits on Divorce for Using Marital Funds for Separate Property Assets

In a February 13, 2013 decision. the Second Department in Braun v. Abenanti directed a father to pay his child’s orthodontist directly and also directed that the mother’s petition for an upward modification of child support be granted.

Doing so, the Second Department reversed Family Court, Suffolk County Judge Richard Hoffmann, who in turn had denied the mother’s objections to an order of Support Magistrate Isabel Buse. The Magistrate’s order, after a hearing, granted the mother’s petition to enforce a 2001 support order only to the extent of directing the father to reimburse the mother the $20 she had paid to the orthodontist. Magistrate Buse also denied the mother’s petition for an upward modification of that decade-old support order.

As for the orthodontia, the 2001 order directed the father to pay 100% of “future reasonable health care expenses not covered by insurance.” The child had orthodontia expenses of $1,329 that were not covered by insurance, of which the mother could only afford to pay $20.

The Second Department acknowledged that as the mother demonstrated that she paid $20 of the child’s unreimbursed orthodontia expenses, the Family Court’s award of only $20 to the mother was properly limited to “those sums for which the mother submitted proof of actual payment to the third-party medical providers.”Continue Reading Father Directed to Pay Orthodontist Directly; and Mother Entitled to Upward Modification