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What happens on divorce when during the marriage, the marital residence that had been owned by one spouse prior to the marriage is conveyed during the marriage to the parties jointly? That was the issue addressed by the Appellate Division, Second Department, in its decision this month in Spencer-Forrest v. Forrest.

The parties were married on March 31, 1984. There were no children of the marriage, but children from each of the parties’ prior marriages resided with the parties in the marital residence during the children’s respective minorities. Both parties were employed for the majority of the marriage, and the wife provided care for the husband’s children, who were younger and resided in the marital residence longer than her children.

The husband had purchased the marital residence prior to the marriage, and transferred the property to himself and the wife as joint tenants in 1989. Other than the marital residence, the parties’ assets were held in their respective names. Both parties contributed to the household expenses, although the husband contributed a larger sum to household expenses and maintenance of the marital residence, and the wife ceased financial contributions in 2006 or 2007, after she retired.

In August, 2012, the wife commenced this action for a divorce and ancillary relief. The wife was 68 years old and the husband was 67 years old at the time of trial.

Except for the marital residence, Nassau County Supreme Court Justice Stacy D. Bennett divided the marital property) equally (other than the vehicles and personal items) regardless of the party holding title. As to the residence, Justice Bennett awarded the wife 20% of the appreciation in the value of the marital residence from 1989 (when the husband conveyed the home to the parties jointly) through the date of the commencement of the action, an award amounting to $30,000. The court declined to award the parties credits sought for assets allegedly secreted or wasted by the other party and denied the wife an award of maintenance.Continue Reading When One Spouse Transfers Sole Title to the Home to Both Spouses Jointly

What do you do upon divorce when the home purchased during the marriage and titled in one spouse’s name was purchased using the proceeds from the sale of the home owned at the date of marriage solely in the name of that same spouse?

The Appellate Division, Second Department, in its March 2, 2016 decision in Ahearn v. Ahearn, applied well-established equitable distribution principles to affirm the determination of now-retired Suffolk County Supreme Court Justice William J. Kent, III, and hold that the home purchased during the marriage was marital property even though titled in only the one spouse’s name. Moreover, the titled spouse was entitled to a dollar-for-dollar separate property credit against the equity in the marital-property home for the use of the first home’s net sales proceeds.

The fact pattern was straightforward. In June 1996, the wife-to-be purchased a house on Salem Street in Patchogue. Approximately nine months later, the parties were married and lived together in the Salem Street house. In December 2004, the wife sold the Salem Street house and used the $143,000 in net proceeds from that sale toward the purchase, in March 2005, of a house in Holbrook. Only the wife’s name was on the Holbrook deed, but, at the time of trial, both parties were listed on the mortgage.Continue Reading Tracing One Spouse’s Pre-Marital Home Sold During Marriage To Purchase Another

Once again, it has been made clear that where either or both spouses have assets or liabilities at the date of marriage, it is foolhardy (or at least imprudent) to enter the marriage without a prenuptial agreement and/or the assembly of proof of the extent, nature and value of those assets or liabilities.

Take the January 8, 2015 decision of the Appellate Division, Third Depatrtment, in Ceravolo v. DeSantis. In that case, the parties were married in July, 1996. The wife commenced the action for divorce in June, 2010. Acting Albany Supreme Court Justice Kimberly O’Connor determined, among other things, that the marital residence, which had been purchased by the husband prior to the marriage, was marital property and awarded the wife, among other things, half of its value. The husband appealed.

The Third Department agreed with the husband that Justice O’Connor erred in classifying the marital residence as marital property. Marital property is defined as “all property acquired by either or both spouses during the marriage” (Domestic Relations Law §236[B][1][c]), while “property acquired before marriage” is separate property (D.R.L. §236[B][1][d][1]).

Title is a critical consideration in identifying the nature of real property acquired before the marriage. The circumstances surrounding the purchase of the residence and the parties’ intent relative thereto are irrelevant to the legal classification of the residence as separate or marital property.

Here, the husband purchased the marital residence in January 1994 — 2½ years prior to the parties’ marriage — paying $130,000 of his own funds and borrowing an additional $100,000 from his father, secured by a note and mortgage. Although the wife contributed $30,000 of her separate funds to the initial purchase of the residence, the husband took title to the property in his name alone.Continue Reading Title Controls Premarital Contributions To The Acquisition and Expenses of Property

House divided.jpgIn its December 13, 2012 decision in Murrary v. Murray, the Appellate Division, Third Department, affirmed the determination to deny a husband an equitable distribution credit for the value of a home which he owned before the marriage and which, after the marriage, he deeded to himself and his wife jointly.

The parties were married in 1986 and have four children. 15 months before the marriage, the husband purchased a residence in Queens County. Tthe parties lived there together for several years after their marriage. In 1991, the husband conveyed the home to himself and his wife jointly. The parties thereafter refinanced the Queens County property and used the proceeds to purchase their ultimate marital residence in Sullivan County, keeping and renting out the Queens County property. In 2003 the parties separated. The husband commenced this divorce action in 2005.

In resolving equitable distrution issues, Sullivan County Supreme Court Justice Robert A. Sackett denied the husband a credit for the premarital value of the Queens County property. On appeal, the Third Department found that that determination was within Justice Sackett’s discretion.

The transfer of that property into joint ownership created a presumption that it was marital property, placing the burden upon the husband to rebut this presumption with clear and convincing proof that the transfer was solely a matter of convenience.

Here, the appellate court noted, the husband’s testimony regarding the Queens County property (characterized by Supreme Court as evasive and questionable) failed to rebut the presumption. The entire Queens County property was thus part of the parties’ marital property and subject to the court’s substantial discretion in fashioning an equitable distribution award.

While the appellate court noted that a credit is often given for the value of former separate property, such a credit is not strictly mandated. The property is no longer separate, but is part of the total marital property. Quoting the 2010 Court of Appeals decision in Fields v. Fields, 15 NY3d 158, it was stated:

There is no single template that directs how courts are to distribute a marital asset that was acquired, in part or in whole, with separate property funds.

Upon review of the record and the entirety of the equitable distribution award, the Third Department was unpersuaded that Justice Sackett abused his discretion.Continue Reading Husband Gets No Separate Property Credit in Divorce for Pre-marital Home Deeded to Himself and His Wife Jointly