Most us of who get married don’t plan for our future divorce, and are not motivated to save our financial records for more than a few years.
Unfortunately, the Equitable Distribution Law of the State of New York and certain policies of banks and financial institutions, provide good reasons for married people to save their financial records from day one.
The first step in applying New York’s Equitable Distribution Statute, is to determine whether an asset is a marital asset or a separate property asset. In essence, a separate property asset is an asset acquired prior to the marriage, or as a result of receiving an inheritance or gift from a third party. Other assets are marital assets, regardless of how title is held.
When the Divorce Court divides property, separate property is retained by the owner, and marital property is equitably divided between the parties.
New York divorce law provides that the party asserting the separate property claim has the burden of proving it. If you cannot prove it, then there’s a good chance that your spouse will get as much as half of it.
How does one prove that an asset is separate property? The usual way to prove it is to provide a paper trail tracing the asset back to its separate property source.
In relatively short-term marriages (only a few years in length), providing such a paper trail is a relatively easy thing to do. Chances are you still have the last few years of your financial records in your possession. If you do not have such financial records in your possession, you can go to the bank or financial institution, pay a small fee, and get a copy of the necessary financial records.
However, what do you do if you have a long term, 20 plus year marriage?
Unless you are a pack rat that saves your financial records for a very long time, you will not have such a paper trail in your possession. This problem is compounded by the fact that most banks only keep the financial records of their customers going back six years. And, this problem is further compounded by the fact that many banks have merged or been acquired by others, or gone out of business, and the surviving bank does not retain the records of the prior one for more than a few years. As a result, your ability to satisfy your burden of proof with respect to your separate property claims is in serious jeopardy.
There are other ways to prove your separate property claims. One way is to show that the financial circumstances of you and your spouse are such that there could be no source for the asset other than your separate property. This happens when the income and assets of you and your spouse are modest, the asset in question is valuable, and it could not have been acquired without your valuable inheritance or gift from a third party.
None of us who have been married for a long time want to save mountains of financial records. Technology provides an efficient solution. We can scan important financial records on our computers and save them on a flash drive should our computers crash. This way, we can preserve important financial records without being buried in them. Should the time come to prove your separate property claims, having easy access to essential documents will save you a lot of money, time and trouble.
© Arnold D. Cribari 2019
