In this day and age of people marrying after they have established themselves financially, marrying and remarrying, and baby boomers becoming financial recipients of the greatest generation, it is not uncommon that a spouse owns property (i.e., house, condo, etc.) prior to the marriage, or inherits it prior to or during the marriage. At some point during the marriage one may decide to transfer title so that both spouses own the property. This can be done for many reasons: to make a gift to the spouse; to be able to obtain [re] financing; to ensure that property will transfer upon the owner’s death; or “for comfort.” In other words, the non-titled spouse may feel that if s/he is not the owner of the property, why be paying money towards a mortgage, care for the property, make improvements, etc. when s/he will not be the beneficiary of those efforts?
Imagine you have transferred title to property and then divorce – can the original owner recoup the value of the property at the time that it was transferred? While this had been the law of the land in the Third Department (the part of the state where we live), it was modified by the decision of Campfield v. Campfield 1. In that case, the parties were married for seventeen (17) years when the wife inherited property and then transferred it to herself and her husband. The court stated that when the wife transferred the property to the husband, there was a presumption that the property was now marital, and thus could be distributed between the Husband and Wife. The Court looked not just at the transfer but the Wife’s reasons for it – her intention to give him an interest and the value could be used for retirement. The court stated that she transmuted her separate property to marital property.
The recent case of Myers v. Myers 2 held that the trial court may give a credit for the value of the property at the time of the transfer. Therefore, a separate property credit is not precluded as a matter of law when title to separate property has been transferred.
For the originating spouse, a sigh of relief should be let out. However, and as we have discussed in other articles, it is very important that your intention is clear at the time that you make the transfer. This should be done in the form of a formal agreement, but minimally a conversation should occur as to each party’s wishes and goals.
If it is your intention to benefit the other person even if you eventually divorce, then a transfer of property is appropriate. If that is not your intention, then perhaps a transfer should not be made, or made in part, such as an unequal ownership of property.
Before “giving away” perhaps your most significant financial asset, a conversation with an attorney upfront is far less expensive than lengthy divorce litigation.
195 AD3d 1429 (2012).
2Third Department July 10, 2014