Rules that grant discretionary authority to the court promote flexibility at the price of uncertainty and expense. The history of the separate property credit provides a vivid example of this dilemma, offering shifting and uncertain rules that make counseling a client difficult and costly.

Marital Residence

The Equitable Distribution Law is founded on the principle that “separate property”—property “acquired before marriage” or “by bequest, devise, or descent, or gift from a party other than the spouse”—”shall remain such.” DRL §236(B)(1)(d) and (5)(b).

Since the dawn of the EDL, courts have interpreted this principle to warrant, upon divorce, reimbursement to a party who contributes separate property to acquire a residence irrespective of the form in which title is taken. Duffy v. Duffy, 94 A.D.2d 711 (2d Dept. 1983); Parsons v. Parsons, 101 A.D.2d 1017 (4th Dept. 1984); Nalbandian v. Nalbandian, 135 A.D.2d 621 (2d Dept. 1987); Lisetza v. Lisetza, 135 A.D.2d 20 (3d Dept. 1988); Lolli-Ghetti v. Lolli-Ghetti, 165 A.D.2d 426 (1st Dept. 1991); Pauk v. Pauk, 232 A.D.2d 386 (2d Dept. 1996); Judson v. Judson, 255 A.D.2d 656 (3d Dept. 1998); Murphy v. Murphy, 4 A.D.3d 460 (2d Dept. 2004); Juhasz v. Juhasz, 59 A.D.3d 1023 (4th Dept. 2009); Wyser-Pratte v. Wyser-Pratt, 68 A.D.3d 624 (1st Dept. 2009); Fields v. Fields, 15 N.Y.3d 158, 165-66 (2010).

This principle also applies to separate property that is rolled over into successive purchases. Cunningham v. Cunningham, 105 A.D.2d 997 (3d Dept. 1984); Lolli-Ghetti, supra.

Other Forms of Property

The credit is not restricted to marital residences. Coffey v. Coffey, 119 A.D.2d 620 (2d Dept. 1986) (certificates of deposit); Lauricella v. Lauricella, 143 A.D.2d 642 (2d Dept. 1988) (savings bonds); Burns v. Burns, 193 A.D.2d 1104 (4th Dept. 1993), modified on other grounds, 84 N.Y.2d 369 (1994) (payment of marital debts).

Standard of Proof

Uncertainty arises, however, because the standard of proof for a credit in a marital residence is unclear. In Shkreli v. Shkreli¸142 A.D.3d 546 (2d Dept. 2016), the husband was denied a separate property credit in a marital residence because his testimony alone did not “trace the source” of the separate property or prove its value. In Iacomo, the husband, failing to “offer clear and convincing evidence to substantiate the specific amount claimed” or intent to create “a marital beneficial interest,” was denied the credit for separate property contributed to the jointly owned home. Iacomo v. Iacomo, 145 A.D.3d 972 (2d Dept. 2016), citing Renck, infra. Historically, the standard was less stringent. Cleary v. Cleary, 171 A.D.2d 1076 (3d Dept. 1991); Zurner v. Zurner, 213 A.D.2d 906 (3d Dept. 1995). The credit is available regardless of whether the separate property is used to acquire an asset or title to a separate property asset is transferred to marital names. Myers v. Myers, 119 A.D.3d 1114 (3d Dept. 2014).