Covering Your Assets in a Divorce
Under a bill recently passed by the state legislature, as soon as a husband or wife sues for divorce by filing a summons in New York State Supreme Court, they are both required to not alter the economic status of the marriage from that point on. As soon a person receives a divorce summons they can no longer move money or other property around to hide it or shield it from claims by their spouse.
In years past, planning a divorce also meant planning to be the first one to clean out the bank accounts and redistribute property and other assets before their spouse or spouse’s lawyer could make any moves to grab it in court. Until the new statute was implemented the parties in a divorce had to seek a court injunction to prevent their partner from the removal, sale or other redistribution of assets. This meant a loss of both time and money before any financial protection could be established. It was not uncommon for cash in the bank to mysteriously vanish right before a divorce action was initiated in court.
The new law doesn’t change the process of applying for child or spousal support, and does not affect the eventual court-ordered distribution of property and assets, but it will halt the premeditated looting of marital resources by divorcing New Yorkers. The bill forces divorcing couples to maintain the lifestyle and financial situation they had before the marriage until their case is heard in court and all evidence from both sides has been presented. Selling property, cleaning out bank accounts, adding new credit card debt, placing new mortgages on homes, cashing-in pension funds, and canceling insurance plans are now illegal activities for New Yorkers involved in a divorce.
The law offers both spouses the security of knowing that their marital property cannot be disposed of while the couple awaits a divorce settlement. The marital property and assets can, however, be disposed of legally if both parties agree to the action in writing. This means divorcing spouses no longer have to rush to court expressly to seek a protective injunction after proving the marital assets are in jeopardy. It also means the divorcing clients will save the money they might have spent on attorneys pursuing those injunctions in court.
Unfortunately, people can still be pretty sneaky when it comes to dividing marital assets and there is little that can be done to prevent a person from liquidating assets and moving money around before the divorce papers are actually filed.