FULL TRANSCRIPT – Season 2, Episode 62
Welcome to another episode of the exEXPERTS’ Divorce etc… podcast, here we give you all kinds of information and tips on everything divorce. Why? We’ve lived it, so we get it. We’re Jessica and T.H. And keep in mind you can get exEXPERTS in your inbox by signing up for our newsletter. Get the latest news and find out all about our events before anyone else, plus, access to special discounts and prices. Head to exEXPERTS.com to subscribe.
Jessica: We’re so excited to have back with us yet again today, Gabriella Formosa, a divorce lawyer and mediator at Greenblatt Law right here in New York City. Today we’re going to be talking all about everything assets. Welcome back, Gabriella.
Gabriella: Hi, thanks for having me again. So as usual, I just want to say that anything that we talk about here is just for conversational purposes, it’s not to constitute legal advice. I know you have people listening all over the country so advice is different in all different states. Take this as a conversation, and if you have any questions and want actual legal advice, you can contact me or another attorney.
Jessica: We’ll give you guys all that information at the end. It’s also posted on the ExExperts website, so you can always find it even after the fact.
T.H.: So Gabriella, why don’t we start with what exactly is an asset?
Gabriella: So an asset is really simply anything with value. A lot of the times I ask my clients, what are their assets, and they say, I don’t have any. But if you have $5 in the bank, you have an asset. If you have a car, you have an asset. If you have a candlestick or a pot, that is an asset. So you do have assets, and mostly everyone does. That’s just something to know going into a divorce. If you have things, you’re going to have to figure out a way to divide them.
T.H.: And just to take it down to an even lower level, it’s a thing, it’s not a person, an asset is not a person, and it’s a thing that you own that you purchased, right?
T.H.: And it’s not a pet either?
Gabriella: Actually, that’s not correct. A pet is considered an asset under the law.
Gabriella: It’s considered a piece of property. It is not a child. You can feel like you’re a dog mom at heart, but the law doesn’t see it that way. And so that’s actually maybe a story or topic for another podcast, but the way that the law deals with how to handle an animal in a divorce is actually really interesting.
T.H.: Wow, that’s surprising.
Jessica: We’re going to have to have an interview about that at some point. I wanted to ask you about I think one of the first things that I know for myself and a lot of other people think of with regards to an asset is the ring. What happens to the ring? Is that a gift, is that an asset? Does it matter where you live in a different state? What happens to it?
Gabriella: I can’t speak to other states, but in New York, your engagement ring is your property if you go through with the marriage. Presumably, someone proposed to you, you said yes, and you got married. That ring is a premarital gift to you so you are entitled to 100% of it in the divorce, and you can keep it.
Jessica: What if you get an upgraded ring while you’re married?
Gabriella: So that’s actually a really good question. Gifts that are given to your spouse, interspousal gifts we call them, so really if your husband buys you something during the marriage, technically that’s a marital asset. We can fine-tune points here, if it was purchased with separate property then it gets a little more complicated. But if you get an upgraded ring, then yes, that’s going to be a marital asset and so that gets a little bit more confusing on how to divide it. But presuming you were given the gift prior to the marriage or given the ring prior to the marriage, that’s yours to keep.
Jessica: So tell us a little bit about the difference of gifts versus assets and how someone can determine for themselves and get a preliminary idea of how it’s going to work out?
Gabriella: Well, I think it’s really interesting because a lot of the time people think that was a gift to me, my wife bought me this car during the marriage and that was a gift to me, and there was a note that said here is a gift to you, but the law doesn’t see it that way when it comes to a gift from your spouse to you. The law sees it as that’s just marital. A lot of people don’t know that when they get divorced and so that’s a rude awakening for them if say all of their Chanel handbags or all of their diamond jewelry is a gift to them, and they should be able to walk away. That’s not always going to be the case.
T.H.: Well, when you wake up in the morning and the car is gone, you’ll know that it’s a marital asset and it’s his turn [laughs].
Jessica: That’s such an interesting thing that you said Gabriella because I certainly know people, who just based on their own personal financial situations, and when I say personal it could be personal beforehand or even during the marriage, and they do own thousands of dollars worth of shoes and handbags and things that they just bought themselves while they were married. Are you saying that you’ve seen divorces where there are battlegrounds drawn over things like bags and designer items?
Gabriella: I’ve never seen a bag fight. I’m working on a divorce now where we’re having a guitar fight. The husband is a collector of guitars and purchased many during the marriage and feels that they’re his collection and the wife wants to put them all on eBay and sell them. And so a lot of it is really just needling him because she knows that those are important possessions to him so we’ll see how it turns out. But most divorces, people don’t necessarily fight over personal property usually, unless it’s antiques or really, really extravagant pieces of jewelry. Usually, people can work it out. The law might say it’s marital, but what, is someone going to sell a handbag on eBay? It’s not worth the legal fees.
T.H.: I feel like we have to bring it back again to what we’ve talked about in the past, that divorce is a business. You have to look at it as a business, and you can’t be emotionally tied to so many things. If he wants to keep the guitars, then you keep your handbag and you’ve got to play it fair on both sides so that you don’t get into the nitty-gritty. I’ve heard of experiences where you are basically fighting over something like a candlestick just, to your point, to needle the person. You’re going to take that candlestick and you’re going to chuck it in the garbage the minute you walk out with it. Or you’re going to go in and take all the stuff and leave it in a storage facility and throw away the key.
Jessica: So are you saying T.H., people should be using certain items as leverage?
T.H.: I think that people – I’m not giving that advice, necessarily. I’m not a qualified legal professional, but I’m just saying in my experience, I’ve heard that people do in order to keep the peace. What’s really important to you, what’s really important to him, and then, okay, so can we just take that stuff off the table? Now let’s focus on the bigger stuff, the bigger picture.
Gabriella: Right and we were talking about rings. When it comes down to rings, a lot of people don’t like to admit this to themselves, but the fact of the matter is once you buy a diamond it’s worth half of what it was purchased for. I have a client now, she has a $30,000 ring, and she just looked around and talked to people to see what she could sell it for. The highest she got was $10,000. That’s a third of what was paid for it so you really have to think and use your common sense. Is it worth fighting over this? What’s the value? Is it there’s a dollar value, then there’s an emotional value, and then there’s the value of the legal fees they’re paying to fight over it? You need to really think about all of those three things before you start going to the mattresses about your jewelry or your guitar.
T.H.: Well, and if you keep the ring, and if the ring is of any real value in terms of money, you can put it away. Maybe you need that $10,000 further down the road, just put it away somewhere you’re not going to wear it, and just put it in a safe space. If you should get into a place where you need that money then sell the ring. It’s just like a safety net if it’s worth it.
Jessica: It’s an asset. What are some surprising things people might not know about when it comes to assets?
Gabriella: So in New York, one of the most surprising things is I find the fact that just because an account or a piece of property is in your name alone does not mean that that is your money. If you earned it during the marriage, and you put it into an account in your name, your spouse they have a claim to that. That can be really frustrating if you and your spouse have decided to keep accounts separate, and you’re a saver and your spouse is a spender. You’ve been under the impression that you two have been living financially separate lives, but the law says that you haven’t. That can be a real rude awakening for some people.
Jessica: So for situations like that, and I guess you really learn that more as you go in your marriage, but I know people that have prenups, and generally those prenups are based off of what one or both of the partners had as they came into the marriage to protect what was theirs prior. I’m wondering if there’s a way you can write a prenup to say during the marriage, what’s mine is mine, and what’s yours is yours and only what we put into this joint account is going to be considered joint assets.
Gabriella: Of course, and that’s really one of the most common things that we do see in a prenup that is anything in my name is mine, anything in your name is yours. That has its advantages and disadvantages. I usually consider something like that a pretty stringent prenup. Depending on who I represent, I either advocate for or against that language. If it’s a young couple who are just starting out, I’m a little wary of it because they don’t know where life’s going to take them, especially and unfortunately with female clients. They’re usually the ones who leave the workforce or whose job takes a hit if they have a child so if you enter into a prenup like that, you run the risk of perhaps leaving the marriage with absolutely nothing if you make the decision to stay home and raise children. That’s something that I caution people against because it is so stringent, but then again, if you’re marrying someone who you know might have a gambling problem, or plays fast and loose with the stock market and with their money, then you might want to consider something like that even if you are the earning one because you might want to protect yourself. It’s really situation-specific, but it’s definitely something that you can do and ask your lawyer to draft.
T.H.: Do prenups really work?
Gabriella: They really work. In New York, it is almost impossible to overturn a prenup provided that the acknowledgments are correct and it’s signed and notarized. Clients often ask me, does this need to be signed 30 days, 60 days before the wedding to be valid? No, you can sign that on the courthouse steps. You don’t need a lawyer as long as it’s signed and notarized. It will be valid. That’s why I always suggest having legal counsel when you sign a prenup because that’s going to come back to bite you if you’re not fully comfortable with what you’ve signed.
Jessica: So what are some of the most important pieces you think that people need to know when it comes to their assets? I think it’s really interesting that you’re sharing with everyone, if you own anything, that’s an asset. So whether it’s a candlestick or a couch, or whatever the case may be, but what would you say are some of the most important things that people do need to know or think about that they might not otherwise be thinking about when it comes to assets?
Gabriella: So one thing that I think people should think about, and that surprises some people too, is that you can have assets that start out separate and then you can take actions that turn them marital. For example, the law says that any money that you inherit is your separate property and your spouse doesn’t have a claim to it. That makes sense in our minds, but if your parent, God forbid, passes away and gives you a chunk of money and you deposit that into an account that you share with your spouse, then that protection that you had, that separate property protection, goes out the window, and you’ve now made that marital. That can also apply even if you put it into an account that’s in your own name, and then you start putting marital funds into that account and mixing up all that separate and marital money together. We call that commingling funds, and you can change the character of that property from separate to marital.
Jessica: What if you have money like if you owned your own property before you ever met, so that’s clear, then you sell that property and you buy a property together and your contribution is like the funds from the sale of your first property?
Gabriella: Good question. That happens a lot. Someone will own a property, you move in, you get married, and then you decide to sell that and start a life together. In that case, you have kind of this hybrid property because you have purchased a marital asset because you’re buying it during the marriage in both of your names, but you’ve used separate property to do that. When it comes time to get divorced, you may be entitled to what we call a separate property credit which really just means you could get back that money. I used to have a boss that said it’s not as easy as taking a ticket that says separate property credit and handing it to the court; you have to be able to trace that money. You have to be able to provide all of the documentation from the minute you bought that first house when you sold it, what check you used, and what check you used for the down payment on the second house. It’s your responsibility to trace that so if that’s something that people are thinking of doing, having that paper trail is really important.
Jessica: That was a conversation personally that I had with Elysa like when we were first starting, that was totally my situation. I owned my apartment, sold it, bought a new apartment together, and now I just want what I had from the old one.
Gabriella: Right. That gets tricky because a lot of the time you have situations where you know you put in that money, your spouse knows that you put in that money, but you don’t have the documents to prove it. And so if they want to be vindictive, you’re not getting that credit back.
Jessica: So I just want to say to everybody listening and I’m sure you guys would agree, this is why you just have to do your best with keeping track of your paperwork and things. There are I’m sure some things that have a statute of limitations and maybe if it’s x amount of years later, and it may change state to state or under the law, but you do have to take responsibility for yourself to be able to have that paperwork. Save your documents, put it in a Dropbox somewhere on your computer, or save it somehow and have a file because at the end of the day that could be, like what Gabriella was saying, the difference of whether or not you’re getting back the money from your prior asset or not.
Gabriella: It’s so important and I actually recently bought a home with my husband and he did all of the legwork and did all of the paperwork and I realized I had nothing. I’m thinking to myself this is the opposite of what I would advise my client to do and so I got it together, Jessica, and did exactly what you said. In the end, I scanned all the documents, made a Dropbox folder, sent it to both of us, and had a safe place for all those documents. It’s not easy, but it’s important.
Jessica: Totally. Well, I feel as always there’s a million more questions. There’s so much more to talk about and you’ve given us some ideas for some other really important conversations that we need to have moving forward to be able to help everyone listening. So for people out there, I know you gave the disclaimer at the top that this is not legal advice per se, but for anybody out there who’s interested in getting in touch with you and actually asking for legal advice, what’s the best way to find you?
Gabriella: You can reach out on our website, which is www.greenblattlawllc.com. All of our contact information is on that website so you can reach out there. My email address is email@example.com and you can find it on the website as well.
Jessica: Okay and we’ll have all that information on our site attached to the podcast so you can just click through for that. This is as always so much great information and thank you so much for coming to share it with our ExExperts community. For anybody out there listening, if you know anyone else that you think that this could help, please share it. Sharing is caring, but also we really want to get this information out to as many people as possible because it is so important and everyone really needs to know about it. So be sure also to click to subscribe to the ExExperts podcast on iTunes or wherever you listen to your podcasts. Please follow us on social media @exexperts on Instagram and Facebook and YouTube. Thanks for listening.
T.H.: Thanks, Gabriella.
Gabriella: Thanks for having me.
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