If you are served with a summons for a divorce action there will be an accompanying document proscribing you from transferring marital assets or encumbering title to any such assets. This document is called the notice of automatic orders and it stems from New York statutory law. Generally, this restriction will remain in place for the entirety of the divorce action and for the Defendant takes effect on the date of service of the summons. Upon entry of the Judgment of Divorce, these automatic orders will cease.
These automatic orders also prevent you from transferring or disposing of retirement accounts. However, the assets subject to the automatic orders can be used to pay for legal fees incurred in the divorce action and for ordinary household purposes.
Assets that you may think are separate property may become marital property if you commingle them with other marital assets during the marriage. This a process known as transmutation. Thus, for example, if you established a checking account before your marriage but you allowed your spouse to take money from this account or used the funds for shared expenses, this account is now marital property and you cannot unlawfully dispose of the property upon notice of the automatic orders.
Transferring or disposing of assets may be tempting to a spouse facing a divorce because suddenly having a lesser net worth may enable you to reduce your obligation to your spouse in terms of maintenance and equitable distribution. The automatic orders curtail this behavior. During the pendency of a divorce action, courts seek to maintain the financial status quo of the parties upon commencement of the divorce so that the court can determine an equitable distribution of property.
The repercussion of violating the automatic orders and transferring marital assets unlawfully will result in the violator being held in contempt of court. Thus, upon being served with a summons for divorce and the notice of automatic orders, it is important that you refrain from trying to hide or dispose of marital assets and consult a family law practitioner.